Quick answer: CCP 998 strategy issues usually turn on duty, timing, causation, damages, and evidence preservation. This CCP 998 strategy guide connects the O’Malley result to the legal, medical, and trial-strategy questions families and referring attorneys are most likely to research. If you are evaluating CCP 998 strategy after a catastrophic injury, use this CCP 998 strategy resource as a starting point before speaking with qualified counsel.
Primary source: California CCP 998.
A strategy note for plaintiff’s counsel
In O’Malley v. Diamond Resorts, an Orange County jury returned a $60 million+ verdict in January 2022. By the time the Fourth District Court of Appeal unanimously affirmed in November 2023, Diamond Resorts paid out more than $100 million.
A material piece of that gap — roughly $30 million — came from a single piece of paper served before trial: a statutory offer to compromise under California Code of Civil Procedure § 998. The rest came from statutory post-judgment interest accruing throughout the appeal.
This page is about how to use § 998 the way it was used in O’Malley: as a deliberate, case-shaping instrument, not as a procedural afterthought.
What § 998 actually does
California Code of Civil Procedure § 998 authorizes either party to serve a statutory offer to compromise. The mechanics:
- The offer must be served at least 10 days before trial (and at least 30 days before any earlier trial date for some offers)
- The recipient has 30 days to accept (or until the start of trial, whichever is earlier)
- The offer expires if not accepted
- The terms of the offer are not admissible at trial
If the recipient rejects (or fails to accept) the offer and then fails to obtain a more favorable result at trial, § 998 imposes cost-shifting consequences. For a plaintiff whose offer the defendant declined, when the verdict exceeds the offer, the plaintiff can recover:
- Pre-judgment interest at the statutory rate of 10% per annum running from the date of the offer (Civ. Code § 3291 in personal injury actions)
- Expert witness fees the court would not otherwise award
- Costs that would not otherwise be recoverable
In a catastrophic case, the pre-judgment interest component dwarfs the expert fee component. On a $60M verdict, ten percent simple interest from the offer date forward, over a multi-year period, is a number that scales fast.
The math in O’Malley
The mechanics that produced the additional $30 million in O’Malley break down approximately as follows:
| Component | Mechanism | Effect |
|---|---|---|
| Pre-judgment interest under § 3291 | 10% simple interest from § 998 offer date through judgment | Several years of interest on the verdict principal |
| Expert witness fees | Statutory shifting under § 998 | Substantial in a case with multiple medical, life-care planning, and hospitality experts |
| Recoverable costs | Shifted under § 998 | Deposition, trial exhibit, and trial-prep costs |
| Total enhancement | ~$30 million added to the verdict |
Then, on top of that:
| Component | Mechanism | Effect |
|---|---|---|
| Post-judgment interest under CCP § 685.010 | 10% simple interest on the entire unpaid judgment during appeal | ~22 months of interest on roughly $90M principal |
| Final paid recovery | $100M+ |
The defense’s decision to reject the § 998 offer — and then to appeal — was, in retrospect, the most expensive litigation decision Diamond made.
When to serve the § 998 offer
The optimal timing is case-specific, but the framework is consistent:
Serve early enough that the interest clock has time to run. A § 998 offer served two weeks before trial generates interest for the time between offer and judgment plus appeal, but a § 998 offer served eight months before trial generates interest from that earlier date forward. In a case that will likely go up on appeal, every additional month is real money.
Serve after the key liability evidence is locked down. The defendant should be in a position to evaluate the offer realistically. Premature offers — before depositions, before expert disclosure, before the corporate designee testimony — are easy to reject without consequence in the defendant’s risk analysis.
Serve after a meaningful inflection point. A favorable ruling on a key motion, a particularly damaging deposition, or the disclosure of an unexpectedly strong expert report all create moments where a § 998 offer is harder to dismiss as posturing.
Do not serve so close to trial that the defendant has a credible “insufficient time to evaluate” defense. Courts have generally enforced § 998 timing, but the offer should be clearly within the window and clearly capable of being evaluated.
Setting the number
The defining tension in § 998 strategy is between making the offer low enough that the defendant should accept it and high enough that an above-offer verdict is realistically achievable. The number must be:
1. Below the realistic verdict range. If the offer is anywhere near the high end of what a jury might award, the cost-shifting is unlikely to trigger. The whole point is to obtain a number that the defendant should rationally accept but probably won’t.
2. Above the defendant’s anticipated trial cost. If the offer is below what the defendant expects to spend on trial, the defendant has no economic incentive to accept regardless of verdict probability.
3. Defensible against a post-trial challenge. Defendants frequently challenge § 998 offers as not made in good faith. The offer should be supportable as a reasonable estimate of the case’s value as of the offer date.
4. Specific and unconditional. Vague offers, conditional offers, or joint offers to multiple defendants with no apportionment have been held invalid in published California cases.
In a catastrophic case, the offer is often set at a point well above the defendant’s likely opening settlement bid but well below the plaintiff’s likely best-case verdict. That gap is the trap.
Drafting traps to avoid
Joint offers to multiple defendants. A § 998 offer made jointly to multiple defendants is invalid unless each defendant can individually accept. Steinfeld v. Foote-Goldman Proctologic Medical Group, Inc., 50 Cal. App. 4th 1542 (1996). In a joint-employer hotel case, this means separate § 998 offers to the hotel and the staffing contractor, with separate numbers.
Conditional offers. Offers conditioned on release of unrelated claims, on non-disclosure, or on terms beyond payment of money have been held to fail the § 998 specificity requirement. Keep the offer to a dollar amount and a standard release.
Apportionment problems. In a multi-plaintiff case (e.g., injured spouse plus consortium spouse), each plaintiff’s offer should be separately stated and capable of separate acceptance.
Wrong interest start date. The § 3291 interest clock starts on the date of the offer, not the date of filing. Track the offer date carefully — and serve it with proof of service, retained.
No deadline language. While § 998 supplies a default 30-day acceptance window, including the deadline in the offer text avoids ambiguity.
What the defense will argue post-verdict
When the plaintiff moves to add § 998 enhancements to the judgment, expect:
“The offer was not made in good faith.” This is the universal challenge. The plaintiff’s response is to document, with the offer file, the basis for the number — comparable verdicts, medical specials, projected future medicals, prior settlement discussions, the defense’s own pre-offer evaluations if obtainable. A § 998 offer set in line with a defensible damages model is rarely struck down for lack of good faith.
“The verdict was not ‘more favorable.’” This is a math argument turning on what counts toward the comparison. Generally, the verdict principal is compared to the offer principal. The defense may argue that certain damages categories should be excluded from the comparison; published case law generally rejects these arguments.
“The interest calculation is wrong.” The defense will press for the latest possible start date, simple rather than compounded interest, and exclusion of certain damages categories from the interest base. Plaintiff’s counsel should bring a calculation supported by the statutes and the offer date.
“Expert fees are not reasonable.” Courts have discretion on the reasonableness of expert fees. Have the expert invoices clean and supportable.
What § 998 strategy meant in O’Malley
In O’Malley, the § 998 offer was served while the case was in active pre-trial preparation. Diamond Resorts declined. The case went to trial. The jury came back with a verdict in excess of the offer. The § 998 mechanics kicked in. The judgment grew by approximately $30 million as a result.
Then Diamond appealed. For the next twenty-two months, post-judgment interest under CCP § 685.010 accrued at 10% per year on the entire unpaid judgment. Diamond had the right to appeal, but the cost of doing so was running daily.
When the Fourth District Court of Appeal unanimously affirmed in November 2023, the total amount owed had grown by tens of millions more. The final paid recovery exceeded $100 million.
The lesson is direct: in any catastrophic case headed for trial and likely appeal, § 998 strategy should be a board-level decision made early. The mechanics of the statute do the rest.
Refer or co-counsel
The Homampour Law Firm has used § 998 strategy to drive eight- and nine-figure recoveries in California catastrophic injury cases, including O’Malley v. Diamond Resorts — a $60 million jury verdict that became a $100 million+ paid judgment after § 998 enhancements and a unanimous Fourth District affirmance. We accept referrals and co-counsel arrangements. Contact our office to discuss.
Related pages
- The $100M O’Malley case study (hub)
- Negligent undertaking after O’Malley
- Defeating summary judgment in delayed-care cases
- Medical causation in increased-harm cases
- Joint employer liability against hotel staffing contractors
Frequently Asked Questions
What is a CCP § 998 offer in California?
CCP § 998 authorizes either party to a California lawsuit to serve a statutory offer to compromise. If the recipient rejects the offer and then fails to obtain a more favorable result at trial, cost-shifting consequences attach — including pre-judgment interest, expert witness fees, and recoverable costs that wouldn’t otherwise be awarded.
How much pre-judgment interest does § 998 trigger?
Under Civil Code § 3291 in personal injury actions, pre-judgment interest runs at the statutory rate of 10% per annum simple interest from the date of the § 998 offer. On a multi-million-dollar verdict held over multiple years, this is a substantial number. In O’Malley v. Diamond Resorts, § 998 added approximately $30 million to the final judgment.
When should a plaintiff serve a § 998 offer?
Early enough that the interest clock has time to run, but after key liability evidence has been locked down so the defendant can evaluate the offer realistically. Strategic timing — after a favorable ruling, after a damaging deposition, after a strong expert disclosure — produces the best outcomes.
Why are joint § 998 offers to multiple defendants risky?
A § 998 offer made jointly to multiple defendants is invalid unless each defendant can individually accept (Steinfeld v. Foote-Goldman Proctologic Medical Group, Inc., 50 Cal. App. 4th 1542). In a joint-employer hotel case, this means separate offers with separately stated dollar amounts to the hotel and the staffing contractor.
How does post-judgment interest interact with § 998?
After judgment, post-judgment interest under CCP § 685.010 accrues at 10% simple interest per year on the unpaid amount. If the defendant appeals and loses (as Diamond did in O’Malley), interest runs throughout the appellate period — adding tens of millions of dollars on a nine-figure judgment over a typical 18-24 month appeal.
Information only: This case study is not legal or medical advice. Case deadlines, duties, causation, damages, and strategy depend on the specific facts and should be reviewed by a qualified attorney.