Across California, the defense continues to argue for the application of Hanif/Nishihama outside of the Medi-Cal context.  The defense asserts that the holdings of these two cases serve not only as a means of reducing the plaintiff’s post verdict award but as a way of limiting the evidence of past medical damages to collateral source payments.  Their analysis is flawed at the least and simply ridiculous at most; for the collateral source rule is very much alive.  The defense’s argument would ensure the plaintiff who has insurance receives less than her uninsured counterpart.  Thus, the defendant would benefit from the plaintiff’s prudence.

What follows is a case by case overview of each decision involved in this issue.

First, a few principals should be made clear: (1) the Supreme Court has never addressed Hanif/Nishihama; (2) no appellate court has ever applied Hanif/Nishihama outside of the Medi-Cal context; and, (3) no appellate court has ever supported the admission of anything other than the full charges billed by plaintiff’s medical care providers as evidence of past medical damages.

•    Hanif v. Housing Authority of Yolo County, 200 Cal.App.3d 635 (1988).
Hanif involved a Medi-Cal beneficiary and a public entity defendant and dealt with a specific exception to the collateral source rule for public entities under Government Code § 985.  Though Hanif did not analyze the collateral source issue and no case has held that Hanif applies outside of a Medi-Cal context, it has become synonymous with the principal that an injured plaintiff may not recover more than the actual amount paid or incurred for past medical services.  Hanif at 641.

•    Nishihama v. City and County of San Francisco, 93 Cal. App. 4th 298, 309 (2001).  Nishihama was a public defendant case that dealt with the validity of the Hospital Lien Act.  The court found that the hospital’s lien rights did not extend beyond the amount it agreed to receive from Blue Cross as payment in full for services provided to plaintiff.  As the hospital has been paid that amount, it had no lien rights in the damages awarded to the plaintiff.  The court found that the lower court erred in permitting the jury to award plaintiff an amount in excess of $3,600 for the services provided by the hospital. (Nishihama, 93 Cal.App.4th at 307.)  Quoting Hanif, the court found that Nishihama was entitled to $3,600, because it represented “a sum certain to have been paid or incurred for past medical care and services … . ” (Nishihama, at 306.)  However, like Hanif, the Nishihama court did not discuss the collateral source rule.  And, the court stated specifically,  “There is no reason to assume that the usual rates provided a less accurate indicator of the extent of plaintiff’s injuries than did the specially negotiated rates obtained by Blue Cross.  Indeed, the opposite is more likely to be true” (Nishihama at 308.);

•    Olszewski v. Scripps Health, 30 Cal. 4th 798 (2003).  The court held that a medical care provider’s lien against Medicaid beneficiary’s personal injury claims was invalid, as the statutory basis for the lien was preempted by federal law barring recovery of more than the cost-sharing charges allowed under the state plan.  The court did not address Hanif or grapple at all with the collateral source rule.

•    Parnell v. Adventist Health System/West, 35 Cal.4th 595 (2005).  The court addressed what a hospital could recover under a lien, where, similar to the facts in Nishihama, it treated the plaintiff at a discounted rate. The court ultimately held that the hospital’s payment was limited to the amount it agreed to accept via the plaintiff’s insurance contract. (Parnell, at 609) It could not, therefore, recover the difference between the amount it billed and the amount paid by the plaintiff’s insurance, either from the plaintiff or the tortfeasor. In a footnote, the court stated: “Because our holding relies solely on the absence of a debt underlying the lien, we do not reach, and express no opinion on, the following issues: (1) whether Olszewski and Hanif apply outside the Medicaid context and limit a claimant’s tort recovery for medical expenses to the amount actually paid by the patient notwithstanding the collateral source rule … .” (Parnell, at 611–612, fn. 16)

•    Greer v. Buzgheia, 141 Cal. App. 4th 1150, 1156-57 (2006). In Greer the court held that the defendant had failed to preserve any right to a post verdict hearing by failing to request a verdict form that contained a separate entry for past medical expenses. (Greer, at 1158.)   And as to the evidence of past medical damages and the Hanif/Nishihama decisions, the court was very clear:

Neither case, however, holds that evidence of the reasonable cost of medical care may not be admitted. Indeed, Nishihama suggests just the opposite: Such evidence gives the jury a more complete picture of the extent of a plaintiff’s injuries. Thus, the trial court did not abuse its discretion in allowing evidence of the reasonable cost of plaintiff’s care . . . ” (Greer, at 1156-57);

•    Katiuzhinsky v. Perry, 152 Cal. App. 4th 1288 (2007).  The court distinguished Hanif/Nishihama, holding that it did not apply where the plaintiff’s medical lien was sold to a third party. In that instance, the plaintiff was still entitled to the full amount billed by the medical provider, as long as that amount was legitimately incurred and the plaintiff remained liable for its payment. (Katiuzhinsky, at 1291.)  With regard to evidence of the amounts billed, the court stated, “There was no basis in law to prevent the jurors from receiving evidence of the amounts billed, as they reflected on the nature and extent of plaintiffs’ injuries and were therefore relevant to their assessment of an overall general damage award.” (Katiuzhinsky at 1295-96);

•    Olsen v. Reid, 164 Cal. App. 4th 200 (2008).  The court overruled a trial court that had reduced a plaintiff’s verdict for past medical expenses to the amount actually paid.  The Court of Appeal unanimously held that the evidence was insufficient to support the trial court’s ruling.  And in regards to the defendant’s argument that evidence of past medical damages should be limited, the court squarely reject that stating, “…it was error for the trial court to permit the jury to hear evidence of the full measure of Olsen’s medical damages.” (Olsen, at 204).  Additional analysis of Olsen can be read here in a previous post: Olsen

Full analysis of the Prospect v. Northridge decision can be found in a previous post here: Prospect

Analysis

The basis for courts failure to deal with this issue head-on is obvious; it’s complicated – the outcome is influenced by on a myriad of laws, the status of the defendant, the nature and source of any collateral source payments made on behalf of the plaintiff or governmental entity, and the relationship between the provider and insurer.  It is also obvious, however, that there is no support for the exclusion at trial of the full charges as evidence of past medical damages or the application of Hanif/Nishihama outside of the Medi-Cal context.

Action by the legislature and clarity from the California Supreme Court are desperately needed to avoid a windfall for tortfeasors at the expense of prudent plaintiffs.