Wednesday, August 11, 2010
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Appeals Court Reaffirms Vitality of Collateral Source Rule
Panel Overturns Order Limiting Medical Damages to Amount Accepted by Providers
By a MetNews Staff Writer
The amount that a personal injury plaintiff may recover in past medical bills is not limited to the amount actually paid by the defendant’s insurer and accepted as payment in full by his medical providers, the Third District Court of Appeal has ruled.
The justices Monday restored $93,000 that a Sacramento Superior Court judge had cut from an award in favor of Michael King, a personal injury defense attorney from Santa Rosa.
In an opinion by Justice Tani Cantil-Sakauye, who faces an Aug. 25 confirmation hearing in her bid to become California’s next chief justice, the court also ruled that King is entitled to prejudgment interest and court costs because the restored amount brings his total recovery to $314,000. Under the trial court’s ruling, his recovery would have been less than the defendant’s $298,000 offer under Code of Civil Procedure Sec. 998, and he would not have been entitled to interest and costs.
King, who was managing Farmers Insurance’s legal department in Sacramento at the time, sued Carol Willmett following a rear-end collision in 2004. After consulting several neurosurgeons and undertaking physical therapy and yoga, which failed to fully relieve his symptoms, he underwent disc surgery.
The jury found Wilmett liable and awarded King the full amount billed by the doctors—more than $169,000—for past medical expenses, $20,000 for wage loss, and $125,000 for past and future noneconomic loss. Judge Judy Holzer Hersher, however, relying on a pair of prior Court of Appeal cases, ruled that King could not recover medical expenses in excess of a little over $76,000, equaling the amount that his doctors had accepted as full payment from Wilmett’s insurer plus his co-payments.
But Cantil-Sakauye, writing for a divided Court of Appeal panel, said the collateral source doctrine, which prohibits any reduction in the plaintiff’s damages based upon payments received from a source unconnected with the tortfeasor, bars any reduction in the award.
The doctrine, she explained, reflects a public policy judgment that a tortfeasor or liability insurer should not benefit merely because the plaintiff had the foresight to purchase health insurance, although it is subject by statute to two limited exceptions.
One exception allows the defendant in a medical malpractice case to offer evidence as to the portion of the plaintiff’s damages paid by collateral sources, while the plaintiff may offer competing evidence as to the amount of his or her insurance premiums. The other allows the trial court, on post-trial motion, to reduce an award by the amount paid by collateral sources when the defendant is a public entity, so long as the reduction does not exceed one-half of the net recovery and the plaintiff would not suffer undue financial hardship.
To find additional exceptions, the justice said, would be inconsistent with the traditional view that the enactment of some exceptions to a rule implies that the Legislature intended no others, and would create a “strange anomaly” that lawmakers could not have intended—allowing private defendants a reduction equal to the full amount paid by collateral sources, even though a public defendant’s reduction is statutorily limited.
The cases relied upon by the trial judge in reducing King’s award, Cantil-Sakauye added, were not directly on point.
Presiding Justice Arthur Scotland concurred, but Justice Harry Hull dissented.
Hull argued:
“While ultimately allowing for compensation for the reasonable value of medical services regardless of the amount actually paid has appeal, it seems to me that approach presents at least two difficulties. First, it compensates the plaintiff for detriment that the plaintiff, in fact, never suffered....
“Second is the difficulty of determining the reasonable value of medical services to begin with.”
The case is King v. Willmett, 10 S.O.S. 4676.
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