Here is a brief overview of case law that has shaped the reasonable cost analysis of past medical treatment in personal injury litigation. In Hanif v. Housing Authority (1988) 200 Cal.App.3d 635, 643-644 (“Hanif”), the court held that the reasonable value of past medical treatment is limited to the actual amount paid and not billed in cases where the plaintiff has a benefit (e.g. Medi-Cal in that case) that has a pre-negotiated arrangement with the medical services provider for reduced cost of the services. Using similar reasoning as Hanif, a huge blow was dealt with personal injury plaintiffs in California with the Supreme Court decision in Howell vs. Hamilton Meats & Provisions, Inc. (2011) 52 Cal. 4th 541. In Howell, the court held that personal injury plaintiffs whose medical expenses are paid through private insurance may recover as economic damages no more than the amounts paid by the plaintiff’s health insurance and not the full billed amounts. For example, if the medical bill is $100, 000 and the insurance company only pays $10, 000, the plaintiff is only entitled to recover the $10, 000 amount, thereby significantly lowering the value of his or her claim.
Often, health insurance companies have contracts with medical providers and pay negotiated, reduced rates that are often a fraction of the full billed amounts. Subsequent cases were also not favorable to personal injury plaintiffs. Courts held that the amount of the “full bill” for past medical services is not relevant to prove past or future medical expenses and/or non-economic damages. Id. at 567; citing to Corenbaum v. Lampkin (2013) 215 Cal.App.4th 1308, 1330-1331. In Ochoa v. Dorado (2014) 228 Cal. App. 4th 120, 135 the court held that insured plaintiffs could not introduce the full amount billed, but not paid for past medical services, even where there is no pre-negotiated rate.
Case Law Was More Favorable To Plaintiffs That Did Not Have Medical Insurance.
In Bermudez v. Ciolek (2015) 237 Cal.App.4th 1311, 1330-133, the court held that the amount or measure of economic damages for an uninsured plaintiff typically turns on the reasonable value of the services rendered or expected to be rendered. Thus, an uninsured plaintiff may introduce evidence of the amounts billed for medical services to prove the services' reasonable value. Id. at 1330-1331, 1335. Then, on May 8, 2018, in a highly anticipated and favorable plaintiffs opinion, the appellate court in Pebley v. Santa Clara Organics, LLC held that a personal injury plaintiff who has health insurance but obtains treatment on a medical lien shall be considered “uninsured” for purposes of proving the number of damages for past and future medical expenses. The court in Pebley also held that the trial court did not err in excluding evidence that Pebley had health insurance and that he could introduce the full billed amount of the medical treatment received on a lien.
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