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California Supreme Court Rules Against Personal Injury Plaintiffs
The California Supreme Court narrowed the collateral source rule and ruled that defendants in personal injury lawsuits should be able to reap the benefit of a plaintiff having invested in health insurance.
November 10, 2011 /Law Enforcement PR News/ -- In August 2011, the California Supreme Court issued its opinion in Howell v. Hamilton Meats & Provisions, Inc. The court narrowed the collateral source rule for California and ruled that defendants in California personal injury lawsuits should be allowed to reap the benefit of a plaintiff having wisely invested in health insurance.
The Collateral Source Rule
Generally, the collateral source rule (or collateral source doctrine) means that any compensation or damages received by the plaintiff, that was paid by another source other than the defendant, cannot be offset from what the defendant owes. This usually applies in cases where the plaintiff has received a benefit from medical insurance or workers' compensation.
Background of the Case
Rebecca Howell, a forty-eight-year-old former school teacher and lifelong athlete, brought suit to recover for injuries she sustained after a driver of a Hamilton Meats truck made an illegal U-turn and hit her car. Howell needed two back surgeries as a result of the accident and incurred $189,978 in medical bills.
Howell had medical insurance. Like many health insurance companies and health care providers, the hospital that treated Howell had negotiated a contract with Howell's insurance carrier. The hospital offered to pay reduced rate to the insurance company in exchange for being paid cash in a timely manner and for the number of patients that would come to the hospital because it was in the health insurance company's network. As a result of the contract between the hospital that treated Howell and the health insurance company, the insurance company ended up paying $59,691 to the hospital for Howell's care.
A jury awarded Howell compensatory damages, including payment for medical expenses at the hospital's normal billing rate. Hamilton Meats made a motion to reduce the jury's award for medical expenses to the amount that Howell's insurance company actually paid, and the judge granted it. Howell appealed and the Court of Appeals reversed.
The Court's Decision
The California Supreme Court reviewed the case and reversed the Court of Appeals. The court reasoned that the plaintiff could not recover the full amount of what the medical services would have cost without the insurance company's reduced rate because the plaintiff never actually incurred those expenses. The court said that the collateral source rule only applied to expenses that the plaintiff would have otherwise collected from the defendant; since the plaintiff never had to pay the full rate of her medical treatment, she did not lose anything and could not recover the full amount.
Criticisms of the Decision
Some feel that the outcome of this decision simply awards defendants for the prudence of injured plaintiffs. If a person has the foresight to obtain medical insurance and responsibly pays monthly premiums, and then becomes injured by the negligence of another and needs medical care, he or she is actually in a worse situation than someone without insurance. Both the insured and the uninsured parties could sue the wrongdoer, but the one with insurance could only recover the reduced amount that the insurance company pays for the care - after paying insurance premiums for years - and the one without medical insurance would recover the full cost of care, never having had to pay an insurance premium.
Regardless of a person's stance of this issue, it has reached the final chain of command. The California Supreme Court's decision, for now, will stand.
Article provided by Campbell, Lauter & Murphy
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