Contact: Nicole Mahrt Ganley
Phone: 916-440-1116
E-Mail: nicole.mahrt@acicnet.org
FOR RELEASE ON RECEIPT
August 18, 2011
CA Supreme Court Correctly Concluded Damages Should be Based on
Actual Paid Amounts Not Phantom Billed Charges
SACRAMENTO, California – The following statement by the Association of California Insurance
Companies (ACIC) is in response to the decision released this morning by the California Supreme
Court (Court) in the case of Howell vs. Hamilton Meats & Provisions Inc. This case centered on the
question of whether a plaintiff’s settlement damages should be based on the higher amount billed
by a medical provider or the actual amount paid for by the insurer as agreed to by the medical
provider. ACIC participated in an amicus brief with other insurance trade association filed with the
Court on behalf of the defendant reminding the Court of its previous decisions prohibiting such
“unjust enrichment.” This statement can be attributed to Armand Feliciano, ACIC vice president.
“The California State Supreme Court made the right decision today. The Court correctly concluded
that the actual amount paid by the insurer should be the basis for damages. The Court further
stated in their decision: “the negotiated rate differential is not a collateral payment or benefit subject
to the collateral source rule.” The collateral source rule is an evidentiary rule that generally
prevents a reduction of plaintiff’s damages if they received a benefit from an outside source. The
Court’s ruling is a rejection of the trial lawyers’ collateral source arguments.
This ruling will ensure that parties receive damages based upon the actual amount paid to a
medical provider, instead of a random inflated price that was never paid to anyone. If this case had
been decided for the plaintiff, property-casualty insurance companies would have been required to
pay damages based on inflated costs that were never incurred and this could have caused auto or
homeowners insurance premiums to increase.
A plaintiff’s compensation for medical care must equate to the actual harm or what the insurer
actually paid for medical services to make the plaintiff whole. To compensate the plaintiff billed
charges or something that was never incurred is a windfall and could have the unintended
consequence of increasing premiums.
The Court’s ruling is consistent with the amicus brief ACIC and other insurance trade associations
filed with the Court. The brief reminded the Court of past Supreme Court decisions that prohibited
such "unjust enrichment" including the application of the 1970 California Supreme Court case
Helfend v. Southern Cal. Rapid Transit Dist (1970) 2 Cal.3d 1, 6.
Today, the California Supreme Court agreed that damages should be based on actual costs paid
and that is good news for California insurance consumers.”
The Association of California Insurance Companies (ACIC) is an affiliate of the Property Casualty
Insurers Association of America (PCI) and represents more than 300 property/casualty insurance
companies doing business in California. ACIC member companies write 41.8 percent of the
property/casualty insurance in California, including 57.3 percent of personal auto insurance, 45.7
percent of commercial automobile insurance, 40 percent of homeowners insurance, 32.5 percent of
business insurance and 43.4 percent of the private workers compensation insurance. PCI is
composed of more than 1,000 member companies, representing the broadest cross-section of
insurers of any national trade association.
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