It is likely that an issue that is very important to personal injury victims is headed to the California Supreme Court. The Court of Appeal in San Diego recently decided a case, Howell v. Hamilton Meats & Provisions, which made a decision that affects the cases of most accident victims. It will turn the tide of past court decisions which have been used by insurance companies to unfairly reduce the compensation paid to accident victims. This is basically a battle over whether accident victims will get the benefit of having the foresight of securing their own health insurance or if defendants and their insurers will get that benefit.

Damages for Medical Expenses

State law allows personal injury victims such as those who are hurt in car accidents to seek damages for all the harm someone else inflicts on them. One of the “measures of damage” suffered by a personal injury plaintiff is the reasonable value of medical expenses necessarily incurred by the plaintiff to treat the injuries caused by the accident. There has long (predating the founding of the United States) been a legal principle that a person who caused injury cannot take advantage of the fact that the accident victim has taken steps to protect himself from the kinds of expenses that are damages from the accident. An important example of such a “collateral source” is the health insurance that people buy through their employment, through Medicare, or on their own, or have because they qualify for a public benefit like Medicaid.

A common relationship between health insurance companies and health care providers -- especially those who are “in network” providers to members of an HMO or who have PPO insurance -- is an agreement by which the health insurance company funnels its "insureds" to the provider in exchange for the provider's agreement that it/he/she will accept the negotiated dollar amounts for the services rendered. These amounts are always less than the amounts customarily charged by the provider, therefore represents an amount less than what the provider feels is the reasonable value of its services in giving treatment to the patient. The reduction in the price is the value that the provider puts on the increased certainty more of the plan's members and those insured will choose (or be forced) to obtain care from that provider. Everyone wins: the insured patient gets the coverage he is looking for, the provider has increased business, and the insurance company saves money on claims.

However, there is a long-standing tug of war over the money which should be paid to an injured person as compensation for his injuries. One of the areas of conflict has arisen because of these contracts between health insurance companies and providers. Defendants and their insurance companies argued that if a medical provider has agreed to accept an amount of money less than its full bill, the calculation of damages for the accident victim should also be reduced by that discounted amount. Their argument has been that if the provider has agreed to accept the lesser amount, the accident victim has not “incurred” the full amount of the bill and, therefore, it would be unfair to give the accident victim the full amount of the bill as damages. The plaintiffs have argued that the collateral source rule is still a part of the law in California, the discounted price is a benefit which the plaintiff paid for with his premiums to his health insurance company, and the injured plaintiff should get the benefit of that contract rather than the defendant.

For many years, California trial court judges have been bound by two past court decisions which adopted the defendants' arguments on this issue. As a result, judges were obligated to reduce the portion of a successful plaintiff's judgment for medical expenses by any contracted-for discount. But the issue has taken a different turn with the Howell case, brought by a San Diego woman who was injured in a serious car accident in California when a truck made an illegal turn and struck her car. The trial judge had reduced her compensation for past medical expenses to $60,000 from the jury's award of medical expenses of $190,000 for spinal fusion surgeries and related treatment. But an appellate court last week ruled that the truck driver's employer must pay the full amount of the medical bills, which is $190,000. The court recognized the supremacy of the collateral source rule, and permitted the accident victim to keep the benefit of her foresight and expense for obtaining health insurance.

Injury Victims Should Not be Shortchanged

In my opinion, the Appellate Court made the right decision. This is nothing but a clear case of how insurance companies make money by shortchanging injured victims. Defense attorneys argue that it is unfair for the full damages are awarded to victims, and that the cost of full compensation will eventually be passed on from the insurance companies to consumers. That's a pathetic excuse!

Health insurance companies get those "discounts" from hospitals because the victims have been good about getting health insurance and paying their premiums on time. Why should the liability insurance company, the one representing the at-fault party, benefit from the victim's good decisions? It's not fair to injured victims who are basically denied their right to fair compensation. I sincerely hope that if the California Supreme Court decides to review this case it will uphold the Appellate Court's decision and rule in favor of the injured victims.

The BISNAR|CHASE personal injury law firm is not representing any of the parties mentioned in this article at the time the article was posted. Our information source is cited in the article. If you were involved in this incident or a similar incident and have questions as to your rights and options, call us or another reputable law firm. Do not act solely upon the information provided herein. Get a consultation. The best law firms will provide a free consultation. We provide a free, confidential consultation to not at fault persons named in this article. The free consultation offer extends to family members as well.

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