Brief Fact Summary.
The plaintiff was injured in a car accident caused by the defendant’s negligence. Her medical costs incurred by the accident were negotiated down substantially by her insurance company and the medical team that treated her.
Synopsis of Rule of Law.
Economic damages must be reasonable and incurred, even when the collateral source rule applies. In cases where damages have been reduced and the higher cost never incurred by the plaintiff, the defendant need only pay the reduced cost.
California's statute states, in pertinent part: No employer shall employ any person for a work period of more than five (5) hours without a meal period of not less than 30 minutes and an employer may not employ an employee for a work period of more than ten (10) hours per day without providing the employee with a second meal period of not less than 30 minutes.View Full Point of Law
The plaintiff was seriously injured in a car accident negligently caused by a driver for the defendant. The defendant conceded liability and agreed to pay the damages in regards to medical costs, which were $189,978.63 at the time of trial. The plaintiff’s doctor then wrote off $130,286.90 of the medical costs, causing the defendant to seek a reduction in damages in that amount. The plaintiff opposed this on grounds of the collateral source rule.
Can the injured person recover from the defendant, as economic damages, the undiscounted sum stated in the provider’s bill but never paid by or on behalf of the injured party?
No. The plaintiff did not suffer an economic loss in that amount.
Judge Klein disagrees that the damages must be capped at the discounted amount. Rather, the plaintiff should be able to recover the reasonable or market value of the services she received. There are no policy considerations to justify disallowing the plaintiff to recover the full amount, which, in the grand scheme of damages, is relatively minor.
The collateral source rule is implicated when the costs of medical treatment are paid in whole or in part by a third party unconnected to the defendant. That being said, earlier case law has evaluated the reasonable value of damages in light of limitation, not aggrandizement, meaning that damages should be limited to the amount actually incurred or paid. Damages must be both reasonable and incurred, so a plaintiff cannot recover for the reduced cost of damages if they were never incurred in the first place, even when the collateral source rule applies. Just because the plaintiff’s insurance has negotiated a favorable rate does not mean that the defendant obtains a windfall—or a lopsided judgement that allows them to relatively escape liability. The plaintiff never incurred the full cost of the bill, as it had been negotiated down at the time the damages were incurred. The reduced rate is not a collateral payment subject to the collateral source rule.