Tessier Mediation, Los Angeles

(310) 442-2100

Home   l  Our Services   l   Resume   l  Testimonials   l   Mediation Articles   l  Howell Articles   l  Scheduling

Aug 2011: Howell v. Hamilton Meats Analysis
By Robert M. Tessier

The issue of whether the substantive portion of the collateral source rule allows an injured plaintiff to recover the full billed amount of her medical bills, if her own health insurance has negotiated with the provider for a lower price, has been decided by the California Supreme Court. In a 6-1 decision, the court decided that only the amount the provider has accepted as full payment for those services may be recovered as a past medical expense.

Speaking for the majority, Justice Werdegar reasons that when the provider has accepted less than the billed amount as payment in full, no recovery in excess of that amount is permitted for those past medical expenses. The full text of the opinion may be obtained at http://www.metnews.com/sos.cgi?0811%2FS179115

The court has answered this question, but has left unanswered several others which will be discussed here to hopefully assist the trial lawyers in the post-Howell cases to be tried. Those questions are: Has the Howell decision changed the burden of proof and admission of evidence on the issue of past medical expenses? Can the plaintiff admit evidence of the amount billed at trial for any purpose? What trends/changes should the trial lawyer anticipate in future cases going to trial?

Has the Howell decision changed the burden of proof and admission of evidence on the issue of past medical expenses?

I do not believe so. The burden of proof as to the damages suffered has always been the plaintiff's. The Howell decision effects only the treatment of the health insurer's negotiated discount vis a vis the substantive element of the collateral source rule. Trials post-Howell will still require the plaintiff to prove the past medical expenses. Now, the evidence of the amount billed will not be admitted to prove this item of damage. Henceforth, the evidence of the amount accepted by the doctor will be the relevant amount.

"We hold, therefore, that an injured plaintiff whose medical expenses are paid through private insurance may recover as economic damages no more than the amounts paid by the plaintiff or his or her insurer for the medical services received or still owing at the time of trial. In so holding, we in no way abrogate or modify the collateral source rule as it has been recognized in California; we merely conclude the negotiated rate differential-the discount medical providers offer the insurer-is not a benefit provided to the plaintiff in compensation for his or her injuries and therefore does not come within the rule."

Defense objections to admission of the billed amounts will be sustained if that evidence is being offered to prove the amount of the medical expenses.

The jury should not be made aware of the existence of plaintiff's health insurance, however. TheHowell decision does not effect this evidentiary prohibition.

"Evidence that such payments were made in whole or in part by an insurer remains, however, generally inadmissible under the evidentiary aspect of the collateral source rule. (Hrnjak v. Graymar, Inc., supra, 4 Cal.3d at p. 732.)"

Going forward, one would expect either a stipulation between parties and counsel as to the "paid" amount of the medical expenses, or admissibility of evidence showing the amount accepted by the provider without referencing insurance as the source of those payments. In much the same way trial lawyers have been redacting documents related to the amounts and source of payments to providers for trial, litigation paralegals preparing this evidence will approach their task in an similar fashion. Instead of redacting the paid amount, they will redact the billed amount. But under no circumstance should evidence of plaintiff's health insurance be referenced. Providers at trial will be asked how much was accepted, but not that it was paid by plaintiff's insurance.

Plaintiff's attorneys should be prepared with evidence at trial of the amounts accepted by the providers. To save embarrassment at trial, a good practice tip would be for experts in depo to be prepared with this data, particularly if that expert testimony will be presented via video.

Before expert discovery, it seems clear that the paid amounts should be provided in interrogatory responses. This may facilitate a stipulation in that defense counsel would have this information well in advance of trial.

The Howell court did not specifically reference Medicare in their analysis but did cite to a 2005 Medicare Payment Advisory Commission. Short of a federal statute that would preempt Howell, it is hard to imagine a winning argument exempting Medicare from the impact of the Howell decision.

Can the plaintiff admit evidence of the amount billed at trial for any purpose?

The Howell decision leaves open this question. Specifically, the court has stated the following:

"It follows from our holding that when a medical care provider has, by agreement with the plaintiff's private health insurer, accepted as full payment for the plaintiff's care an amount less than the provider's full bill, evidence of that amount is relevant to prove the plaintiff's damages for past medical expenses and, assuming it satisfies other rules of evidence, is admissible at trial. ....Where the provider has, by prior agreement, accepted less than a billed amount as full payment, evidence of the full billed amount is not itself relevant on the issue of past medical expenses. We express no opinion as to its relevance or admissibility on other issues, such as noneconomic damages or future medical expenses. (The issue is not presented here because defendant, in this court, conceded it was proper for the jury to hear evidence of plaintiff's full medical bills.)"

It has long been a rationale for the substantive element of the collateral source rule that evidence of the billed amount is relevant to establish the general damages of the injured plaintiff. The defense in Howell conceded this point during the appellate litigation. Thus, the court has left open the question as to whether the billed portion is relevant and/or admissible. What is the upshot of this?

For the short term, one would expect that this decision is going to be made by trial judges on a case by case basis. Plaintiff's attorneys will continue to assert that billed amounts have relevance. Defense attorneys will cite Howell and assert that the billed amounts are not necessary for the fact finder to decide any aspect of the case. Individual judges will be making decision on individual cases, and it is possible there will be inconsistencies from courtroom to courtroom.

For the long term, one would expect the Supreme Court to address this issue when forced to do so in future case. Much like the history in Howell, we will likely see a myriad of inconsistent decisions, first in the trial courts, and then at the appellate level. So for another several years, it will remain a courtroom to courtroom determination.

What trends/changes should the trial lawyer anticipate in future cases going to trial?

There are a number of possible unintended consequences to this decision. First, it is possible that plaintiffs will be discouraged from using their health insurance policies to pay for their medical expenses. If it is perceived that their case has greater value if doctors and health care are secured on a lien basis, then it would surprise no one to see an upsurge in the number of cases where treatment is provided on a lien. One can ponder (although our Supreme Court did not) whether it is good public policy to encourage insured plaintiffs to forego using their health insurance to pay for treatment for their injuries.

Second, for those cases where treatment is secured on a lien, one would expect to see the defense hiring experts to opine as to the reasonable value of the care provided on a lien basis, irrespective of the billed amount. While the plaintiff will admit evidence of the billed amount on a lien case, the defense can still challenge the reasonableness and necessity of both the care provided and its cost. Over the next few years, experts in the field of determining the reasonable cost of health care may see an uptick in their business.

Third, in pre-trial motion practice, one would expect to see motions in limine on the issue of whether the billed amounts are relevant to determine non-economic damages, and opposition thereto. While there is no post trial "Hanif motion" necessary under Howell, at the pre-trial stage the issues need to be either stipulated to or decided before the jury hears the case.

Fourth, unless and until the Supreme Court confronts the issue of the admissibility of billed amounts to determine general damages, there will remain uncertainty as to the settlement value of cases. It will be a tightrope at trial to argue a billed amount is relevant to assess non-economic damages, but a paid amount is the amount the jury should award on the special verdict, without the jury correctly speculating that the plaintiff had her own health insurance. This quandry will also motivate plaintiffs to forego using their health insurance to pay for their care.

In conclusion, the Howell decision has settled an important issue. But it has left open others. I am always interested in how trial lawyers and trial courts are approaching these issues. So please, drop me a line at robert@tessiermediation.com after your next trial to let me know how the individual trial courts are handling these questions.


 Copyright 2009, Tessier Mediation, All Rights Reserved