The amount of money a doctor or hospital bills for medical care is not necessarily the same amount an insurance company pays. Usually, in fact, insurers negotiate these amounts down and pay health care providers only a fraction of the original bill. This practice, however, raises an interesting question in personal injury cases: Are recoverable medical costs the amount billed or the amount paid?
The California Supreme Court recently considered this issue in a San Diego car accident case where the injured plaintiff’s medical bills had been negotiated down to $60,000 from a total of more than $200,000. Last August, in a decision consistent with the original trial court judge’s ruling, six of the court’s seven justices voted to limit the amount of medical costs plaintiffs could recover to the smaller of the two amounts.
A bill introduced by California Senate President Pro Tem Darrell Steinberg last month would essentially negate that precedent and entitle personal injury plaintiffs to recover “the reasonable value of medical services provided without regard to the amount actually paid …”
If the bill is passed and becomes law, insurance industry representatives claim it will mean $3 billion a year in additional costs, which insurers would be forced to try to recoup by charging more for insurance.
While it may be too early to predict how this bill will fare in the California Legislature, it is not too early to say that its passage would significantly benefit victims of personal injury statewide. In the meantime, our lawyers will continue to track this story and post updates on new developments.
Source: The Sacramento Bee, “California’s ‘tort war’ reignited with Darrell Steinberg bill,” Dan Walters, Feb. 27, 2012