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Question: What are you entitled to recover in your injury lawsuit if you have been injured as a result of an auto accident? One simple answer is your medical bills. But, when dealing with insurance companies and the law, it is of course never that simple.
For many years California injury attorneys agreed that a party who was injured in California was only entitled to recover the amount that was actually paid out or owed to a health care provider. So, if you had private insurance, your personal injury verdict or settlement would usually be negatively impacted. For example, if your medical bills were $5,000 but your insurance company only paid $2,000 to the health care provider, you were only entitled to claim $2,000 - not $5,000. This rule was referred to as the Hanif rule, based on the California case that adopted the above reasoning as law.
California Health Care Providers and insurance companies usually negotiate rates for medical services provided on a contracted basis. The parties enter into an agreement to pay a certain pre-determined amount for a medical service. Many health care providers have been happy to accept a lesser rate in order to enjoy a steady stream of clients.
The California Courts had previously determined that, “a plaintiff is entitled to recover up to, and no more than, the actual amount expended or incurred for past medical services so long as that amount is reasonable.” Hanif v. Housing Authority (1988) 200 Cal. App. 3rd 635, 643. The rule was that when a Plaintiff had medical insurance then medical damages were limited to the actual amount paid or incurred.
Hanif in Practice
Take for example a broken arm suffered in an auto accident. Now assume that two people suffered the same injury – one person with private insurance and one person without. Each was billed $5,000. It would seem that if they had suffered the same injury, there would be identical bills. However, that is not the case. The person who had private insurance would have a lower bill ($2,000) due to the agreement between the health care provider and the insurance company. The health care would take what was called a write off on their bill and would only collect the amount agreed upon.
The above situation leads to two different awards for the same exact injury. The person who did not have any insurance would have received more compensation for their medical bills, merely due to the fact that there is no contractual write off on his or her bill.
Collateral Source Rule
The collateral source rule has been defined as, “if an injured party receives some compensation for his injuries from a source wholly independent of the tortfeasor, [such as health insurance], such payment should not be deducted from the damages which the plaintiff would otherwise collect from the tortfeasor.” Helfend v. Southern California Rapid Transit Dist. (1970) 2 Cal. 3d 1, 6. The basis for the rule is that any individual who has invested money into insurance for medical care should receive the benefits of his or her own prudence.
The importance of knowing the above rule is that the Court has finally taken note the holding in Hanif may be violative of the collateral source doctrine.
Where the Law Stands Today
The Court recently stated the following, “We disagree with Greer to the extent it holds that a trial court in a personal injury action is authorized to hear and grant a defendant's posttrial motion to reduce under Hanif and Nishihama a privately insured plaintiff's recovery of economic damages for past medical expenses. As discussed, ante, we have concluded that the negotiated rate differential is a collateral source benefit within the meaning of the collateral source rule.” Howell v. Hamilton Meats & Provisions, Inc. (2009) 179 Cal.App.4th 686.
In March, 2010, the California Supreme Court granted review of the Howell case, which means that it will try and reconcile the Hanif and Howell cases, hopefully making the law clearer. Defendants and insurance companies are doing their absolute best to hold on to the old rule arguing that Howell is not controlling in certain judicial districts.
Retaining a Personal Injury Attorney
The importance of having a personal injury attorney can be illustrated by the above law. Many lay people would not understand what a reasonable value of medical services actually is or even how to argue for it. A person attempting to represent himself would more than likely take the insurance adjuster’s word at face value. If you have been injured in an accident, it is important that you consult and eventually retain an attorney. Without doing so, you run the risk of not receiving the full value of your case, and could be left owing more on your bills than actually recovered.
Categories: attorney, Car Accident, Personal Injury
Posted By Los Angeles Personal Injury Attorney on May 01, 2010 12:59 pm | Permalink