Something to "Howell" About: Bill to Overturn Pro-Defendant Decision on Medical Costs Dies in California Legislature

September 10, 2012

In Howell v. Hamilton Meats & Provisions, Inc. (2011) 52 Cal.4th 257, the California Supreme Court held that a plaintiff may recover in damages only the amount in fact paid by plaintiff or on behalf of plaintiff by his or her insurer for medical care. Plaintiff is precluded from recovering the undiscounted sum stated in the medical care provider's bill but never paid by or on behalf of the injured plaintiff. Before Howell, a plaintiff could recover the amount billed for medical services, even if that amount was more than the amount that was negotiated and actually paid for those services. Pursuant to Howell, a plaintiff is only entitled to recover the amount that was actually paid to the medical care provider.

In response to Howell, Senate Bill 1528, authored by Senate president pro tem Darrell Steinberg and sponsored by the Consumer Attorneys of California, was introduced before the California Legislature in February 2012. As originally introduced, the bill would have allowed any injured plaintiff to recover the entire billed cost of his or her medical care, not what was actually paid by plaintiff or plaintiff's insurer.

Because the bill was so strongly opposed, the final (August 2012), narrower version of the bill stated that it was the intent of the Legislature that the bill's provisions would "be limited to resolving an issue not addressed in Howell v. Hamilton Meats & Provisions, Inc. . . . concerning how to establish the value of damages for medical services provided through a capitated health care system plan and to maximize the recovery of liens by the State Department of Health Care Services and has no other effect..." (A "capitated" plan is one in which a medical provider is given a set fee per patient regardless of the treatment required [for example, an HMO]; under capitated plans, doctors and hospitals receive a monthly or annual fee for treating patients instead of being paid directly for providing a particular service.)

In other words, had the final version of SB 1528 become California law, the Howell principle (damages only in the amount of what was in fact paid) would still have applied to fee-for-service health plan medical bills, but damages for the cost of medical services received through a capitated health plan or medical expenses paid by Medi-Cal would have been based on the "reasonable and necessary value" of those services, regardless of what was in fact paid. Opponents, including Kaiser Permanente and many business and insurance groups, called "reasonable and necessary value" a legally murky standard designed to increase payout to tort plaintiffs above and beyond what their injuries actually cost to treat in violation of Howell.

On August 31, 2012, the very last day of the legislative session, SB 1528 died as the result of a California Assembly vote against the bill (43 against, 13 for, and 24 "no votes recorded"). As a result, the Howell decision will continue to govern the recovery of damages concerning all medical services, regardless of whether they were provided through a fee-for-service health plan, a capitated health plan or Medi-Cal.

Will another anti-Howell v. Hamilton Meats & Provisions, Inc. bill be introduced in the next session of the California Legislature? We wouldn't bet against it.