In what's being hailed as a favorable ruling for insurance companies, the California Supreme Court recently ruled that accident victims who bring suit for damages may only recover the amount negotiated between an insurer and healthcare providers, and not the actual costs for treatment billed.
In Howell v. Hamilton Meats & Provisions, Plaintiff Rebecca Howell brought suit seeking compensation for injuries she suffered after a Hamilton Meats truck made an illegal U-turn and struck her car. Howell underwent spinal fusion surgery and required additional treatments and rehabilitation. The hospitals that treated her submitted $189,978.63 in medical bills to her insurer, PacifiCare. However, they agreed to accept $59,691 instead.
This compromise highlights a growing trend of health care providers offering substantial discounts to insurers in exchange for continued business and prompt payments.
The trial court based Howell's damages on the reduced amount, and an appeals court reversed, relying on California's collateral source rule that can bar the reduction of a plaintiff's damages if he or she received a benefit from an outside source. Essentially, the court ruled that Howell should not be penalized simply because her insurer negotiated a reduced payment.
The Supreme Court disagreed, voting 6-1 to overturn the appeals court ruling. In the majority opinion, Justice Kathryn Mickle Werdegar explained that Howell "did not suffer any economic loss" and was not entitled to the sums the hospitals initially charged. Werdegar further explained that the higher amounts did not reflect the true value of their services since they were so willing to accept substantial discounts.
In dissent, Justice Joan Dempsey Klein wrote that Hamilton Meats "would not be paying the full cost of its negligence or wrongdoing" because Howell's insurance coverage provided an undue benefit. Instead, courtroom evidence should determine the value of Howell's medical care, not a negotiated discount.
Consumer advocates and plaintiff's lawyers saw the ruling as a setback for accident victims. Howell's lawyer, Gary Simms, believed that the ruling would likely lead to reduced pain and suffering awards in addition to medical benefits, since it would allow jurors to know that accident victims had medical insurance.
If you are injured in an accident and have questions about how your insurer's actions may affect how you may be compensated, an experienced personal injury attorney can advise you.
