Let’s assume Mr. Jones has health insurance which he pays $500.00 per month. Let’s further assume, Mr. Jones is in an auto accident with Mr. Smith which Mr. Jones sustains very serious injuries and incurs a hospital bill of $75,000.00. The hospital then submits their charges to Mr. Jones’ health insurance company. Due to the contractual relationship the hospital has with the health insurance company, the hospital writes-off $60,000.00 and the health insurance company pays $15,000.00. When Mr. Jones files an action against Mr. Smith is he able to get only $15,000.00 or the entire bill of $75,000.00?. Prior to the recent holding in Howell vs. Hamilton Meats & Provisions, Inc. decided recently by the California Supreme Court, Mr. Smith would be liable for the entire amount of $75,000.00 as any payments made by the health insurance company is a “collateral source” for the benefit of Mr. Jones and any adjustments could not benefit the responsible party. Now, the landscape has changed as the court in Hamilton has ruled that the damages that can be collected by Mr. Jones is only the amount that was paid (i.e. $15,000). This in effect, penalizes health insured parties for if Mr. Jones had no health insurance, Mr. Smith would be liable for the whole amount (i.e. $75,000). Mr. Jones is further penalized for having insurance sicne he has made premium payments for the health insurance, that the defendant, Mr. Smith does not have to share in. In effect, the only winner is Mr. Smith as he is less exposed to less damages and does not have to share in the premium payments. Perhaps one day the state legislature will create a law to overrule the Howell decision so that the insured does not get penalized.
If you, your family member, or a friend is involved in a serious accident, feel free to call me. My website is www.shermanlaw4u.com
