California’s highest court has ruled that accident plaintiffs may only recover economic damages equal to the amount paid by their insurer and not the higher amount billed. The opinion stated that “the negotiated rate differential is not a benefit provided to the plaintiff in compensation for his or her injuries.”
Rebecca Howell, injured in a car crash involving Hamilton Meats & Provisions, filed suit. During trial, Hamilton moved to exclude evidence of bills not paid by the plaintiff or her health insurer because some of the bills were reduced prior to payment, as a result of an agreement between Howell’s health insurer and contracted providers. The trial court denied the motion and allowed the full amount of the medical treatment billed, $189,978.63 in at trial. The jury awarded the plaintiff the same amount as damages for her past medical expenses.
Hamilton filed a post-trial motion seeking a reduction of the amount “written off” by the plaintiff’s medical providers. Included as evidence were declarations from two providers outlining the write-offs, pursuant to the agreement between the provider and Howell’s health insurer. The providers stated they had not filed liens and were not pursuing collection of the amounts written-off.
The trial court granted Hamilton’s motion, reducing the jury award by $130,286.90. The Court of Appeal reversed the reduction order, holding that it violated the collateral source rule.
The plaintiff argued that because she signed patient agreements with her providers, she incurred full liability for the amount originally billed. The Supreme Court, however, found that the plaintiff was never billed the full amount, so she could not recover it as damages. The high court also found that the collateral source rule was inapplicable.
The high court reversed the Court of Appeal judgment and held that an injured plaintiff with medical expenses paid through a health insurer may only recover economic damages equal to the amount paid by his or her insurer.
“We hold no such recovery is allowed, for the simple reason that the injured plaintiff did not suffer any economic loss in that amount,” the court said.
The court further held that evidence of payment in an amount less than the billed amount is admissible at trial.
Finally, the high court opined that when a trial jury has heard evidence of the amount accepted as full payment by the medical provider, but has awarded a greater sum as damages for past medical expenses, the defendant may move for a new trial on grounds of excessive damages. Should a new trial be granted, the plaintiff will have the option of accepting the reduced damages or undertaking a new trial.
The Association of California Insurance Companies (ACIC) participated in an amicus brief with other insurance trade associations on behalf of the defendant, in order to remind the court of previous decisions prohibiting “unjust enrichment.”
“This ruling will ensure that parties receive damages based upon the actual amount paid to a medical provider, instead of a random inflated price that was never paid to anyone. If this case had been decided for the plaintiff, property-casualty insurance companies would have been required to pay damages based on inflated costs that were never incurred and this could have caused auto or homeowners insurance premiums to increase,” said Armand Feliciano, ACIC vice president, in response to the decision.
The case is Rebecca Howell v. Hamilton Meats & Provisions.
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