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Mar 2012: Aftershocks of the Howell v. Hamilton Meats Decision
By Robert M. Tessier

The Howell v. Hamilton Meats decision continues to create aftershocks both in the judicial and legislative arenas. Two events in the last few weeks are worthy of note, and will be summarized in this email.

Lydia Sanchez v. Brooke, B224835, Filed March 8, 2012 applies Howell rationale to past medical expenses paid by workers' compensation carrier

Two trial lawyers who are on my email list, M. Lawrence Lallande and Christopher Sheedy, squared off in the Lydia Sanchez v. Brooke casefiled March 8, 2012. This Sanchez case should not be confused with the Sanchez v. Strickland case decided in November 2011 which held that past medical expenses gratuitously written off were not subject to the Howell reduction. Rather, in this new Sanchez case, one of the issues to be determined was whether past medical expenses which were paid in the workers' compensation system in an amount less than the amount the providers actually billed are subject to reduction under the Howell rationale. The answer as provided by Division Four of the Second Appellate District, is yes.

The court succinctly stated its ruling as follows:

"Applying the court's reasoning in Howell to this case, we conclude that where an employer is required under the workers' compensation laws to pay in full an injured employee's medical expenses, the injured employee may not recover, as economic damages from a third party tortfeasor, medical fees that the provider is precluded, either by agreement or by law (including the statutory fee schedule), from collecting from the employer. Because fees that the provider may not collect from the employer under the workers' compensation law do not represent an economic loss for the employee, they are not recoverable in the first instance."

The basis of this ruling is grounded in the statutory scheme found in the California Labor Code. When a worker is injured in the course and scope of employment, her employer is responsible for all medical expenses incurred. The workers' compensation laws limit a healthcare provider's ability to balance-bill an injured employee for charges the employer does not pay. Specifically, Labor Code section 4600 prohibits attempts to seek payment from the injured worker for medical treatment above the reasonable fee established by the official medical fee schedule in the workers compensation system.

This statutory scheme allowed the court to conclude that the amount paid under workers' compensation was the payment in full and the plaintiff was not obligated for the balance. Therefore, the Howell rationale applies to reduce the past medical expenses recoverable to the amount paid by workers' compensation, not the amount billed.

The court did remand the case back to the trial court for determination, in light of Howell (which was decided during the pendency of the appeal in Sanchez) of the full amount owed by the employer to the medical care providers under the worker's compensation law. The amount owed will be the measure of recoverable past medical expenses in the case.

Given the broad and sweeping ruling in Howell, one would have anticipated this result in Sanchez v. Brooke. While the aftershocks continue in the judicial branch, there is now a legislative attempt to address the impact of the Howell decision.

The Impact of Howell in the Legislature

On February 24, 2012, State Senator Steinberg introduced SB 1528, which would add Section 3284 to the Civil Code as follows:

"SECTION 1. Section 3284 is added to the Civil Code, to read:

3284. (a) To ensure the public policy of all injured persons being compensated equally, an injured person shall be entitled to recover the reasonable value of medical services provided without regard to the amount actually paid.

(b) Nothing in this section abrogates the lien rights provided for in Sections 3040 and 3045.1of this code, or Section 14124.791 of the Welfare and Institutions Code. This section shall have no effect on the rights of parties under Section 3333.1 of this code or of public entities under Section 985 of the Government Code."

As we know, there is a long road ahead for any piece of legislation. This legislation squarely reverses Howell, and would require evidence of the reasonable value of medical expense at trial rather than the amount paid. Senator Steinberg's rationale for the legislation is as follows:

"Existing law establishes, as a general rule, that compensation is the relief or remedy provided by law for a violation of private rights. Existing law provides that a person suffering detriment from the unlawful act or omission of another may recover damages from the person at fault.

This bill would require, in order to ensure the public policy of all injured persons being compensated equally, that an injured person is entitled to recover the reasonable value of medical services provided without regard to the amount actually paid, as specified."


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