People who suffer traumatic brain injuries, spinal cord injuries, or other serious injuries as a result of the negligence of a third party must receive proper medical care. Victims who do not have health insurance generally obtain medical care on a lien basis, and their liens are resolved after a settlement or judgment is entered in the case. To determine damages based on medical expenses in these cases, the judge or jury must determine whether the treatments were necessary and whether the charges were reasonable. The complete medical bill is presented to the fact finder (usually a jury) at trial.
This procedure is very different from medical expense cases submitted to a health insurer. A victim whose medical bills are paid by an insurance company is only responsible for the copay or deductible. And insurance companies almost never pay medical bills in full. Typically, a large portion of the medical bill is discounted due to rate reductions negotiated by the insurance company.
As the law stands, victims of California personal injury lawsuits who have health insurance receive less compensation than victims who do not have insurance. How do courts assess damages for a personal injury victim who pays for medical bills with private health insurance? The cases that address this issue have emphasized the public policy of not penalizing victims who have health insurance. Less emphasis has been placed on cases where medical bills are written off or heavily discounted due to contracts between insurers and health care providers. The topic is important to victims in cases of traumatic brain injury, spinal cord injury, and other serious injuries where treatment is often lengthy and very expensive.
The California Supreme Court has ruled that medical bills paid by health insurance must be included in the evidence given to the jury. The Court has stated that a victim should benefit from the purchase of health insurance. A victim in a personal injury case may present evidence of all collected medical bills, regardless of how the bills were paid. Those bills provide the jury with evidence of the amount of damages the victim should receive to compensate them for her bills. The bills also help the jury assess the victim’s injuries. Submitting total bills helps a jury or judge determine how much to award a victim for their pain and suffering.
But, after a trial in which the full medical bill is presented, the defense can request a hearing to reduce the amount of damages awarded to compensate the victim for the medical bills to reflect cancellations or reductions due to contract health insurance with medical providers.
The solution that the courts have come up with is to remove medical bills that have been canceled from damages. This is in contradiction to the original justification for allowing insured victims’ medical bills to be presented at trial. The rule was designed to prevent the negligent party from benefiting from the victim’s decision to purchase insurance. The idea was to encourage victims to have insurance. Reducing the victim’s recovery due to insurance cancellations or adjustments benefits the negligent party. If the victim did not have insurance, the negligent party would be responsible for the full cost of treatment. It seems logical that since the victim paid the insurance premiums, she should receive the benefit of contract cancellations or reductions.