New California Supreme Court Ruling Harms Personal Injury Plaintiffs and Helps Insurance Companies

FOR IMMEDIATE RELEASE
San Jose, California, United States of America (Free-Press-Release.com) December 31, 2011 --

The August decision by the California Supreme Court was not totally unexpected, but still shocking. The decision in Howell v. Hamilton Meats & Provisions, Inc. will directly affect every personal injury claim for compensation. For over 100 years, the law recognized the collateral source rule, which provided that the wrong-doer could not benefit from the foresight of the injured party in securing health insurance for himself. What this means in plain English is that, if someone injures you, they, or their insurance company, are liable for all damages that you incur as a result of the incident, whether you have insurance or not. The rationale behind this law was simple and fair —if an injured person (plaintiff) had the good sense to purchase medical insurance, the wrong-doer (defendant) who injured the plaintiff could not benefit from the prudence of the plaintiff. The Courts of Appeal and previous California Supreme Courts consistently held that the wrong-doer could not receive the windfall from the thrift and good sense of a plaintiff who had invested years of premiums to assure medical care. The amount the defendant must pay to the injured person was the full medical bills, not just the amount that the plaintiff’s health insurance paid to the doctors and hospitals.

This all changed with the stroke of the Supreme Court pen in August 2011. That decision holds that the wrongdoer will receive the benefit of the reduction in the medical expenses negotiated by the plaintiff’s health insurance company with doctors and hospitals, and the plaintiff will now be able to recover only that amount paid by the plaintiff’s health insurance. Interestingly, this decision was rendered by six sitting justices, not one of whom had handled even one personal injury case in the last 25 years. The seventh Justice, sitting on temporary assignment, dissented, following the accepted collateral source rule logic.

Becky Howell, the plaintiff, suffered severe neck injuries when a Hamilton Meats truck driver made an illegal u-turn into her vehicle. Becky underwent two surgeries to scrape out material between her neck bones, and to drill screws and attach metal brackets to her spine to hold the neck bones in place. Her medical bills were almost $190,000.00. She suffered extreme pain and numbness in her arms, and the long term consequences of the trauma to her spine are unknown. Her health insurance company settled with her doctors and hospitals by paying about $60,000.00 of the medical costs. At trial, the jury returned a special verdict that awarded to Becky compensatory damages in the total amount of $689,978.63, which included the medical expenses.

The trial judge then reduced the jury award by approximately $130,000.00 that was not paid by Becky’s health insurance company. On appeal, the Court of Appeal overruled the trial judge and reinstated the full amount of the verdict. However, the Supreme Court reversed the Court of Appeal and held that since Becky didn’t suffer any financial loss in excess of the amount paid by her insurance, she can’t collect any more than that. That logic and reasoning lead to the only conclusion that Becky didn’t suffer any loss at all because her insurance paid for everything! The Justices’ pro-insurance company tortured logic completely ignored the fact that Becky paid insurance premiums for years and did not take into account the value of the advertising for health plan member doctors and hospitals by the insurance company, the simplified and streamlined billing procedures, the lack of delay in receipt of payment from the insurance company, and the access to the plan members as patients. These all have significant economic value that was completely ignored by our Supreme Court. Historically, the amount of compensation awarded to injured persons for pain and suffering has largely depended upon the amount of the medical expenses. Now that the past medical expenses are diminished by injured party’s insurance payments and contractual agreements, the compensation for pain and suffering will be greatly diminished as well.
And, adding insult to injury, all or most of the money an injured party may now collect from the wrongdoer for past medical expenses will be paid to the plaintiff’s health insurance company to reimburse it for paying those benefits that the plaintiff’s premiums bought. This is a great example of corporate justice at work where, once again, the corporation benefits and the individual looses.
All six Justices who rendered this decision were appointed by Republican governors. The lesson—avoid accidents at all costs, and consider these issues when you vote.