What Insurance Professionals Should Know about Howell v. Hamilton

October 17, 2011

On August 18, 2011 the California Supreme Court issued its long-awaited decision in the matter of Howell v. Hamilton Meats & Provisions, Inc., 53 Cal.4th 541 (2011). The case establishes a critical limitation on a plaintiff’s right to recover damages for past medical expenses, sets forth new procedures for addressing this issue, and leaves open to debate the admissibility of evidence of the plaintiff’s medical charges exceeding that which was paid by insurance.

Howell essentially holds that a plaintiff’s recovery for past medical expenses is limited to the amount paid by insurance.

The California Supreme Court concluded its analysis in Howell by clearly stating:

“We hold . . . that an injured plaintiff whose medical expenses are paid through private insurance may recover as economic damages no more than the amounts paid by the plaintiff or his or her insurer for the medical services received or still owing at the time of trial.”

In other words, the plaintiff is not entitled to recover as damages the amount that was charged by a health care provider when the provider accepts less than the amount billed for their services, and the plaintiff is not responsible for paying the difference between the amount that was billed by the provider and the amount his or her insurer paid the provider. At the same time, in order to avoid contravening the collateral source rule, the fact that plaintiff’s bills were paid by insurance is not to be made known to a jury.

Since the plaintiff may recover the full amount billed when the plaintiff remains liable for the amount that insurance does not pay the provider, the defense needs to prove that the provider has accepted the amount paid by the insurer as full payment of the charges at issue. This was shown in Howell through affidavits obtained from the plaintiff’s health care providers. The importance of such evidence in future cases cannot be overstated.

Howell eliminates the need to file a post-trial Hanif motion, calling instead for a motion for new trial.

Prior to the decision in Howell, many California courts followed the approach to recovery of past medical expenses outlined in the case of Hanif v. Housing Authority (1988) 200 Cal.App.3d 635. In Hanif the court held that a plaintiff’s recovery of past medical expenses was limited to the amount paid by Medi-Cal. However, because the amount of the charges for medical services was admitted into evidence, Hanif called for the defense to make a post-trial motion to reduce the amount of a jury’s award of past medical expenses to the amount paid. Howell eliminates this procedural approach, instead calling for the defense to move for a new trial in the event that a jury awards the plaintiff more than he or she is entitled to for past medical special damages. In response, the plaintiff has the option of accepting the lesser amount the plaintiff was entitled to recover or, proceeding with a new trial. So long as juries follow an instruction based on Howell that clearly states that they are not to award the plaintiff more than the amount that has been paid for plaintiff’s past medical expenses, which defendants should request going forward, motions for new trial should not be necessary.

Howell does not hold that evidence of the amount billed for past medical expenses is inadmissible.

Where private insurance has paid the plaintiff’s past medical bills and the plaintiff is not liable for the difference between the amount billed and the amount paid, the Howell court unequivocally held that a plaintiff may only recover as damages the amount paid by insurance to the plaintiff’s health care providers. However, even under these circumstances the Howell court did not hold that evidence of the amount billed by plaintiff’s health care providers must be excluded. Rather, the Howell court left this question to be decided on a case-by-case basis until the court has an opportunity to revisit the issue. The court left the issue open because the defendant in Howell did not contest the relevance of plaintiff’s past medical charges.

Can defendants move to exclude all evidence of the amount billed for plaintiff’s past medical care after Howell?

Yes, the defense can move to exclude all evidence of the amount billed for a plaintiff’s past medical care assuming, of course, that the defense can prove that the plaintiff does not remain liable for the difference between the amount billed for the services and the amount paid by insurance. Whether a motion to exclude all evidence of the amount billed for past medical care will be granted depends on whether the trial court in a given case determines that evidence of the amount billed is, or is not, relevant either to plaintiff’s claims for future medical expenses or for pain and suffering. Again, because the defense in Howell did not argue that all evidence of past medical charges was irrelevant, the Howell court expressly stated that it was not deciding whether such evidence was relevant to either plaintiff’s damages for future medical care or, plaintiff’s claim for pain and suffering. Therefore, the onus is on defense counsel to persuade the court in future cases that the amount billed for plaintiff’s past medical care has no relevance to plaintiff’s claims for future medical expenses and plaintiff’s pain and suffering.

Under what circumstances are defendants likely to face greater difficulty excluding all evidence of the amount billed for a plaintiff’s past medical care?

Since it should not be difficult to persuade a court that the amount billed for a plaintiff’s past medical care is no more or less indicative of the extent of the plaintiff’s pain and suffering than is the amount actually paid for such care, defendants likely will face greater difficulty excluding all evidence of the amount billed for past medical care in cases involving claims that the plaintiff will need future medical care. In particular, it can be expected that when a plaintiff’s expert contends that the plaintiff will need the same treatment he or she received in the past, such as physical therapy or a particular type of surgery, like knee replacement, plaintiffs will maintain that the amount billed for such services in the past evidences the likely cost of such services in the future. In response, defendants likely will contend that an expert for the plaintiff can opine as to the anticipated cost of such future services without relying on evidence of what the plaintiff was charged for the services in the past. However, if the defense contests the opinion of plaintiff’s expert as to the anticipated cost of the future treatment, and the amount the plaintiff was previously billed dovetails with the opinion of the plaintiff’s expert, the defense may be hard-pressed to exclude the plaintiff’s previous charges from the evidence.

The deadline to grant a rehearing or modification has been extended to November 16, 2011.