Calif. bill seeks to increase medical damage awards

By Jessica M. Karmasek | Aug 7, 2012


SACRAMENTO, Calif. (Legal Newsline) - A group of California trial lawyers, with the help of California Senate President Pro Tem Darrell Steinberg, are pushing a bill through the state legislature that would increase the amount of medical damage awards.

Steinberg, D-Sacramento, introduced the measure, Senate Bill 1528, in February. Its sponsor is the Consumer Attorneys of California.

The trial lawyers group views the legislation as a "substantive spot bill," intended to "clarify" the measure of an injured person's medical damages.

"SB 1528 simply provides that a party who is found to be responsible for causing injuries should pay the reasonable value of medical care for the injury, regardless of the injured person's medical benefits, if any," according to CAOC's website.

"Unfortunately, a series of court decisions have thrown into question how medical damages are determined, and in many cases injured people have no recovery for their medical injury.

"When that happens, costs are shifted from the person causing injury back to the patient and those who provide care, including fiscally strapped government health care programs."

The decision at issue is Howell v. Hamilton Meats, a 2011 ruling by the California Supreme Court.

In a 6-1 decision, the Court ruled that an insured plaintiff cannot collect damages at the billed rate of the provider "for the simple reason that the injured plaintiff did not suffer any economic loss in that amount."

That is, injury victims can recover only the actual payments for medical treatment, as negotiated by insurance companies, not the amounts for which providers initially bill.

Steinberg, in SB 1528's bill analysis, said the Howell decision created "uncertainty" as to the measure of compensation.

"The Howell court held that proof of reasonable value of medical services paid for by the injured party's insurer or rendered by the provider contracting with the insurer is not admissible when measuring the plaintiff's compensatory damages," the lawmaker wrote.

"Howell brought up other issues regarding third-party compensation related to plaintiff injury cases, including: How does Medi-Cal recover costs? How are providers affected? How are county governments who provide needed services to their community affected? How are our public hospitals affected?"

CAOC says the bill attempts to "level the playing field" in calculating compensation for medical costs in personal injury cases.

"This is a significant step toward restoring the rights of consumers and helping cash-strapped governments," CAOC President Niall McCarthy said of the legislation last month.

According to the trial lawyers group, as currently drafted, SB 1528 is limited to giving county hospitals and clinics the power to seek compensation for medical treatment provided to patients who have settled a personal injury lawsuit.

That power is currently granted to counties only in lawsuit judgments -- and virtually all personal injury cases are settled before reaching trial, it noted.

Meanwhile, opposing groups like the California Manufacturers and Technology Association and the Association of California Insurance Companies, or ACIC, argue the measure will significantly increase insurance costs for businesses and result in windfall recoveries for plaintiffs -- and trial lawyers.

"SB 1528 is a wolf in sheep's clothing in its current form. The sponsors of this measure say the Howell decision has 'caused some confusion' and that SB 1528 'is intended to clarify' the measure of an injured person's medical damages. In reality, this 6 to 1 decision by California's highest court reaffirmed a bright line rule in calculating medical damages -- actual or contracted amount," Armand Feliciano, ACIC vice president, said in May.

"The Court clearly said in their decision, 'We hold no such recovery is allowed, for the simple reason that the injured plaintiff did not suffer any economic loss in that amount.' To suggest that the calculation of medical damages in California is uncertain or needs clarification is patently misleading."

The bill was approved 22-13 by the state Senate in May. It is now before the state Assembly.

From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.

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