Californians Can’t Claim Billed Costs in Injury Lawsuits

Californians suing over personal injuries can only seek damages for actual, rather than billed, medical expenses, the state’s high court said today.

Allowing plaintiffs to recover billed medical costs rather than the lower fees from negotiated rates between health providers and insurers could have cost insurance companies billions of dollars and driven up insurance rates for consumers, Allstate Insurance Co. said in court filing in the case. The company wasn’t a party in the case.

“This is one of the biggest issues to hit California consumers in years, and few people were aware” of the case, said Robert Tyson, an attorney for Hamilton Meats & Provisions Inc., the defendant in the lawsuit decided today. “Rates for insurance were going to go up if the court had ruled the other way.”

Rebecca Howell sued Hamilton Meats after she was seriously injured in a car accident with a company driver. A trial court reduced her damages to the amount actually paid by her medical care providers.

A state appeals court in San Diego reversed the ruling, saying it violated a legal rule that disallows reducing damages for compensation a plaintiff has received from sources other than the defendant. Hamilton Meats & Provisions Inc. appealed and insurance groups and companies including Allstate sought reversal of the appeals court ruling.

“The ruling drastically rewrites a century of California law that says plaintiffs can recover the reasonable value of their damages,” Gary Sims, an attorney for Howell, said in a phone interview.

The case was sent back to the appeals court for further proceedings.

The case is Howell v. Hamilton Meats, S179115, California Supreme Court, San Francisco.

To contact the reporter about this story: Karen Gullo in San Francisco federal court at kgullo@bloomberg.net.

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