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Recent Court Decision Regarding the Collateral Source Rule

On August 18, 2011, a decision came down from the California Supreme Court in Howell v. Hamilton Meats & Provisions, No. S179115. This decision set a limit on the defendant’s liability for special medical damages and the amounts recoverable by a plaintiff. This means that, where a medical provider has accepted as full payment of his/her bill a lesser sum pursuant to a pre-existing contract with the injured person’s health insurer, only the amount actually paid will be recoverable as economic damages, not the larger amount originally billed.

The plaintiffs’ argument was that preclusion from evidence of the amounts actually billed violated the “collateral source” rule, pursuant to which a plaintiff’s recoverable damages are not reduced simply because somebody else (e.g., insurance) paid expenses.  The court rejected this argument stating that this rule “has no bearing on amounts that were included in a provider’s bill but for which the plaintiff never incurred liability because the provider, by prior agreement, accepted a lesser amount as full payment.  Such sums are not damages the plaintiff would otherwise have collected from the defendant.”

The full published opinion from the California Courts’ website can be located here: http://www.courtinfo.ca.gov/opinions/documents/S179115.PDF