It's been more than year since Cal Biz Lit posted about the whole Hanif / Nishihama / Olsen question. That question, specifically, is this: "Just what does a personal injury plaintiff get when her medical bills are $200,000 but the hospitals and doctors have deals with the insurance companies, Medicaid (or MediCal as we Californians call it) or Medicare to take a whole bunch less as payment in full?" Anybody who's working in the product liability or personal injury law world knows the drill. So does anybody who's ever been in a hospital. The plaintiff gets hurt. The hospital fills up her bill with $5 Q-tips, and $10 bandages, and $3 aspirin tablets and $75 disposable slippers, not to mention Ritz-Carlton-like room charges.
Then it's time for the public agency or insurance company to settle up. And under a pre-existing deal between the insurer and the hospital, the hospital takes something like twenty cents on the dollar and writes off the rest. So almost nobody ever pays all those $10 charges for razors and $30 for disposable IV bottles full of salt water. Or whatever.
So, now our plaintiff is discharged from the hospital, feeling fit as a fiddle (or so we hope) and ready to proceed with her lawsuit. Assume liability is established, does she get what the hospital and the doctors billed? Or does she get what they accepted from the insurance company?
For some years now, the answer has been pretty clear: she can put on evidence of the large amount of her bills so the jury will think she must have had a pretty significant injury. But after the jury awards all those medicals and goes home to their families, the judge will reduce them down to what the providers actually accepted. That's the ruling by the Courts of Appeal in Hanif v. Housing Authority (1988) 200 Cal.App.3d 635 and Nishihama v. City and County of San Francisco (2001) 93 Cal.App.4th 298.
Well, in July of last year, another Court of Appeal came out with a decision in Olsen v. Reid (2008) 164 Cal.App.4th 200. That Court didn't have to decide whether or not Hanif and Nishihama were correct, because the defendant in that case didn't meet his burden of showing what the reduced medical bills were. But in a gratuitous concurring opinion, Justice Moore of that Court let loose with a lengthy argument that Hanif and Nishihama had been wrongly decided, and the plaintiff should be entitled to recover for the entire amount billed, even if nobody was ever going to pay it.
At the time, CBL commented as follows:
As a concurring opinion, this has no binding effect, and trial courts throughout the state are still bound to follow Hanif and Nishihama. But this looks like an invitation for a plaintiff in another case to directly attack these decisions at the Fourth District Court of Appeal when the record is better for the defendant. In fact, it looks like an out-and-out advisory opinion that this district will, in the right case, issue a decision holding that the plaintiff recovers the amount billed, not just the amount paid.
Well, a stopped clock is right twice a day, and CBL gets it right once in awhile as well. Because here is the Fourth District again, in Howell v. Hamilton Meats & Provisions, Inc. (November 23, 2009) ___ Cal.App.4th ___ (Fourth Dist., D053620) squarely holding that Hanif and Nishihama were wrongly decided and declining to follow them. In short, this court rules that if a plaintiff has health insurance, and as part of the insurer's deal with the hospital and doctors, large amounts of the bills get written off so that neither the insurer nor the plaintiff has to pay the excess amounts, that is a "benefit" to the plaintiff. The defendant didn't pay for the benefit. So under the collateral source rule, the defendant can't take advantage of the benefit. And the plaintiff can recover for the full amount of the bill, even though nobody is ever going to pay most of it.
So now, there are directly conflicting Court of Appeal decisions. Which means that under Auto Equity Sales, Inc. v. Superior Court of Santa Clara
County (1962) 57 Cal. 2d 450 , every trial court in California can follow either rule. Until the Cal Supremes intervene. Which, CBL feels confident, they will.