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March 2010

California Supreme Court Grants Review of Decision Unfavorable to Tort Defendants on Medical Damages

Howell v. Hamilton Meats & Provisions, Inc. (Case No. S179115)

The California Supreme Court has granted review of, and thereby rendered unpublished and uncitable in California courts, a decision that greatly increased medical special damages to include phantom charges never paid or owed by anyone. (Howell v. Hamilton Meats & Provisions, Inc. (Case No. S179115), review granted 3/10/2010.)

The Howell decision was contrary to the general principle that tort victims are entitled to compensation, but not a windfall recovery above their actual damages. "[W]hen the evidence shows a sum certain to have been paid or incurred for past medical care and services, whether by the plaintiff or by an independent source, that sum certain is the most the plaintiff may recover for that care despite the fact that it may have been less than the prevailing market rate." (Hanif v. Housing Authority (1988) 200 Cal.App.3d 635, 641; Nishihama v. City and County of San Francisco (2001) 93 Cal.App.4th 298, 306.) Thus, the law limits the amount of medical damages to the amounts actually paid to, or accepted by, medical service providers. In this age of managed care, the difference between the amount billed and the amount paid for medical care can be quite significant. If injured plaintiffs were allowed reimbursement for the higher "billed" costs of health care, as opposed to the actual lower out-of-pocket managed care costs, then plaintiffs would receive a windfall payment for fictional costs they never incurred.

The court of appeal in Howell rejected Hanif, Nishihama and these principles, and allowed a plaintiff to recover the illusory "billed" amount of her medical costs, not the far (2/3) lower cost accepted by her provider from her insurer. The published decision drew wide attention and threw trial courts into a quandary, because there were now two lines of diametrically opposed authority on an issue that is a major portion of many cases. (Click here to read an in-depth analysis of Howell.)

As a result of the Supreme Court's grant of review, Howell is now depublished, so Hanif/Nishihama remains governing law. Trial courts may not adopt the Howell approach, though another court of appeal could. 

A decision by the Supreme Court is likely to take at least two years.

Appellate

Charles S. Custer
Kenneth S. Perri
Don Willenburg


Appellate
Product & General Liability