Provided by: David G. Smith, Oakland Personal Injury Attorney
People injured due to someone else's negligence may end up with a reduced award for medical expenses based on what his or her insurance company actually paid for medical care
Consider this scenario: Imagine that you were involved in a major car accident caused by a drunk driver. In this accident you suffered severe injuries requiring major medical care. You brought a lawsuit against the drunk driver and the jury quickly found him or her fully at fault for the accident. The total bill for your medical treatment was $100,000, and your insurer paid $60,000 as payment-in-full based on a contract it has with the hospital. Can the jury hear evidence of the total cost of your medical care? Is the jury permitted to hear evidence of your insurance company's payment? Further, how much are you entitled to recover? The answers to these questions likely depend upon the status of what is known as the collateral source rule.
What Is the Collateral Source Rule?
The collateral source rule is an evidentiary rule; it bars defendants in a personal injury case from introducing evidence of money the plaintiff received from collateral sources. Used in this sense, collateral sources are any people or companies not directly involved in the litigation that may have provided benefits or compensation to the plaintiff for damages he or she suffered in the accident. As the California Supreme Court stated in Helfend v. Southern California Rapid Transit District, "if an injured party receives some compensation for his injuries from a source wholly independent of the [at-fault party], such payment should not be deducted from the damages which the plaintiff would otherwise collect from the [at-fault party]." 2 Cal.3d 1, 6 (1970). Common collateral sources are private health insurers, workers' compensation programs, Medicare and Medicaid.
Under the traditional application of the collateral source rule, the jury would not hear evidence of insurance payments, and any insurance payment would not be deducted from the total expenses. Using the above example, the plaintiff could recover $100,000, despite the $60,000 insurance payment. In Helfend, the California Supreme Court discussed the rationale behind the collateral source rule as being that a defendant should "not be able to avoid payment of full compensation for the injury inflicted merely because the victim has had the foresight to provide himself with insurance." 2 Cal.3d at 10. However, there has been a series of decisions by California Courts of Appeal (from both the First and Third Districts), application of which may change this answer.
Erosion of the Collateral Source Rule in California
In Hanif v. Housing Authority of Yolo County, 200 Cal.App.3d 635 (1988), the court held that the plaintiff was only entitled to recover the amount of money actually paid by Medi-Cal (California's Medicaid plan) on the plaintiff's behalf. As such, it reduced the trial court's award, which exceeded the actual amount paid.
In Nishihama v. City and County of San Francisco, 93 Cal.App.4th 298 (2001), the court again held that the plaintiff was only entitled to recover the amount that her health plan actually paid for her medical care, and not the actual cost of the care, which was higher. Thus, the Court of Appeal reduced the award of expenses for medical care.
Both Hanif and Nishihama stand for the proposition that the entire amount of medical expenses billed by a provider may not be collectible by the injured plaintiff. A later case, Greer v. Buzgheia, 141 Cal.App.4th 1150 (2006), clarified these decisions and held that evidence of the entire amount of the plaintiff's billed medical expenses is admissible as evidence, even though it was more than the actual amount paid by the insurer for the medical care.
Under Hanif, Nishihama and Greer, a defendant may bring a post-verdict motion to reduce the verdict based on the actual amount paid by an insurer for medical care. Using the example in the opening paragraph, under these cases, the defendant would be allowed to move to reduce an award of $100,000 to the plaintiff by $40,000 since the insurer only paid $60,000, and the court has the authority to make that reduction.
Recent Reaffirmation of the Collateral Source Rule in Olsen
As noted by Justice Moore in the recent concurring opinion in Olsen v. Reid, 164 Cal.App.4th 200 (2008), there is no California Supreme Court authority for a post-verdict reduction of an award of medical expenses actually billed based on insurance payments. The Olsen court found that the trial court erred in reducing the amount of medical expenses the jury awarded the plaintiff because it was not clear what was actually paid or if anything was "written off."
In his concurring opinion, Justice Moore warned that by "permitting the posttrial reduction of medical expenses, the collateral source rule has been buried without the dignity of any services or parting words." 164 Cal.App.4th at 204. Justice Moore refused to "jump on the bandwagon" and follow the post-verdict reduction practice, which he believed abolishes the policies behind the collateral source rule. As he noted, under this practice, "[t]he plaintiff who has insurance receives less than her uninsured counterpart, while the defendant benefits from the plaintiff's prudence." Id. at 213.
What does this all mean for an injured person in California? If the jury is allowed to hear evidence of the full cost of medical expenses then it follows that the damage award for pain and suffering will be higher and the injured party can get more money. However, if the courts opt not to heed Justice Moore's warning and instead follow the Hanif/Nishihama post-verdict reduction, the injured person may end up with a reduced award for medical expenses based on what his or her insurance company actually paid for medical care.
Thursday, January 21, 2010
Victory From Defeat
Provided by Oakland Personal Injury Lawyer, David G. Smith
Successes From "Take it or Leave it" Offers: In these days of the "take no prisoners" attitude of the insurance companies, the unrepresented plaintiff is at an extreme competitive disadvantage.
Unrepresented plaintiffs do not know how the insurance claims process works, they do not know what is important and what is not, they do not know when to pick their fights, they do not know how to get a personal injury claim in the best posture to resolve, and they do not know what a case is worth. Not only does the insurance adjuster know all these things the unrepresented plaintiff does not know, more importantly, the adjuster knows the unrepresented plaintiff is in the dark and most certainly uses that to his or her advantage.
One of the big hurdles that an injured plaintiff must get over is their own unfamiliarity and distrust of lawyers and the legal system in general. Every lawyer knew when starting out that the public, generally, isn't particularly fond of lawyers. For more than 30 years I have been representing injured plaintiffs, and I am convinced that I and the vast majority of my colleagues do a workmanlike, professional job with a real compassion for our injured clients. We fight a fight on behalf of those not powerful enough to take on the insurance companies to the best of our ability.
With the preceding as my introduction, I want to talk about three recent cases that we were able to resolve successfully. They are not untypical injury claims and other plaintiff injury lawyers can tell you similar stories.
CASE ONE:
An otherwise healthy 56-year-old woman came to me after having various conversations with the defendant's insurance adjuster for nearly two years. She had been involved in an extremely low impact rear end collision. At the time she was struck she was stopped at a rather unusual intersection which required that she lean forward and look over her steering wheel to make sure it was safe before proceeding. She had a fairly significant amount of medical treatment for a neck injury and she had given the insurance company an authorization to obtain the medical records which they had done. After all the conversations and review the insurance company offered a "take it or leave it" $780.
Since the statute was about to run, we filed suit immediately and served it on the defendant. We went through discovery, non binding arbitration (we got an award of approximately $6,000 which we rejected) and settled the case on the eve of trial for $40,000.
CASE TWO:
A father of a five-year-old girl came to me after having dealt with an insurance company for approximately two years. His daughter and his wife had been at a retail store one day and the little girl got out of the mother's sight for a short period of time and in the process had come too close to a clothing rack and had sustained an approximate three-inch laceration above her left eye. We felt that the rack in question had an outward edge that was probably sharper and more dangerous that it should have been and since this happened in the children's department we felt there was negligence on the part of the store. For her injuries she went to the emergency room and her laceration was sutured and about 10 days later the sutures were removed. She was left with a scar which certainly was not horribly disfiguring, but she was definitely self conscious about it. In all the negotiations with the insurance company the father received an offer of $2,000 "take it or leave it."
I attempted to resolve the case with the adjuster but when she refused to go past $10,000 we filed suit, got through discovery, got through a failed mediation and settled on the eve of trial for $25,000.
CASE THREE:
A 55-year-old woman came to me with a history of a serious accident three years before. The defendant in the case had only a $25,000 policy and that was paid to her quickly. She had $25,000 in medical payments coverage under her policy and she had underinsured motorist coverage of $100,000. Grudgingly the insurance company had paid the $25,000 in medical payments coverage and they had also advanced her an additional $5,000 from her underinsured motorist coverage.
In underinsured coverage the insurance carrier gets a credit for any amount paid by the at fault defendant, so preliminarily, the maximum available would be $75,000. From that they would be able to deduct the $5,000 advance. If the total value of the case were $100,000 or less, they could also deduct the medical payments of $25,000 so when I took the case over we were looking at a maximum recovery of $70,000. Prior to my involvement they had offered $15,000 "new money," had sent the case to their lawyers and had told her the $15,000 was "take it or leave it." We settled the case in less than 90 days for the $70,000 maximum.
While these certainly are stories about snatching victory from the jaws of defeat, more importantly I would likely have done as well or better had they come to me right after these injuries occurred. But they were forced to wait years for justice!
I believe the two most prevalent attitudes of the unrepresented plaintiff are their beliefs that the insurance company will treat them fairly when they absolutely will not and that they just do not want to have to hire a lawyer.
Successes From "Take it or Leave it" Offers: In these days of the "take no prisoners" attitude of the insurance companies, the unrepresented plaintiff is at an extreme competitive disadvantage.
Unrepresented plaintiffs do not know how the insurance claims process works, they do not know what is important and what is not, they do not know when to pick their fights, they do not know how to get a personal injury claim in the best posture to resolve, and they do not know what a case is worth. Not only does the insurance adjuster know all these things the unrepresented plaintiff does not know, more importantly, the adjuster knows the unrepresented plaintiff is in the dark and most certainly uses that to his or her advantage.
One of the big hurdles that an injured plaintiff must get over is their own unfamiliarity and distrust of lawyers and the legal system in general. Every lawyer knew when starting out that the public, generally, isn't particularly fond of lawyers. For more than 30 years I have been representing injured plaintiffs, and I am convinced that I and the vast majority of my colleagues do a workmanlike, professional job with a real compassion for our injured clients. We fight a fight on behalf of those not powerful enough to take on the insurance companies to the best of our ability.
With the preceding as my introduction, I want to talk about three recent cases that we were able to resolve successfully. They are not untypical injury claims and other plaintiff injury lawyers can tell you similar stories.
CASE ONE:
An otherwise healthy 56-year-old woman came to me after having various conversations with the defendant's insurance adjuster for nearly two years. She had been involved in an extremely low impact rear end collision. At the time she was struck she was stopped at a rather unusual intersection which required that she lean forward and look over her steering wheel to make sure it was safe before proceeding. She had a fairly significant amount of medical treatment for a neck injury and she had given the insurance company an authorization to obtain the medical records which they had done. After all the conversations and review the insurance company offered a "take it or leave it" $780.
Since the statute was about to run, we filed suit immediately and served it on the defendant. We went through discovery, non binding arbitration (we got an award of approximately $6,000 which we rejected) and settled the case on the eve of trial for $40,000.
CASE TWO:
A father of a five-year-old girl came to me after having dealt with an insurance company for approximately two years. His daughter and his wife had been at a retail store one day and the little girl got out of the mother's sight for a short period of time and in the process had come too close to a clothing rack and had sustained an approximate three-inch laceration above her left eye. We felt that the rack in question had an outward edge that was probably sharper and more dangerous that it should have been and since this happened in the children's department we felt there was negligence on the part of the store. For her injuries she went to the emergency room and her laceration was sutured and about 10 days later the sutures were removed. She was left with a scar which certainly was not horribly disfiguring, but she was definitely self conscious about it. In all the negotiations with the insurance company the father received an offer of $2,000 "take it or leave it."
I attempted to resolve the case with the adjuster but when she refused to go past $10,000 we filed suit, got through discovery, got through a failed mediation and settled on the eve of trial for $25,000.
CASE THREE:
A 55-year-old woman came to me with a history of a serious accident three years before. The defendant in the case had only a $25,000 policy and that was paid to her quickly. She had $25,000 in medical payments coverage under her policy and she had underinsured motorist coverage of $100,000. Grudgingly the insurance company had paid the $25,000 in medical payments coverage and they had also advanced her an additional $5,000 from her underinsured motorist coverage.
In underinsured coverage the insurance carrier gets a credit for any amount paid by the at fault defendant, so preliminarily, the maximum available would be $75,000. From that they would be able to deduct the $5,000 advance. If the total value of the case were $100,000 or less, they could also deduct the medical payments of $25,000 so when I took the case over we were looking at a maximum recovery of $70,000. Prior to my involvement they had offered $15,000 "new money," had sent the case to their lawyers and had told her the $15,000 was "take it or leave it." We settled the case in less than 90 days for the $70,000 maximum.
While these certainly are stories about snatching victory from the jaws of defeat, more importantly I would likely have done as well or better had they come to me right after these injuries occurred. But they were forced to wait years for justice!
I believe the two most prevalent attitudes of the unrepresented plaintiff are their beliefs that the insurance company will treat them fairly when they absolutely will not and that they just do not want to have to hire a lawyer.
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