State High Court Rules Victims Can Claim Only Paid Costs in Injury Suits

On Thursday, the California Supreme Court ruled that an accident victim who sues for compensation for medical costs can seek only the amount the insurer paid health care providers, rather than the actual billed cost of treatment, the San Francisco Chronicle reports.

The 6-1 decision was seen as a victory for insurance companies. Payments of hundreds of millions of dollars annually were at stake, according to business and consumer groups that participated in the case (Egelko, San Francisco Chronicle, 8/19).

Background

The case stemmed from an accident in which a truck from a meat company hit a San Diego woman. Her bills from surgeries and other care totaled nearly $190,000 (Robertson, Sacramento Business Journal, 8/18). The facilities that treated the woman agreed to accept $60,000 from her insurer (California Healthline, 3/15/10).

The woman sued to recover the full $190,000 but lost at the trial court level. She then won an appeal from the 4th District Court of Appeal.

Attorneys from the company then appealed to the state Supreme Court.

Details of the Ruling

The state's high court ruled that an individual should recover only the amount that health care providers were actually paid for treatment and not the total sum billed.

The ruling stated, "We hold no such recovery is allowed, for the simple reason that the injured plaintiff did not suffer any economic loss in that amount" (Sacramento Business Journal, 8/18).

In a dissenting opinion, Justice Joan Dempsey Klein said an individual's insurance coverage should not influence the damages awarded. She added that a party that caused an accident could benefit unfairly from an individual having insurance and "would not be paying the full cost of its negligence or wrongdoing" (San Francisco Chronicle, 8/19).

The case was returned to the appeals court (Gullo, Bloomberg, 8/18).

Reaction to the Ruling

John Montevideo, president of Consumer Attorneys of California, said the ruling was "a setback for consumer rights in California."

Gary Simms, the plaintiff's lawyer, said the ruling could reduce overall damage awards -- for pain and suffering and economic losses -- based on whether an individual had health coverage (San Francisco Chronicle, 8/19).

Insurers said that if they lost the case, as much as $3 billion annually could have been added to their payouts in personal injury cases (Walters, Sacramento Bee, 8/19).