HALLELUJAH FOR HOWELL(OR HOW THE HOWELL HOLDING HELPS PERSONAL INJURY DEFENSE) By: Mark S. Newman
One of the most important Supreme Court decisions in quite some time was issued by the California Supreme Court on August 18, 2011. The decision is Howell v. Hamilton Meats & Provisions, Inc. (2011 S.O.S. 4563). Following the general rationale of the appellate court holding in Hanif v. Housing Authority (1988) 200 Cal.App.3d 635, the Supreme Court has ruled that the amount accepted as full payment by medical providers from a private insurer of the plaintiff establishes the upper limit of recoverable medical expenses. THE ISSUE When an injured plaintiff receives medical care for injuries and the providers accept pre-negotiated amounts from the plaintiff=s insurer for the treatment received, is plaintiff entitled to an award of medical expenses greater than that accepted by the provider from plaintiff=s insurer? In other words, is an injured plaintiff entitled to damages measured by the billed amount for services as opposed to the amount accepted by the provider for services rendered? SUPREME COURT HOLDING The core ruling of the California Supreme Court in the Howell case is that the A. . . plaintiff may recover no more than the medical providers accepted in full payment for their services. . .@ (p. 23 of the slip opinion). In arriving at this conclusion, the Court squarely rejected application of the collateral source rule to such circumstances. POTENTIAL EFFECTS OF RULING The most direct and obvious effect is to limit plaintiffs= special damages for medical expenses to the amount actually accepted by the medical provider for the services rendered. The direct ruling by the Court, however, is not the end of potentially significant ramifications of this decision. In reported decisions prior to Howell, an approach was developed to implement Hanif principles by presenting to the jury the billed amount of medical expenses and then, by post-trial proceedings, reducing any jury award for past medical expenses to the amount accepted by the medical providers. By squarely eliminating the application of the collateral source doctrine to these circumstances, it can be persuasively argued that the amount accepted by the providers should be the only figures submitted to a jury in the first instance. The consequent reduction in Ablackboarded@ specials is likely to have a significant and beneficial impact on general damages awards, which are often linked, in varying degrees by a jury. It should be noted that the Howell Court expressly reserved any decision with respect to the application of the rule to evidentiary issues and specifically noted with favor the Aevidentiary aspect@ of the collateral source rule that precludes evidence that payments to medical providers were made in whole or in part by an insurer. There does not appear to be any reason that evidence of projected future medical expenses should not be measured in terms of the amount likely to be accepted for such treatment from an insurer. The argument may be complicated, however, to the extent that future medical care is attenuated over several years as coverage for such future medical procedures or treatment may become more conjectural. END RUNS One potential argument or tactic to avoid the application of the Howell decision was directly addressed by the Court. That method was by virtue of the agreement signed by the plaintiff with various medical providers where plaintiff agreed to pay the providers Ausual and customary charges@ for the medical care she was to receive or Aany part of the physician=s fee@ that the plaintiff=s insurance did not pay. The Howell Court held that, so long as the medical care provider was bound by prior agreement to accept the amount paid by the plaintiff=s insurer, any such agreement executed by the plaintiff did not constitute an additional expense actually incurred. Therefore, the differential between the negotiated rate between provider and insurer and the billed rate for services rendered remained outside the collateral source rule. The Court noted the potential disparity between an insured plaintiff and a plaintiff who was uninsured for medical coverage and who may, given the appropriate circumstances, demonstrate an obligation to pay the full rack rate. There have been instances where plaintiffs have gone outside their coverage to seek medical treatment which may result in evidence being admitted of the rack rate. However, it also seems that such activities would run afoul of plaintiff=s duty to mitigate damages. Lastly, there may be issues of whether plaintiff is entitled to claim as damages health insurance premiums applicable to the medical treatment received as a result of a defendant=s conduct. CONCLUSION The Howell decision, at the very least, supports a post-trial reduction of any jury award for past medical expenses that exceeds the amount actually accepted by medical providers. The rationale of the decision supports a powerful argument that the billed amount for such services is irrelevant and should not be presented to a jury at all. Rather, the decision supports the contention that the only evidence of past medical expenses should be the amount accepted by the providers. If that approach is adopted, significant reduction in general damages for pain and suffering can generally be expected as a result of the reduction in Ablackboarded@ specials. |
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