Here at San Francisco Injury Law Answers, we have previously addressed whether a personal injury victim is entitled to the actual charges for past medical care in a personal injury trial (see The Hanif/Nishihama Debate Continues).  And that issues is currently before the California Supreme Court in Howell v. Hamilton Meats & Provisions Inc., 179 Cal.App.4th 686.

A worker pulls records of past medical charges billed in a personal injury case

But San Francisco’s 1st District Court of Appeal last Thursday put forward their two-cents in this debate with their ruling in Yanez v. SOMA Environmental Engineering Inc., A123893.  In this case the Appeals Court ruled that the the trial court erred in reducing a jury’s award for past medical damages to what had actually been paid to the personal injury victim’s doctors by her insurance company.

The 1st District reasoned that, 1) the collateral source rule demands this outcome at least as it is applied in a private insurance situation, and 2) within a private insurance context the reasonable value of medical services (what a personal injury victim is entitled to) cannot simply be discerned by looking at what her insurance company paid.

Now, if you are a personal injury victim who has suffered injuries in a car accident, a trucking accident, from a defective product, or even in a mild traumatic brain injury case you may wonder – why do I care about this?  Here is why?

When a personal injury case goes to trial, often a jury will analyze the amount to award for pain and suffering, or what is known as general damages, in consideration of, among other factors, past medical damages.  So, if your past medical damages are high, the chances are good that the damages awarded by the jury for pain and suffering will be high as well.  Or at least general damages will be higher than they may have been if you medical damages were lower.

And then of course there is the obvious – insurance companies would simply prefer to pay less for the past medical care that was rendered to the personal injury victim due to the negligence of their insured.  It’s really pretty simple.

But if the court had followed the arguments of the defense in this case, a windfall for negligent defendants would have been served up on a silver platter.  In other words, you are a responsible person; you have good health insurance or auto insurance with a substantial medical pay supplement.  So, why should the person or entity that caused your personal injuries benefit from the years of premiums that you have paid?  They shouldn’t.  And, in a nut-shell, that is one of the reasons the court in Yanez ruled as they did.

Let’s hope the California Supreme Court has as little interest in providing personal injury defendants with a windfall as San Francisco’s 1st District Court of Appeal.

Let’s say that you are involved in a personal injury accident in San Francisco.  Let’s also assume that like thousands of other folks in the San Francisco Bay Area you have private health insurance (mostly likely through your workplace or employer).

So, you go to the hospital for your injuries, say San Francisco General – and the good folks there send out bills for one amount (what was charged) but accept as payment from your insurance company another amount (what was paid).

If you go to trial on your personal injury case, which amount do you get at trial (assuming you win of course) – what was charged or what was paid?

Well, the Fourth Appellate District of California recently answered that question: the jury is able to award the injury victim what was charged.  And assuming they do, you, the injury victim, are entitled to obtain without reduction what was charged by your hospital.

Now, the California Supreme Court has decided to hear this case and decide this issue once and for all (let’s hope).

The case on review to the Supreme Court is Howell v. Hamilton and the scenario that I outline above is one that has caused an endless debate between personal injury attorneys (not just in San Francisco but across California) and insurance defense counsel.

Personal injury attorneys, like myself, want the jury to hear, be able to award, and the injury victim to be entitled to, what was charged.  And insurance defense attorneys want the injury victim to be entitled to what was paid.

The Court in Howell added their two cents by examining the collateral source rule, its application, and fully evaluating what resides in the gap between what is charged by a hospital to an injury victim and what is paid by the injury victim’s health insurance company for her medical care.

In other words, what does the difference between what was charged and what was paid represent? The Court answered – a benefit within the meaning of the collateral source rule.

To put this as simply as possible: in California, the collateral source rules states that collateral source payments such as insurance or disability are irrelevant in a personal injury trial.  The bad guys don’t get the benefit of the injury victim being responsible and having insurance.  So, a jury is not allowed to hear about collateral source benefits like health insurance and an award by a jury to an injury victim is not reduced because of such payments for her medical treatment.

When a hospital negotiates with a health insurance company and agrees to take less that what it would normally charge for its services, it is not out of the goodness of its heart.  It is because it is getting something for that reduction – a certain volume of business, faster payments, advertising, all sorts of things.  Those things – those in-kind benefits – are benefits within the meaning of the collateral source rule.  And when a hospital agrees to accept as full payment the negotiated rate – meaning the injury victim doesn’t owe any additional amount – that too is a benefit within the meaning of the collateral source rule.

So, the Court ruled that you can’t reduce the plaintiff or injury victim’s award by the difference between what was charged and what was paid because that difference is a collateral source benefit.  So there!

But the California Supreme Court gets the last word.  A decision is expected later this year.