Another blow to personal injury plaintiffs

As we discussed in a newsletter that we sent out at the end of last year, the California Supreme Court has had before it an issue of great significance in personal injury cases, namely the proper measure of damages for past medical expenses. Unfortunately, the Court has now spoken on the issue and issued a resounding setback for plaintiffs. See Howell v. Hamilton Meats & Provisions, Inc., 2011 DJDAR 12533 (issued August 18, 2011).

The specific issue at hand was whether a plaintiff may recover: (i) the total dollar amount that his providers billed for treating his injuries or (ii) the discounted amount that the providers accepted from the plaintiff’s health insurer (or government program). After earlier Court of Appeal opinions had tilted this issue in favor of defendants, three different Court of Appeal opinions over the past two years had gone the other direction. Obviously, the issue was ripe for decision by the Supreme Court.

Plaintiff’s lawyers had some reason for optimism, as the author of one of the favorable Court of Appeal opinions was recently-appointed Supreme Court Chief Justice, Tani CantilSakauye. Unfortunately, however, elevation to the high court has somehow changed the Chief Justice’s views on this subject 180 degrees, as she joined the majority opinion in Howell.

The Court of Appeal in Howell had concluded that the discounted rates negotiated by health insurers are a benefit that plaintiffs pay for with their health insurance premiums, and, therefore, allowing a tortfeasor to benefit from the reduced rates would violate the collateralsource rule. The Supreme Court disagreed with this reasoning, concluding that: (i) a plaintiff who is insured never really “incurs” the “full price” for the health care that he obtains to treat his injuries because his insurer has previously negotiated a discounted rate with the providers and (ii) the undiscounted rates charged by health care providers do not reflect the reasonable value of their services because they are routinely reduced, both through agreements with insurers and through voluntary write-offs for uninsured patients. The latter conclusion, while perhaps not intended as such, is an extraordinary indictment of our health care system. According to the highest court of our country’s most populous state, health care providers routinely overcharge for their services.

The Supreme Court unfortunately left open an issue of great significance – whether a plaintiff may introduce evidence of the total, undiscounted bills before the jury, subject to a posttrial reduction of the awarded medical bills by the trial judge to reflect the amounts actually paid by health insurance. That has been the accepted practice since the Court of Appeal opinion in Greer v. Buzgheia (2006) 141 Cal.App.4th 1150, was issued. The significance of Greer is that the plaintiff can use the larger medical bill number as an “anchor” for a larger award of general damages.

The Supreme Court held that the undiscounted figure is not relevant on the issue of past medical expenses and that the amount paid by insurance is admissible to prove the measure of damages for past medical expenses. However, because the defendant had conceded that the plaintiff was entitled to present the undiscounted medical bill number to the jury, the Court did not reach the issue of whether the larger, undiscounted figure might be relevant “on other issues, such as noneconomic damages or future medical expenses.” It is difficult to see how both past medical bill numbers could be presented to the jury without leading to confusion or, worse from a plaintiff’s standpoint, inadvertently disclosing to the jury the fact that the plaintiff’s medical bills have been paid by insurance.

Given the Supreme Court’s conclusion that the undiscounted number does not reflect the reasonable value of medical services and is not an amount that the plaintiff has “incurred,” it doesn’t take much of an additional step to conclude that that number has no relevance at trial whatsoever. Unfortunately, confusion will rein in the trial courts until and unless the Supreme Court speaks to that specific issue. What is clear from Howell is that the plaintiff now bears the burden of determining, and presenting to the jury, the amount of medical bills paid by insurance, because that now represents the only correct measure of damages for past medical bills.

The negative impact of Greer on plaintiffs will obviously vary from case to case, depending upon the amount of the past medical bills, the amount of other damages (such as loss of earnings and future medical expenses) and the type of health insurance plan (if any) that the plaintiff has. On an aggregate basis, however, it is clear that Greer represents a huge windfall for insurance companies and self-insured defendants, at the expense of injured consumers.