Morrison Law Journal


The Morrison Law Journal May 2013 Volume VIII, Edition 5 An Expansive View Of The Howell Doctrine: California Court Of Appeal Rules That Evidence Of "Full Rate" Medical Charges (Which Were Paid At A Discounted Rate) Are Not Relevant In Determining Noneconomic Damages Or The Reasonable Value Of Future Medical Expenses Which May Later Be Incurred By A Personal Injury Plaintiff By: Edward F. Morriso n, Jr., Esq. Larry A. Schwartz, Esq.
As many are aware, California's collateral source rule provides that, in determining personal injury tort damages, "if an injured party receives some compensation for his injuries from a source wholly independent of the tortfeasor, such payment should not be deducted from the damages which the plaintiff would otherwise collect from the tortfeasor." [Helfend v. Southern California Rapid Transit District (1970) 2 Cal.3d 1, 6] Stated differently, an injured personal injury plaintiff whose medical expenses are paid through private insurance may recover the medical expenses as economic damages without offset for the amounts paid for by the plaintiff's insurer. An issue has arisen, however, given that healthcare providers often bill at a rate which is much greater than the amount paid by insurance (and which is accepted as payment in full by the healthcare provider). In that regard, the California Supreme Court in Howell v. Hamilton Meats & Provisions, Inc. (2011) 52 Cal.4th 541, 566 ("Howell") ruled that an injured plaintiff whose medical expenses are paid through insurance cannot recover as economic damages an amount greater than the amount paid by the plaintiff or his or her insurers as of the time of trial. The Howell Doctrine was recognized later on to apply to medical payments which are paid by Medicare. [Luttrell v. Island Pacific Supermarkets, Inc. (2013) 215 Cal.App.4th 196, 205-208] A question, however, that remained after Howell was decided is whether evidence of the "full amount" rate for prior medical care is relevant in proving noneconomic damages or the reasonable value of the medical expenses that a plaintiff may reasonably incur in the future for noneconomic damages. That question has now been answered in Corenbaum v. Lampkin (2013) 215 Cal.App.4th 1308 ("Corenbaum"). 1 In Corenbaum, taxicab passengers brought an action against a motorist for simple and gross negligence arising from an automobile collision in Long Beach, California which occurred in April 2008. The Plaintiffs were severely injured when the Defendant, driving his automobile at a rate of 50 to 70 miles per hour, ran a red light and collided with the taxicab in which the Plaintiffs were passengers. At trial, the trial court admitted evidence of the "full rate" medical billings for the Plaintiffs' medical care for the purpose of establishing medical care as of the date of trial and what the cost of future, necessary medical care would be (the trial took place prior to the California Supreme Court's issuance of its decision in Howell). Following the return of a jury verdict, the trial court entered judgment for the passengers awarding past and future economic and noneconomic damages and punitive damages, but denied attorneys' fees. The motorist and the passengers both appealed. On appeal, and as relevant to this article, the taxicab passenger Plaintiffs argued that a plaintiff seeking damages for future medical expenses should be able to present evidence of the full amount billed for the plaintiff's medical care for purposes of determining future medical expenses. The Plaintiffs also argued that evidence of the full rate charges were relevant to proving noneconomic damages. In that regard, the Corenbaum Court noted, as did the Howell Court, that the "full amount billed [by a medical care provider] is not an accurate measure of the value of medical services [and] that there can be significant disparities between the amounts charged by medical providers and the cost of providing services ... " The Court of Appeal then ruled that evidence of the full amount billed for medical care was inadmissible to prove the cost of future medical care and could not be relied upon by any expert witness to prove the cost of future medical care. The Court of Appeal also ruled that evidence of the full rate of medical charges was inadmissible to prove noneconomic damages. The Court of Appeal then ruled that the Judgment must be reversed and ordered a new trial on compensatory damages. The Corenbaum case certainly provides clarity. Unless there is legislative intervention, a plaintiff in a personal injury case will not be permitted to present evidence of the "full amount billed" by a medical care provider (at least where that amount is greater than the amount accepted by the medical care provider), whether that be for past economic loss, future economic loss or noneconomic damages. About the Authors: Edward F. Morrison, Jr. is the founding partner and Larry A. Schwartz is Of Counsel to The Morrison Law Group, a professional corporation. Their biographies can be viewed at www.morrisonlawgroup.com. 2 Publication Note: The Morrison Law Group wishes to disseminate this publication to all clients and colleagues of the Firm who wish to receive it. Should any recipient desire to be removed from the distribution list, or wishes to have a colleague added, please contact Jim Van Dusen at The Morrison Law Group at 213 356-5504 or vandusen@morrisonlawgroup.com. Disclaimer Note: The legal article presented above is intended to provide general information which may be of interest or use to clients and colleagues of The Morrison Law Group and should not be construed as legal advice on any matter. 3

As many are aware, California's collateral source rule provides that, in determining personal injury tort damages, "if an injured party receives some compensation for his injuries from a source wholly independent of the tortfeasor, such payment should not be deducted from the damages which the plaintiff would otherwise collect from the tortfeasor." [Helfend v. Southern California Rapid Transit District (1970) 2 Cal.3d 1, 6] Stated differently, an injured personal injury plaintiff whose medical expenses are paid through private insurance may recover the medical expenses as economic damages without offset for the amounts paid for by the plaintiff's insurer.

An issue has arisen, however, given that healthcare providers often bill at a rate which is much greater than the amount paid by insurance (and which is accepted as payment in full by the healthcare provider). In that regard, the California Supreme Court in Howell v. Hamilton Meats & Provisions, Inc. (2011) 52 Cal.4th 541, 566 ("Howell") ruled that an injured plaintiff whose medical expenses are paid through insurance cannot recover as economic damages an amount greater than the amount paid by the plaintiff or his or her insurers as of the time of trial. The Howell Doctrine was recognized later on to apply to medical payments which are paid by Medicare. [Luttrell v. Island Pacific Supermarkets, Inc. (2013) 215 Cal.App.4th 196, 205-208]

A question, however, that remained after Howell was decided is whether evidence of the "full amount" rate for prior medical care is relevant in proving noneconomic damages or the reasonable value of the medical expenses that a plaintiff may reasonably incur in the future for noneconomic damages. That question has now been answered in Corenbaum v. Lampkin (2013) 215 Cal.App.4th 1308 ("Corenbaum").

In Corenbaum, taxicab passengers brought an action against a motorist for simple and gross negligence arising from an automobile collision in Long Beach, California which occurred in April 2008. The Plaintiffs were severely injured when the Defendant, driving his automobile at a rate of 50 to 70 miles per hour, ran a red light and collided with the taxicab in which the Plaintiffs were passengers. At trial, the trial court admitted evidence of the "full rate" medical billings for the Plaintiffs' medical care for the purpose of establishing medical care as of the date of trial and what the cost of future, necessary medical care would be (the trial took place prior to the California Supreme Court's issuance of its decision in Howell). Following the return of a jury verdict, the trial court entered judgment for the passengers awarding past and future economic and noneconomic damages and punitive damages, but denied attorneys' fees. The motorist and the passengers both appealed.

On appeal, and as relevant to this article, the taxicab passenger Plaintiffs argued that a plaintiff seeking damages for future medical expenses should be able to present evidence of the full amount billed for the plaintiff's medical care for purposes of determining future medical expenses. The Plaintiffs also argued that evidence of the full rate charges were relevant to proving noneconomic damages. In that regard, the Corenbaum Court noted, as did the Howell Court, that the "full amount billed [by a medical care provider] is not an accurate measure of the value of medical services [and] that there can be significant disparities between the amounts charged by medical providers and the cost of providing services ... " The Court of Appeal then ruled that evidence of the full amount billed for medical care was inadmissible to prove the cost of future medical care and could not be relied upon by any expert witness to prove the cost of future medical care. The Court of Appeal also ruled that evidence of the full rate of medical charges was inadmissible to prove noneconomic damages.

The Court of Appeal then ruled that the Judgment must be reversed and ordered a new trial on compensatory damages.

The Corenbaum case certainly provides clarity. Unless there is legislative intervention, a plaintiff in a personal injury case will not be permitted to present evidence of the "full amount billed" by a medical care provider (at least where that amount is greater than the amount accepted by the medical care provider), whether that be for past economic loss, future economic loss or noneconomic damages.

About the Authors: Edward F. Morrison, Jr. is the founding partner and Larry A. Schwartz is Of Counsel to The Morrison Law Group, a professional corporation. Their biographies can be viewed at www.morrisonlawgroup.com.

Publication Note: The Morrison Law Group wishes to disseminate this publication to all clients and colleagues of the Firm who wish to receive it. Should any recipient desire to be removed from the distribution list, or wishes to have a colleague added, please contact Jim Van Dusen at The Morrison Law Group at 213 356-5504 or vandusen@morrisonlawgroup.com.

Disclaimer Note: The legal article presented above is intended to provide general information which may be of interest or use to clients and colleagues of The Morrison Law Group and should not be construed as legal advice on any matter.