SACRAMENTO, Calif. (Legal Newsline) - The California Supreme Court ruled Thursday that a plaintiff may only collect as damages the amount that actually had to be paid by insurers for medical treatment.
That is, rather than the retail rate that medical providers charge for that treatment, the Court said in its 30-page majority opinion.
"When a tortiously injured person receives medical care for his or her injuries, the provider of that care often accepts as full payment, pursuant to a preexisting contract with the injured person's health insurer, an amount less than that stated in the provider's bill. In that circumstance, may the injured person recover from the tortfeasor, as economic damages for past medical expenses, the undiscounted sum stated in the provider's bill but never paid by or on behalf of the injured person?
"We hold no such recovery is allowed, for the simple reason that the injured plaintiff did not suffer any economic loss in that amount."
Medical providers negotiate reimbursement rates with insurance companies that are lower than the retail rate they would charge to someone without insurance. This allows them to gain access to the insurance provider's customers and a broader pool of patients.
The case stems from a car accident in which plaintiff Rebecca Howell was seriously injured. The accident was negligently caused by a driver for defendant Hamilton Meats & Provisions Inc.
Justice Kathryn Werdegar authored the Court's opinion, which reversed and remanded an appeals court judgment.
"Plaintiff's insurance premiums contractually guaranteed payment of her medical expenses at rates negotiated by the insurer with the providers; they did not guarantee payment of much higher rates the insurer never agreed to pay," Werdegar wrote.
Civil Justice Association of California President Kim Stone said Thursday that the Court "absolutely made the right decision."
"This case addresses a situation where a plaintiff had health insurance for which a negotiated rate was already agreed upon, so the retail rate is irrelevant and should not apply. The medical providers were reimbursed appropriately at the negotiated rate. The plaintiff was compensated for all out-of-pocket costs," she said in a statement.
"This is fair and prevents an unjustified windfall for plaintiffs' attorneys."
The CJAC is a non-profit, membership-supported coalition of citizens, taxpayers, businesses, local governments, professionals, manufacturers, financial institutions, insurers and medical organizations.
Founded in 1979, it is the only statewide association dedicated solely to improving California's civil liability system.
From Legal Newsline: Reach Jessica Karmasek by email at firstname.lastname@example.org.