California Court of Appeal Re-affirms Hanif and Nishihama, which Limit Medical Special Damages to Amounts Actually Paid
February 25, 2011
On February 24, 2011, in the most recent appellate case, Cabrera v. E. Rojas Properties, Inc. (Second Dist., Case No. B216445), the Court of Appeal followed the holdings in Hanif v. Housing Authority, 200 Cal.App.3d 635 (1988) and Nishihama v. City and County of San Francisco, 93 Cal.App.4th 298 (2001).
The issue decided by the Cabrera court was whether the collateral source rule barred the reduction of a plaintiff’s recovery of past medical expenses from the amount billed by her medical provider to the amount paid by her private medical insurer. The Cabrera court stated—“We follow current California law and hold that such reduction was appropriate notwithstanding the collateral source rule.” Therefore, the appellate court reaffirmed that a plaintiff may not recover “phantom” damages, i.e., the “billed” amount of medical expenses that providers never actually pursued or collected as opposed to the actual amount paid.
Last year, the California Supreme Court granted review of, and thereby rendered unpublished and uncitable, several contrary decisions that greatly increased medical special damages to include phantom charges never paid or owed by anyone. See Howell v.Hamilton Meats & Provisions, Inc. (Case No. S179115), review granted 3/10/2010; Yanez v. Soma Environmental Eng’g (Case No. S184846), review granted 9/1/10; King v. Willmett (Case No. S186151), review granted 10/13/10.) The Yanez and King cases are on “hold” pending the decision in Howell. Of particular note, the author of the King decision is now-Chief Justice Cantil-Sakauye of the California Supreme Court, who may be a vote against the defense in Howell.
Since Hanif and Nishihama are still good and citable opinions, pending the Supreme Court’s decision in Howell, the Cabrera court relied on these cases in reaching its conclusion: “[W]hen the evidence shows a sum certain to have been paid or incurred for past medical care and services, whether by the plaintiff or by an independent source, that sum certain is the most the plaintiff may recover for that care despite the fact that it may have been less than the prevailing market rate.” See Hanif, supra, 200 Cal.App.3d at 641; Nishihama, supra, 93 Cal.App.4th at 306. Accordingly, Cabrera rejected the argument, which swayed the Howell and King courts, that payment of the phantom damages is required under the “collateral source” rule.
Until the Supreme Court rules on Howell, the Cabrera-Hanif-Nishihama cases are binding on trial courts, and other appellate courts are free to follow either the Howell-King approach or the Cabrera-Hanif-Nishihama approach.
