Personal injury victims won another important victory this past June when a second California appellate court upheld their right to recover the full amount of medical expenses.
In Yanez v. SOMA Environmental Engineering Inc., the 1st District Court of Appeal in San Francisco ruled that personal injury plaintiffs are entitled to recover the total amount of medical expenses billed rather than the actual amount accepted by their medical care providers. It is common practice for health care providers to agree to accept lower negotiated rates for their services from insurance carriers in exchange for other benefits, like preferred provider status.
The Yanez ruling closely followed a November decision by the Fourth Appellate District Court in Howell v. Hamilton Meats & Provisions, Inc. (2009) 179 Cal. App. 4th 686. In Howell, the appellate court held that personal injury plaintiffs are entitled under the collateral source rule to collect the full amount of their medical expenses rather than the negotiated rate accepted by their providers.
Under the collateral source rule, the amount of damages awarded to a personal injury victim is not reduced because the victim receives compensation from other sources, including benefits under a health insurance policy. The purpose of this rule is to prevent the defendant tort-feasor from escaping the consequences of his or her wrongful act and enjoying a windfall merely because the victim had the prudence to pay for insurance.
The defense in Yanez argued that applying the collateral source rule gave personal injury plaintiffs an unfair windfall. However, the judge held that the collateral source rule still applies even if the plaintiff receives a windfall and that not applying the rule would unfairly reward the wrongdoer.
The Yanez and Howell opinions break from earlier precedent in California that held plaintiffs only were entitled to recover the amount of compensation actually paid for their health care rather than the amount billed by their providers (Hanif v. Housing Authority (1988) 200 Cal. App. 3d 635).
However, there is an important distinction between the Hanif case and the Yanez and Howell cases: the plaintiff in Hanif was receiving government-paid health insurance through Medi-Cal while the plaintiffs in Yanez and Howell were privately insured.
In the Howell decision, the court pointed out that the plaintiff in Hanif was entitled to recover the amount actually paid by the government-run insurance program because the government was billed directly for the medical expenses and the plaintiff did not incur any personal financial liability for his medical expenses. However, in Howell, the plaintiff agreed to be financially liable for any portion of her medical expenses not covered by her insurance policy, making her entitled to recover the full amount billed.
Even though the second appellate court ruling upholding the right of privately insured injury victims to recover full compensation for their medical expenses is encouraging, the issue is far from decided. The California Supreme Court granted review to Howell this past March and will have the final say on whether personal injury victims are entitled to full compensation for their injuries.
