August 18, 2011
Today the California Supreme Court in Howell v Hamilton Meats Case No. S179115 decided that an injured party may only recover as 'damages' the amount actually paid for past medical care and services. This is an important and long awaited decision. It is the Supreme Courts reconciliation of two well accepted legal notions.
The first being, that a wrongdoer/defendant is not entitled to have his obligation to the injured party 'reduced' by the injured parties prudence in procuring health insurance. This is known as the Collateral Source Rule. Thus, a defendant in an injury case was not entitled to reduce the medical bills incurred by the injured party to the amount actually 'paid' by the health insurer in full satisfaction of the bill.
The second notion is that an injured party is entitled to recover only "damages actually incurred". Almost always, a private health insurer has renegotiated with hospitals and doctors for services to be provided to their patient/insured. This sum is most often much less than the amount billed. This is called the 'rate differential' or 'negotiated discount'. The Supreme Court ruled that the Collateral Source Rule precludes any mention of 'who' paid the medical bills to the jury however the plaintiff CAN NOT recover the 'rate differential' as in their view the injured party has not been damaged beyond the amount paid by his health insurer.
This decision is a billion dollar windfall to liability insurers and will serve to 'devalue' injury cases for consumers. From the consumer/injured party perspective this decision fails to recognize that the injured party has paid 'health insurance' premiums for years and built into those premiums are expenses that prompt the hospitals and doctors to discount the bill to private insurers.
Indirectly, in this way, the injured party has indeed been 'damaged' by the amount actually 'billed' for the medical service. Particularly , the health insurers by contract agree to commit thousands of patients to the doctor or hospital, agree to pay the bills within 3 days, agree to promote the doctor or hospital, etc. and certainly have built into premiums to account for these 'expenses' of doing business. The Supreme Court disagreed and refused to consider the details of the bargain between the health insurer and the doctor/hospital.
O'Mara & Padilla, trial lawyers specializing in personal injury and wrongful death. We invite your call to answer any questions at 858.481.5454.