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California Plaintiffs Can't Claim Billed Costs, Only Actual Costs, Court Rules

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By Cynthia Hsu, Esq. on August 19, 2011 9:46 AM

The California Supreme Court has ruled personal injury plaintiffs cannot seek billed medical costs over actual costs paid by their insurers.

The case started when Rebecca Howell, the plaintiff, was injured in an automobile accident. She sued the defendant, Hamilton Meats & Provisions, Inc., in a personal injury lawsuit seeking damages for her medical expenses.

Howell and her surgeon testified that she had spent $189,978.63 in medical expenses at the time of the trial, according to the court's opinion. Hamilton, however, sought a reduction in damages in the amount of $130,286.90, representing the portion of Howell's medical bills that were either waived or discounted.

Though Scripps Memorial Hospital Encinitas billed $122,841 for Howell's surgeries, Howell's insurance paid $24,380 total. Howell paid $3,566. The difference was waived by the hospital.

Similarly, CORE Orthopaedic Medical Center gave a bill of $52,915. Howell's insurance paid $9,665, with $35,392 waived.

Howell argued against the damages reduction by citing the collateral source rule.

The collateral source rule prevents a reduction of damages if the injured party receives some monetary compensation from an independent source. As Howell's insurance company, the insurance payments were coming from an independent source. So, the amount of damages she was to receive could not be reduced because her insurance company paid some of the bills.

However, the court cited the California damages' statute, which dictates that for damages to be recoverable they must have been incurred as well as reasonable. And, the court reasoned that if the plaintiff gets a discount on services, they have not suffered a monetary loss or detriment that equals the non-discounted amount. As a result, they cannot recover damages for this greater amount.

The case is a landmark suit that will have a great affect on personal injury damages across the state. If plaintiffs can only sue for actual costs, instead of billed costs, it will mean that they will be able to recover less. However, insurance companies argue that this ruling will ultimately help consumers by helping keep insurance costs low, reports Bloomberg.

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