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Some California Injury Victims Receive Less Compensation Because of Their Health Insurance

People who suffer traumatic brain injuries, spinal injuries or other serious injuries as the result of the negligence of a third party must receive appropriate medical care. Victims who do not have health insurance typically obtain medical care on a lien basis, and their liens are resolved after settlement or a judgment is rendered 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 the charges were reasonable. The entire medical bill is presented to the fact-finder (usually a jury) at the trial.

This procedure is very different from that of cases involving medical expenses submitted to a health insurer. A victim whose medical bills are paid by an insurance carrier is only responsible for a co-payment or the deductible. And, insurance carriers almost never pay medical bills in full. Usually, a large portion of the medical bill is discounted because of rate reductions negotiated by the insurance company.

As the law stands victims in California personal injury lawsuits who have health insurance receive less compensation than victims who lack insurance. How do the courts assess damages for a personal injury victim who pays medical bills with private health insurance. The cases that deal with this issue have emphasized the public policy of not penalizing victims who have medical insurance. Less emphasis has been placed on cases in which medical bills are written off or deeply discounted due to contracts between insurers and healthcare providers. The issue is important to victims in cases of traumatic brain injuries, spinal injuries, and other serious injuries in which the treatment is usually long and very expensive.

The California Supreme Court has ruled that medical bills paid by health insurance should be included in the evidence given to the jury. The Court has stated that a victim should benefit from purchasing health insurance. A victim in a personal injury case can put forth evidence of all medical bills charged 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 him for his bills. The bills also aid the jury as they assess the injuries of the victim. Presentation of the total bills assists a jury or judge in determining how much to award a victim for his or her pain and suffering.

But, following a trial at which the full medical bill are presented the defense may request a hearing to reduce the amount of the damages awarded to compensate the victim for medical bills to reflect the write offs or reductions due to health insurance contracts with medical providers.

The solution the courts have come up with is eliminating from damages the medical bills that have been written off. This is at odds with the original rationale for allowing the medical bills of insured victims to be introduced at trial. The rule was designed to prevent the negligent party from benefiting from the decision of the victim to purchase insurance. The idea was to encourage victims to have insurance. Reducing the recovery of the victim because of write offs or insurance adjustments benefits the negligent party. If the victim had no insurance the negligent party would be responsible for the full cost of the treatment. It seems logical that since the victim paid the premiums for the insurance, he or she should receive the benefit of any write-offs or contract reductions.

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