Howell Limits Liability for Medical Special Damages
by: David Melton and Lindsay Goulding
In a much anticipated opinion, the California Supreme Court held today that injured plaintiffs may only recover the amounts their private health insurance actually paid to medical providers as payment in full.
In Howell v. Hamilton Meats & Provisions, the Supreme Court explained that recoverable medical expenses must be both incurred and reasonable. Where a plaintiff’s insurance company has negotiated a discounted rate for medical services rendered on the plaintiff’s behalf, it cannot be said that the plaintiff incurred the value of the amounts billed for medical care. Rather, the plaintiff is only entitled to the amounts actually paid by the health insurer and accepted as payment in full by the health care provider. The Court also explained there is no distinction between private health care and Medi-Cal. In both situations, the insurer has negotiated discounted rates with medical providers, the difference of which no one is obligated to pay.
Any argument regarding the potential windfall to a tortfeasor was rejected by the Court as well. The Court explained that “fortuity is a fact in life and litigation,” and that a tortfeasor should not be punished based on the injured party’s particular circumstance. The Court acknowledged the notion that “identical injuries may have different economic effects on different victims,” and held that a defendant should not be ordered to pay damages for an economic loss the plaintiff did not actually suffer merely because a different defendant may have to compensate a different plaintiff who did actually suffer such a loss.
In line with this conclusion, the Supreme Court also held that all evidence of the amounts actually paid by private insurers is admissible at trial and subject to pre-trial discovery. However, the court left open the question of its relevance or admissibility on other issues, such as non-economic damages or future medical expenses.
Howell will have a major impact on all personal injury and wrongful death lawsuits in California. For plaintiffs, this means their economic recovery may not be as substantial as it was just a few weeks ago. For defendants, this will lead to lower economic damage awards and the potential for lower general damage awards. If you would like to know more about how Howell will impact your case, please call our office.