The simple reality is that personal injury claims that are made against contractors tend to be substantial. Far too often, they involve significant injuries with substantial dollars involved for past and future medical care. A recent California court decision may reduce the value of future medical damages to the benefit of the defendants.
Over the last decade, the law in California relating to medical damages has undergone a substantial shift. There was a time when any reference to medical insurance was forbidden under the guise of the collateral source rule. The fact that a plaintiff had insurance was their own benefit and they were allowed to recover the “full price” of their medical bills. A long series of cases, with Howell v Hamilton Meats (2011) 52 Cal.4th 541 at its apex, the law changed and the courts recognized that allowing a plaintiff to recover more than was actually paid for their medical damages constituted a windfall to the plaintiff. The new measure of damages because the amount actually paid – although some plaintiffs’ counsel are still attempting to present a “reasonable value” theory that is not found in the case law.
All of that related to past medical damages. The measure of damages for future medical care was still the projected future cash price. The shortest explanation was that the injury would constitute a pre-existing condition and was, therefore, not insurable. As we all know, the Affordable Care Act dramatically changed the landscape as to pre-existing conditions. California law has just recently caught up with this changing landscape. In a key decision, the court in Cuevas v Contra Costa County (4/27/17 – First District – petition for rehearing pending) issued an extension of the Hamilton doctrine. Because the plaintiff can purchase insurance through the ACA exchange and it cannot legally bar coverage for a pre-existing condition, the proper measure of his future medical care is the insurance reimbursement rate for his care – not the cash price and not the “list price.” This has a dramatic impact on future life care plan values. In many cases, the discount can be 50%, or more.
The long-term impact of this decision is unknown – and it is likely to be litigated further in the courts of appeal. However, it would seem obvious that anything that reduces future medical damages by as much as 50% is good for the defendants.