If you have followed other posts on this blog, you will know that the Howell court relied on the "collateral source rule" to trump Hanif, and reversed a trial court ruling reducing the plaintiff’s recovery based on Hanif, and reinstated the jury’s verdict to include the full amount of the medical charges that were originally billed. As noted in previous posts, the Howell case is not presently "citable", based on the fact that the Supreme Court has accepted it for review. However, a new case from the 1st District (Alameda County) [Yanez v. Soma Environmental Engineering, Inc. (2010) --- Cal.Rptr.3d ----, WL 2527483, decided June 24, 2010 ("Yanez")], steps into that void to shed some new light on the issue.
In Yanez, Plaintiff Ana Yanez sued defendants SOMA Environmental Engineering, Inc., Mansour Sepehr, and Brian Tims (collectively SOMA) for injuries she suffered in an automobile accident. A jury found that SOMA's negligence caused Yanez’s injuries, and returned a special verdict awarding her $150,000 in damages, including $44,519.01 in damages for past medical expenses. After judgment was entered, SOMA moved, pursuant to the Hanif line of cases, to reduce the award for medical expenses to $18,368.24, which was the amount actually accepted by Yanez’s medical providers as payment in full under their contracts with Aetna and Healthnet, her private health insurers. The trial court granted the motion and entered an amended judgment reducing Yanez’s damage award. Yanez appealed.
The First District reversed and remanded the case back to the trial court to enter a new judgment restoring the original amount of damages awarded by the jury.
In a fairly long, reasoned opinion, the Court in Yanez concluded that:
In our view, the trial court erred in reducing Yanez’s damages to the amounts actually paid by her insurers. Although the court reasonably relied on case law extending Hanif to the private insurance context, we find Hanif used overly broad language and the extension of its holding to private insurance by Nishihama and other cases is inconsistent with the collateral source rule. Consistent with the view taken by the appellate courts in a great majority of the jurisdictions that have considered the issue, we conclude the amounts written off by Yanez’s health care providers constitute collateral benefits of her insurance. [Yanez v. Soma Environmental Engineering, Inc. (2010) --- Cal.Rptr.3d ----, WL 2527483]
Thus, the First District appellate court invoked the collateral source rule, which says damages shouldn't be reduced simply because the victim receives benefits from other sources, such as insurance companies. Per Justice Sandra Marguiles "The rule ... reflects a policy preference favoring the tort victim over the wrongdoer since not applying the rule allows the wrongdoer to profit from the victim's investment in purchasing insurance or from the generosity of those who come to the victim's aid."
As we noted in our prior posts, the 4th District came to a similar conclusion in Howell v. Hamilton Meats & Provisions Inc., 179 Cal.App.4th 686.
At the time of that decision, Justice Gilbert Nares wrote "Howell, as a person who has invested insurance premiums to assure her medical care, should receive the benefits of her thrift," and that "...the party liable for Howell's injuries, should not garner the benefits of Howell's providence."
Defense lawyers have argued that basing damages on the full cost of medical services -- rather than just for the amount actually accepted by doctors -- would give plaintiffs an undue windfall. Margulies noted, however, that the collateral source rule applies "even when it unquestionably does confer a windfall benefit on the tort plaintiff."
In the end, for the time being, Howell cannot be cited (per California Rules of Court, Rules 8.1105 and 8.1110, 8.1115). Yet, this new Yanez case will likely be used during Howell's pendency by the plaintiffs' bar, to achieve the same result as the 4th District opinion in Howell. I suspect, however, that the defense, like they did in Howell, will seek to "de-publish" this opinion while Howell is on review.