Howell v. Hamilton Meats Decision Upheld 6-1 by Supreme Court, August 18, 2011

BREAKING NEWS

The long awaited Supreme Court decision in the Howell v. Hamilton Meats (Hanif) case presents a major win for the defense, insurance companies, businesses and California consumers. The issue of whether the plaintiff could recover the total amount of her medical bills from medical care providers or the much lesser amount that her health insurance actually paid was decided today. The Supreme Court interpreted the Collateral Source Rule to only allow injured plaintiffs to recover what was actually paid for medical services, not the amount billed by the health providers which is typically a much larger amount. The Supreme Court’s ruling has tremendous impact on the defense and has ultimately saved the California insurance industry, businesses and consumers over $3 Billion dollars per year.

This is the Supreme Court’s introduction:

When a tortiously injured person receives medical care for his or her injuries, the provider of that care often accepts as full payment, pursuant to a preexisting contract with the injured person’s health insurer, an amount less than that stated in the provider’s bill. In that circumstance, may the injured person recover from the tortfeasor, as economic damages for past medical expenses, the undiscounted sum stated in the provider’s bill but never paid by or on behalf of the injured person? We hold no such recovery is allowed, for the simple reason that the injured plaintiff did not suffer any economic loss in that amount. (See Civ. Code, §§ 3281 [damages are awarded to compensate for detriment suffered], 3282 [detriment is a loss or harm to person or property].)

The collateral source rule, which precludes deduction of compensation the plaintiff has received from sources independent of the tortfeasor from damages the plaintiff “would otherwise collect from the tortfeasor” (Helfend v. Southern Cal. Rapid Transit Dist. (1970) 2 Cal.3d 1, 6 (Helfend)), ensures that plaintiff here may recover in damages the amounts her insurer paid for her medical care. The rule, however, has no bearing on amounts that were included in a provider’s bill but for which the plaintiff never incurred liability because the provider, by prior agreement, accepted a lesser amount as full payment. Such sums are not damages the plaintiff would otherwise have collected from the defendant. They are neither paid to the providers on the plaintiff’s behalf nor paid to the plaintiff in indemnity of his or her expenses. Because they do not represent an economic loss for the plaintiff, they are not recoverable in the first instance. The collateral source rule precludes certain deductions against otherwise recoverable damages, but does not expand the scope of economic damages to include expenses the plaintiff never incurred…

For more detailed information or to discuss the impact of this decision on our clients, please contact Timothy M. White directly. You may also click here to read the full Supreme Court opinion which was drafted by Justice Werdegar in a 6-1 vote.