Calif. Trial Lawyers Welcome Latest Ruling on Recovery of Medical Expenses -- By: Mike McKee

The Recorder

Plaintiffs lawyers are celebrating the second appeal court ruling in seven months that lets individuals recover the full cost of medical care even if the insurer paid only a smaller, negotiated amount.

The ruling by San Francisco's 1st District Court of Appeal was handed down Thursday, adding support to an opinion issued by the 4th District's San Diego branch in November. The California Supreme Court granted review in the latter case by a unanimous vote in March.

The fact that both rulings favor plaintiffs didn't worry David Ettinger, a partner with Encino's Horvitz & Levy who was on the losing side of Thursday's opinion.

"Really," he said, "until the Supreme Court speaks I don't think we can make any judgments."

In Thursday's ruling in Yanez v. SOMA Environmental Engineering Inc., A123893, the 1st District held that an Alameda County judge erred by reducing a negligence award from $150,000 in damages -- including more than $44,500 for past medical expenses -- to about $18,000. The lower amount represented the actual payment plaintiff Ana Yanez's doctors accepted under their contracts with the woman's insurers.

The appeal court invoked the collateral source rule, which says damages shouldn't be reduced simply because the victim receives benefits from other sources, such as insurance companies.

"The rule," Justice Sandra Margulies wrote, "reflects a policy preference favoring the tort victim over the wrongdoer since not applying the rule allows the wrongdoer to profit from the victim's investment in purchasing insurance or from the generosity of those who come to the victim's aid."

The 4th District came to a similar conclusion in Howell v. Hamilton Meats & Provisions Inc., 179 Cal.App.4th 686.

"[Rebecca] Howell, as a person who has invested insurance premiums to assure her medical care, should receive the benefits of her thrift," Justice Gilbert Nares wrote. "And Hamilton, as the party liable for Howell's injuries, should not garner the benefits of Howell's providence."

Both Yanez and Howell were injured in traffic accidents.

Defense lawyers had argued that basing damages on the full cost of medical services -- rather than just for the amount actually accepted by doctors -- would give plaintiffs an undue windfall.

Margulies noted, however, that the collateral source rule applies "even when it unquestionably does confer a windfall benefit on the tort plaintiff."

In a concurrence in Yanez, Justice Kathleen Banke stated it might be wise to re-examine the evidentiary aspect of the collateral source rule.

"It is time, therefore," she wrote, "to trust juries to heed limiting instructions in this context, as in others, and to let juries hear all the relevant evidence on the 'reasonable value' of medical services."

Scott Sumner, a partner with Walnut Creek, Calif.'s Hinton, Alfert & Sumner who represents Yanez, warned, though, that Banke's proposal "would turn every run-of-the-mill rear-end auto collision case into a graduate-level medical financing and insurance exposition."

If that logic is followed, he added, jurors should also be told that defense lawyers have been paid by the hour "and that the plaintiff's lawyer has not been paid, and will not be paid ... unless and until the jury compensates plaintiff for all the harm the defendant's carelessness inflicted on them."

Ettinger called the ruling a "big deal" because the number of personal injury claims filed in California each year involves a "huge amount of money."

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