Howell v. Hamilton Meats & Provisions Inc.

• Decision Date: 18 August 2011
• Docket Number: No. S179115.,S179115.
• Court: California Supreme Court
• Parties: Rebecca HOWELL, Plaintiff and Appellant,v.HAMILTON MEATS & PROVISIONS, INC., Defendant and Respondent.

52 Cal.4th 541

257 P.3d 1130

129 Cal.Rptr.3d 325

11 Cal. Daily Op. Serv. 10,525

2011 Daily Journal D.A.R. 12,533

Rebecca HOWELL, Plaintiff and Appellant,

v.HAMILTON MEATS & PROVISIONS, INC., Defendant and Respondent.

No. S179115.

Supreme Court of California

Aug. 18, 2011.

OPINION TEXT STARTS HEREWest CodenotesRecognized as PreemptedWest's Ann.Cal.Welf. & Inst.Code § 14124.791 Law Office of Gary L. Simms, Gary L. Sims; LaFave & Rice, John J. Rice, San Diego; Basile Law Firm, San Luis Obispo, J. Jude Basile; Law Offices of J. Michael Vallee, Solana Beach, and J. Michael Vallee for Plaintiff and Appellant.Barbara A. Jones; Michael Schuster, Kelly Bagby and Bruce Vignery for AARP as Amicus Curiae on behalf of Plaintiff and Appellant.Hinton, Alfert & Sumner, Scott H.Z. Sumner, Walnut Creek, Jeremy N. Lateiner, San Francisco; Liberson & Wolford and Joel K. Liberson for Consumer Attorneys of California as Amicus Curiae on behalf of Plaintiff and Appellant.Tyson & Mendes, La Jolla, Robert F. Tyson, Mark T. Petersen and Kristi Deans for Defendant and Respondent.McCormick, Barstow, Sheppard, Wayte & Carruth, Dean Petrulakis, John M. Dunn and Jeffrey R. Olson, Modesto, for CSAC Excess Insurance Authority and Central Region School Insurance Group as Amici Curiae on behalf of Defendant and Respondent.Hayes, Scott, Bonino, Ellingson & McLay, Redwood City, and Mark G. Bonino for Association of Defense Counsel of Northern California and Nevada as Amicus Curiae on behalf of Defendant and Respondent.Sedgwick, Detert, Moran & Arnold, Los Angeles, Christina J. Imre and Kirk Jenkins for Allstate Insurance Company as Amicus Curiae on behalf of Defendant and Respondent.Fred J. Hiestand, Sacramento, for The Civil Justice Association of California as Amicus Curiae on behalf of Defendant and Respondent.Greines, Martin, Stein & Richland, Los Angeles, and Robert A. Olson for Association of Southern California Defense Counsel and DRI–The Voice of the Defense Bar as Amici Curiae on behalf of Defendant and Respondent.Horvitz & Levy, Encino, David S. Ettinger and H. Thomas Watson for American Insurance Association, Association of California Insurance Companies, Personal Insurance Federation of California, California State Automobile Association Inter–Insurance Bureau, Chartis, Inc., Farmers Insurance Exchange, Infinity Insurance Company, Interinsurance Exchange of the Automobile Club, Mercury Insurance Group, State Farm General Insurance Company and State Farm Mutual Automobile Insurance Company as Amici Curiae on behalf of Defendant and Respondent.Cole Pedroza, Pasadena, Curtis A. Cole, Kenneth R. Pedroza for California Medical Association, California Dental Association and California Hospital Association as Amici Curiae on behalf of Defendant and Respondent.Newdorf Legal, San Francisco, David B. Newdorf and Vicki F. Van Fleet for The League of California Cities as Amicus Curiae.WERDEGAR, J.

[52 Cal.4th 548 , 257 P.3d 1133]

When a tortiously injured person receives medical care for his or her injuries, the provider of that care often accepts as full payment, pursuant to a preexisting contract with the injured person's health insurer, an amount less than that stated in the provider's bill. In that circumstance, may the injured person recover from the tortfeasor, as economic damages for past medical expenses, the undiscounted sum stated in the provider's bill but never paid by or on behalf of the injured person? We hold no such recovery is allowed, for the simple reason that the injured plaintiff did not suffer any economic loss in that amount. (See Civ.Code, §§ 3281 [damages are awarded to compensate for detriment suffered], 3282 [detriment is a loss or harm to person or property].)

The collateral source rule, which precludes deduction of compensation the plaintiff has received from sources independent of the tortfeasor from damages the plaintiff “would otherwise collect from the tortfeasor” ( Helfend v. Southern Cal. Rapid Transit Dist. (1970) 2 Cal.3d 1, 6, 84 Cal.Rptr. 173, 465 P.2d 61 ( Helfend )), ensures that plaintiff here may recover in damages the amounts her insurer paid for her medical care. The rule, however, 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. They are neither paid to the providers on the plaintiff's behalf nor paid to the plaintiff in indemnity of his or her expenses. Because they do not represent an economic loss for the plaintiff, they are not recoverable in the first instance. The collateral source rule precludes certain deductions against otherwise recoverable damages, but does not expand the scope of economic damages to include expenses the plaintiff never incurred.

Factual and Procedural Background

Plaintiff Rebecca Howell was seriously injured in an automobile accident negligently caused by a driver for defendant Hamilton Meats & Provisions, Inc. (Hamilton). At trial, Hamilton conceded liability and the necessity of the medical treatment plaintiff had received, contesting only the amounts of plaintiff's economic and noneconomic damages.

Hamilton moved in limine to exclude evidence of medical bills that neither plaintiff nor her health insurer, PacifiCare, had paid. Hamilton asserted that PacifiCare payment records indicated significant amounts of the bills from plaintiff's health care providers (the physicians who treated her and Scripps Memorial Hospital Encinitas, where she was treated) had been adjusted downward before payment pursuant to agreements between those providers and PacifiCare and that, under plaintiff's preferred provider organization (PPO) policy with PacifiCare, plaintiff could not be billed for the balance of the original bills (beyond the amounts of agreed patient copayments). Relying primarily on Hanif v. Housing Authority (1988) 200 Cal.App.3d 635, 246 Cal.Rptr. 192 ( Hanif ),¹ Hamilton argued that because only the amounts paid by plaintiff and her insurer could be recovered, the larger amounts billed by the providers were irrelevant and should be excluded. The trial court denied the motion, ruling that plaintiff could present her full medical bills to the jury and any reduction to reflect payment of reduced amounts would be handled through “a posttrial Hanif motion.”

Plaintiff's surgeon and her husband each testified that the total amount billed for her medical care up to the time of trial was $189,978.63, and the jury returned a verdict awarding that same amount as damages for plaintiff's past medical expenses.

Hamilton then made a “post-trial motion to reduce past medical specials pursuant to [ Hanif ],” seeking a reduction of $130,286.90, the amount assertedly “written off” by plaintiff's medical care providers, Scripps Memorial Hospital Encinitas (Scripps) and CORE Orthopaedic Medical Center (CORE). In support of the motion, Hamilton submitted billing and payment records from the providers and two declarations, the first by Scripps's collections supervisor, the second by an employee of CORE's billing contractor. The Scripps declaration stated that of the $122,841 billed for plaintiff's surgeries, PacifiCare paid $24,380, plaintiff paid $3,566, and the remaining $94,894 was “ ‘written off’ or waived by [Scripps] pursuant to the agreement between [Scripps] and the patient's private healthcare insurer, in this case Pacificare PPO.” The CORE declaration stated that of the surgeon's bill for $52,915, PacifiCare paid $9,665, and $35,392 was waived or written off pursuant to CORE's agreement with PacifiCare.² Both declarants stated the providers had not filed liens for, and would not pursue collection of, the written-off amounts.

In opposition, plaintiff argued reduction of the medical damages would violate the collateral source rule. She supported her opposition with copies of the patient agreements she had signed with Scripps, in which she agreed to pay Scripps's “usual and customary charges” for the medical care she was to receive, and with CORE, in which she agreed to pay any part of the physician's fee her insurance did not pay.

The trial court granted Hamilton's motion, reducing the past medical damages award “to reflect the amount the medical providers accepted as payment in full.” Accordingly, the court reduced the judgment by $130,286.90.

The Court of Appeal reversed the reduction order, holding it violated the collateral source rule. Because it viewed the reduction of the award as substantively improper, the Court of Appeal did not resolve plaintiff's additional contentions that the procedures used in the trial court were statutorily unauthorized and the evidence Hamilton presented was insufficient.

We granted Hamilton's petition for review.

Discussion

Compensatory damages are moneys paid to compensate a person who “suffers detriment from the unlawful act or omission of another” (Civ.Code, § 3281), and the measure of damages generally recoverable in tort is “ the amount which will compensate for all the detriment proximately caused” by the tort ( id., § 3333). Civil Code section 3282, in turn, defines “detriment” as “a loss or harm suffered in person or property.” A person who undergoes necessary medical treatment for tortiously caused injuries suffers an economic loss by taking on liability for the costs of treatment. Hence, any reasonable charges for treatment the injured person has paid or, having incurred, still owes the medical provider are recoverable as economic damages. (See Melone v. Sierra Railway Co. (1907) 151 Cal. 113, 115, 91 P. 522 [plaintiff is entitled to “[s]uch reasonable sum ... as has been necessarily expended or incurred in treating the injury”].)

When, as here, the costs of medical treatment are paid in whole or in part by a third party unconnected to the defendant, the collateral source rule is implicated. The...