Howell v. HAMILTON MEATS & PROVISIONS, INC.
52 Cal. 4th 541
| Cal. | 2011Background
- Howell was seriously injured in a negligent auto collision by Hamilton’s driver; liability was admitted.
- Medical care was paid in part by PacifiCare and discounted/written off by providers under a prearranged insurer plan (PacifiCare PPO).
- Plaintiff signed patient agreements to pay usual charges; insurer-paid discounts meant she incurred liability only to the extent of what the insurer paid.
- Trial evidence showed total billed charges exceeded what was paid or written off; the trial court reduced past medical expenses to the discounted full-payment amount.
- Court of Appeal reversed the reduction, holding that the collateral source rule barred reduction; this Court granted review to resolve the measure of past medical expenses under the collateral source rule.
- Court holds that a plaintiff may recover no more than the amounts paid or incurred for medical services, and the negotiated rate differential is not a collateral source payment; the issue is remanded for proceedings consistent with this ruling.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Measure of past medical expenses when insurer discounts apply | Howell seeks recovery of the undiscounted, billed amounts (full value). | Collateral source rule limits damages to amounts paid or incurred; discounts are not recoverable. | Damages limited to amounts paid or incurred; negotiated discounts not recoverable. |
| Does collateral source apply to negotiated rate differential? | Negotiated rate differential is a benefit under plaintiff’s policy and should be recoverable. | Differential is not a payment to or on behalf of plaintiff; not within collateral source rule. | Negotiated rate differential is not a collateral source payment and not recoverable. |
| Should reasonable value be used over actual payments to determine damages? | Recovery should reflect reasonable value of care, not discounted payments. | Recovery limited to negotiated amounts under current rule; no windfall to tortfeasor. | Court adopts the “paid or incurred” measure; remaining issues on reasonable value reserved for trial (remand guidance). |
| Does collateral source rule create windfall or deterrence issue? | Recovery of full reasonable value preserves deterrence and insurance incentives. | No windfall since discounts reflect commercial pricing; unified rule needed. | No windfall; collateral source rule applied to amounts paid; negotiated rate differential excluded from collateral source. |
| Procedural/evidentiary implications for future trials | Evidence of full bills and insurer payments should be admissible with proper limits. | Limitations and evidentiary rules should prevent double recovery and maintain collateral source protections. | Remand to determine reasonable value at trial with consistent application of the rule; other issues left for remand. |
Key Cases Cited
- Helfend v. Southern California Rapid Transit Dist., 2 Cal.3d 1 (1970) (collateral source rule; insurer benefits not deducted from tort recovery)
- Hanif v. Housing Authority, 200 Cal.App.3d 635 (1988) (measure of past medical expenses; recovery limited to paid or incurred)
- Olszewski v. Scripps Health, 30 Cal.4th 798 (2003) (Medi-Cal beneficiary; provider liens; policy limitations)
- Nishihama v. City and County of San Francisco, 93 Cal.App.4th 298 (2001) (private insurer payments; collateral source rule context)
- Parnell v. Adventist Health System/West, 35 Cal.4th 595 (2005) (insurer discounts; recovery limited to paid or incurred)