A division among California courts in recent years had muddied the waters regarding exactly how to calculate economic damages stemming from medical services. With its August decision in Howell v. Hamilton Meats & Provisions, 11 C.D.O.S. 10525, the California Supreme Court resolved the conflict regarding whether a prevailing personal injury plaintiff may recover the entire amount billed for medical care or only the lesser amount actually paid by the plaintiff’s insurer.

For decades, California courts limited medical expenses to the amount actually paid on behalf of the plaintiff, on the basis that allowing a plaintiff to recover more would violate tort damages principles by placing the plaintiff in a better position than she would have been otherwise. Recently, however, courts began relying on the collateral source rule to hold that plaintiffs could be entitled to the entire amount billed, reasoning that the difference between the as-billed and as-paid rate is a benefit to the insured. The Howell decision rejects the notion that the collateral source rule applies where the amount of the medical expenses paid by the insurer is less than the amount billed, and reaffirms that a plaintiff may recover medical expenses only in the amount of her economic loss, i.e., the actual amount paid by an insurance company for his or her benefit and accepted as payment in full by medical providers. The Supreme Court’s ruling provides common sense clarity and practical benefits for defendants in personal injury cases.

Medical Expenses Based on Tort Damages Principles

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