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Personal Injury: How to Determine Victim Damages in California

How to determine the amount of damages a victim can recover in a personal injury case has been hotly debated in California. If a person is involved in an accident, his health insurance may initially pay for medical treatment. When the injured party files suit against the person or company at fault for the injury, the amount of money he or she may recover in damages to cover medical expenses was at issue recently in California.

Collateral Source Rule

The collateral source rule has always been somewhat controversial. It states that information on collateral payment sources, such as payments by health insurance, is not allowed as evidence at trial. The rule has been the law in California since the late 1940s. However, when California’s Medical Injury Compensation Reform Act was enacted in 1975, such evidence has been allowed in medical malpractice cases in California. This has led to plaintiffs’ receiving lower damage awards than they would have if the evidence had not been admitted. Recent cases have carved out other exceptions, leading to further erosion of the collateral source rule and further diminishing court verdicts for plaintiffs.

Plaintiffs’ lawyers have fought to prevent the disclosure of medical expenses covered by the victim’s insurance company, especially because insurance companies often pay hospitals less than the sticker value of these medical expenses. The San Francisco Chronicle reports that, for years, California trial courts have awarded the victim only the amount that the insurance company paid for the medical services, even when the services were discounted.

Howell v. Hamilton Meats

The current practice in California was recently challenged, in the Howell v. Hamilton Meats case, that went before the California Supreme Court. In this case, San Diego appellate judges previously determined that Rebecca Howell was eligible to reclaim the full $190,000 the hospital charged for her medical expenses (arising from a serious auto accident), though her health insurance company settled the entire bill for $60,000.  Their reasoning was that accident victims shouldn’t be punished for having insurance, and they are entitled to the same financial compensation uninsured victims would receive.

Accident victims ask, “Why should a person that has health insurance receive less money from a defendant than someone that does not have it?” “Why should defendants get the benefit of the plaintiff’s money spent buying health insurance?” The court ruling stated that the discount was “a direct result of [Rebecca Howell’s] own thrift and foresight in procuring private health insurance,” and Hamilton Meats “should not garner the benefits of Howell’s providence.”

The California Supreme Court, though, in Howell v. Hamilton Meats & Provisions, Inc. (2011), held that an injured plaintiff, whose medical expenses are paid by private insurance, can only recover as damages the amount of the medical bills actually paid by that medical provider, not the amount originally billed by the medical provider or providers. The Supreme Court held that that a plaintiff’s pecuniary loss is limited to the amount paid or incurred for past medical services, thus the plaintiff cannot recover damages in excess to that amount.

The question, though, of what evidence is properly provided to a jury is complicated by the fact that evidence of insurance in inadmissible. Notwithstanding the “amount paid” argument, the Court in Howell v. Hamilton Meats” seemed to leave open the issue whether the trial courts should allow evidence of amount initially invoiced or billed.

Because every injury case is unique one should never try to guess the value of “your case” without first seeking the advice of an experienced personal injury lawyer or lawyers.

Related Content: Common Questions about Personal Injury Claims

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