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February 2011

Limiting Medical Special Damages to Amounts Actually Paid: Hanif and Nishihama Re-affirmed by California Court of Appeal

On February 24, the court of appeal ordered publication of a recent, previously unpublished opinion that approved "reduction of a plaintiff's recovery of past medical expenses from the amount billed by her medical provider to the amount paid by her private medical insurer" (Cabrera v. E. Rojas Properties, Inc. (Second Dist., Case No. B216445), emphasis added.) In other words, a plaintiff may not recover "phantom" damages - the "billed" amount of medical expenses that providers never actually pursue or collect, instead of the actual amount paid. This is consistent with the general principle that tort victims are entitled to compensation, but not a windfall recovery above their actual damages. 

Just last year, the California Supreme Court granted review of, and thereby rendered unpublished and uncitable in California courts, contrary decisions that greatly increased medical special damages to include phantom charges never paid or owed by anyone.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; Yanez v. Soma Environmental Eng'g (Case No. S184846), review granted 9/1/10; King v. Willmett (Case No. S186151), review granted 10/13/10.) Yanez and King came later and so were the subjects of  "grant and hold" orders pending the decision in Howell, which is not likely before 2012. King is perhaps particularly troubling because its author, while she was still on the court of appeal, is Chief Justice Cantil-Sakauye. She may therefore be a vote against defense interests when the Supreme Court turns its attention to this issue in Howell.

Cabrera did not expressly address these now-unpublished decisions, but instead relied on prior defense-friendly decisions in the area. "[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. Cabrera rejected the argument, which swayed the Howell and King courts, that payment of the phantom damages is somehow required under the "collateral source" rule. That rule, properly understood, says only that damages may not be reduced by the amounts paid by a source other than a tortfeasor. It says nothing about what constitutes "actual damages."

For now, the Cabrera-Hanif-Nishihama defense position is the only one in published cases, and therefore binding on trial courts. This will not change even if, as may be expected, a petition for Supreme Court review of Cabrera is filed and granted and the case thereupon depublished. Other courts of appeal, however, are free to follow either the Howell-King approach or the Cabrera-Hanif-Nishihama defense position, at least until the Supreme Court rules in Howell.

Please click here to read the decision.

Appellate

Charles S. Custer
Don Willenburg


Appellate
Environmental/Toxic Tort
Product & General Liability