A really important new case on Hanif

Here's a case that plaintiff's personal injury lawyers have been hoping for:  Howell v. Hamilton Meats & Provisions, Inc. (2009) 2009 WL 4021368.  In that case, the plaintiff was seriously injured when her vehicle was struck by a truck driven by defendant's employee while he was attempting to make an illegal U-turn across the lane in which plaintiff was traveling.  The jury awarded plaintiff $689,978.63, including $189,978.63 for past medical expenses.

The defendant employer first raised the issue of reducing the past medical expense to what was actually paid in a motion in limine to preclude evidence of amounts not paid by the plaintiff.  Plaintiff argued she was entitled to present evidence of the "gross amount of all medical bills" under Helfand v. Southern California Rapid Transit Dist. (1970) 2 Cal.3d 1. 

After judgment, defendant brought a Hanif motion, seeking a reduction of the verdict.  It argued the plaintiff did not incur or expend monies for the full value of the medical bills, and thus, the defendant was entitled to the benefit of the "negotiated rate differential."

Plaintiff opposed the motion, arguing she was not a Medi-Cal beneficiary, and therefore, she could recover the full amount of her medical bills under the collateral source rule.  She also argued she incurred medical expenses for the full amount, even signing an agreement that she would be financially liable for all expenses, including those not paid by her insurance.  Plaintiff claimed the defendant shouldn't receive the benefit of her thrift and foresight in obtaining health insurance.

The trial court granted the defendant's motion to reduce the damages by $130,286.90 to $59,691.73, which was the amount of the negotiated rate actually paid by plaintiff's insurers.  It concluded the plaintiff was only entitled to be made whole and should not receive overcompensation for her injuries.  Plaintiff appealed.

The Fourth Appellate District, Division One was faced with the issue was whether a personal injury plaintiff, who has private insurance, may recover the full economic damages for past medical expense billed by the health care providers under the collateral source rule or should that amount be reduced to what the insurer paid as the agreed-upon full payment.

In an opinion written by Justice Nares, the appellate court reversed, finding the plaintiff was entitled to receive compensation for the detriment caused to her pursuant to Civil Code section 3333, which included objectively verifiable monetary losses, such as medical expenses.  Civil Code section 1431.2(b)(1).  In addition, the collateral source rule barred a deduction for compensation received from a source other than the tortfeasor.  In summary, the plaintiff should receive the benefit of her insurance, and not the defendant, who would then otherwise receive a windfall.  (See Rstmt. 2nd of Torts, sec. 920A.)

The court found Hanif v. Housing Authority (1988) 200 Cal.App.3d 3d 635 to be inapposite.  The minor in  Hanif incurred no personal liability because the charges were billed to Medi-Cal and he lacked the capacity to enter into a financial responsibility agreement with the providers.  As a consequence, the court in Hanif did not address the issues presented by Howell.  The court also disagreed with the holding in Nishihama v. City and County of San Francisco (2001) 93 Cal.App.4th 298 [trial court erred in permitting jury to award provider's normal rates, rather than the reduced rates it paid pursuant to agreement].

The appellate court in Howell cited Justice Eileen Moore's concurring opinion in Olsen v. Reid (2008) 164 Cal.App.4th 200, 204 that "[w]ithout statutory authority or the Supreme court's lessing, the Haniff/Nishihama line of cases divorced the collateral source rule from the complicated area of medical insurance," and, "[a]bsent such approval, Hanif/Nishihama simply goes too far."  The Howell court made it clear that making chances to the collateral source rule was best left to the Legislature.

The court also disagreed with Greer v. Buzgheia (2006) 141 Cal.App.4th 1150 about the propriety of bringing a post-trial motion to reduce a jury's award of medical expenses.  Since it had concluded the negotiated rate differential is a collateral source benefit, then the post-trial motion is not necessary, appropriate, or authorized.

The opinion in Howell was filed on November 23, 2009.  We can expect to see a petition for review to the California Supreme Court, as does the plaintiff's attorney, John J. Rice, who is prepared to oppose it.  He notes that "over the last five years, that sum [negotiated rate differential] represents over one billion dollars that hasn't been paid to plaintiff's attorneys."  More to come on this issue      . . .