The California Supreme Court has ruled that a tortiously injured person who receives medical care for his or her injuries may recover medical expenses only in the amount that the plaintiff’s health insurer paid, not the amount charged by the health care provider but later reduced by a contract between the provider and the insurer.
Whether a plaintiff can recover the amount paid or the medical "charges" is a hot issue in tort law. The California opinion falls on the pro-defendant side of that issue.
Plaintiffs have sought the right to claim the higher amount by invoking the collateral source rule.
The California Court said the collateral source rule did not protect the plaintiff, because a negotiated discount – whether negotiated by the plaintiff or the plaintiff’s health insurer – means that the plaintiff has not suffered a pecuniary loss in the greater amount.
Here is the new rule in California:
[W]hen a medical care provider has, by agreement with the plaintiff‘s private health insurer, accepted as full payment for the plaintiff‘s care an amount less than the provider‘s full bill, evidence of that amount is relevant to prove the plaintiff‘s damages for past medical expenses and, assuming it satisfies other rules of evidence, is admissible at trial. Evidence that such payments were made in whole or in part by an insurer remains, however, generally inadmissible under the evidentiary aspect of the collateral source rule. (Hrnjak v. Graymar, Inc., supra, 4 Cal.3d at p. 732.) Where the provider has, by prior agreement, accepted less than a billed amount as full payment, evidence of the full billed amount is not itself relevant on the issue of past medical expenses.
The 30-page majority opinion was accompanied by a 15-page dissent.
The opinions in Howell v. Hamilton Meat & Provisions, Inc., No. S179115 (Cal. S. Ct. 8/18/11) do a fine job setting out the arguments pro and con on this important issue.