In Corenbaum v. Lampkin, --- Cal.Rptr.3d ----, 2013 WL 1801996 (Cal.App. 2 Dist.), the court made it clear that when calculating damages in a personal injury lawsuit, the projected value of future medical services must be based upon the amount paid, rather than the amount billed, for prior medical services. This statement of the law has an extremely important financial effect for defendants and their insurers, and erodes the potential for plaintiffs to collect unfair awards based upon future medical billing estimates that would inflate their medical damages to amounts that would likely never be incurred.

This decision follows the California Supreme Court decision in Howell v. Hamilton Meats, 52 Cal.4th 541 (2011). The Howell decision reflected the modern reality that healthcare providers typically have contractual agreements to accept significantly less than the gross amount billed from health insurers in full satisfaction of their bills. The actual billed amounts are rarely paid, either because a medical insurer has a predetermined payment arrangement for lesser amounts, or because many patients do not have the ability to pay their bills in full, or at all.

Wanting to quantify medical damages at the highest possible figure, the plaintiff’s bar tried to convince the legislature last year to gut, or at least limit the scope of, the Howell decision in Senate Bill 1528, discussed in our prior blog entry last year. After substantial legislative wrangling, the bill went inactive, having garnered less than 25 percent of the final vote.

Now comes Corenbaum, in which an apparently drunk driver sped his Lexus through a red light at 50 to 70 miles an hour and seriously injured two passengers in a taxi. The court reiterated the Howell rule that prior incurred medical expenses will be valued at the amount actually paid. It then confirmed the logical extension of that rule by holding that the amount billed will not even be admissible in court.

As to medical services that are reasonably certain to be necessary in the future, it held that the full amount billed for past medical services is not relevant or admissible in determining the reasonable value of future medical services. What is relevant is what is and will be paid. Anything else is likely to cause jury confusion. And to make the point even clearer, the court ruled that when the Corenbaum parties re-litigate the damages element of the case, the plaintiff’s expert would be barred from doing and end-run around the rule by giving an opinion about the reasonable value of future medical services based in whole or in part upon past medical expenses billed.

Further, the Court of Appeal held that evidence of the full amount billed is not relevant to the amount of noneconomic damages. Calculating “pain and suffering” damages is an extraordinarily subjective task, but judges and juries are required to do that daily. In practice, the amount of medical expenses often serve as a point of reference to translate pain and anguish into dollars. The court held that whether or not it is correct to use medical expenses as a jumping off point for assessing noneconomic damages, there would be no reason to consider the total amount billed for this purpose, because those billed amounts would be irreverent, and otherwise inadmissible, to calculate the actual value of such services

This case will likely be appealed to the California Supreme Court. We are uncertain whether it will accept review or let the decision stand, but we view the holdings as a natural extention of the rules the Supreme Court set forth in Howell.

As it stands under California law, prior and future medical expenses shall be valued at the amount paid or expected to be paid, not billed, and there is no apparent legislative will to change that. This author sees the decision as a victory for common sense, and the decision should put to rest attempts by plaintiffs to obtain inflated reimbursements from defendants for amounts that the plaintiff would never have to pay.