What Is An Offer To Compromise Pursuant to C.C.P. 998?

Lots of people ask me about Offers to Compromise pursuant to Code of Civil Procedure Section 998.

Here is a recent example:

Q: I sued my physician for medical malpractice. The 998 offer was for a monetary amount with no admission of liability. I decided to reject it because I wanted a full admission.  The judgment came back for an amount less than the 998 but the physician was found liable for assault and intentional infliction of emotional distress which led to the revocation of his medical license.  In my eyes, the fact that he was found responsible was a more favorable outcome compared to the offer containing no admission of liability.  Do courts only consider monetary awards in determining whether a judgment was more favorable within a 998 context?

A: The court usually only considers monetary awards in injury cases. The basic mechanism of Section 998 is straightforward. In your case the offer came from the defendant.

Under Section 998(c), if an offer made by a defendant is not accepted and plaintiff fails to obtain a more favorable judgment, the plaintiff

(a) is not entitled to recover court costs, and

(b) must pay the offering defendant’s costs from the time of the offer.

In addition, the court has discretion to award all of defendant’s costs from the date of filing of the complaint, and to award a “reasonable sum” to cover the incurred expenses for expert witnesses used by the defendant in the preparation and trial of the action.

Under Section 998(e), if these awarded costs actually exceed plaintiff’s recovery, the court is directed to enter a judgment against plaintiff in favor of the defendant for the difference. Thus, the stakes for a plaintiff can be quite substantial when faced with a defense 998 offer.

But it works both ways.  If as plaintiff you had made a 998 offer which was rejected by the defendant and the net verdict and recoverable costs exceeded the offer amount then you would be awarded your expert costs and interest.

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