BILL ANALYSIS �
SENATE JUDICIARY COMMITTEE
Senator Noreen Evans, Chair
2011-2012 Regular Session
SB 1528 (Steinberg)
As Amended April 30, 2012
Hearing Date: May 8, 2012
Fiscal: No
Urgency: No
TW
SUBJECT
Damages: Medical Services
DESCRIPTION
This bill seeks to establish a framework for compensating
injured persons. This bill would provide that existing lien
rights and existing law regarding medical services shall be
maintained, as specified.
(This analysis reflects author's amendments to be offered in
Committee.)
BACKGROUND
Under existing law, individuals who have suffered injuries
caused by tortfeasors may bring an action against the tortfeasor
for recovery of damages, including medical costs, to compensate
the individual for these injuries. Existing law, the collateral
source rule, provides that when measuring the plaintiff's
damages, evidence of the plaintiff's insurance coverage for
medical services is inadmissible when used to reduce the amount
of compensatory damages. The collateral source rule reflects
the public policy that the tortfeasor should not be allowed to
escape liability for the plaintiff's injuries.
A recent California Supreme Court decision, Howell v. Hamilton
Meats, Inc. (2011) 52 Cal.4th 541, held that proof of the
reasonable value of medical services paid for by the plaintiff's
insurer or rendered by the provider contracting with the insurer
is inadmissible when measuring the plaintiff's compensatory
damages.
(more)
SB 1528 (Steinberg)
Page 2 of ?
This bill, sponsored by the Consumer Attorneys of California,
would provide legislative intent to establish a framework for
compensating persons with injuries, while maintaining (and,
therefore, not changing) existing medical lien rights, medical
provider provisions, and existing law regarding claims made
against a public agency.
CHANGES TO EXISTING LAW
Existing law provides that every person who suffers a loss or
harm from the unlawful act or omission of another, may recover
from the person at fault monetary compensation, which is called
damages. (Civ. Code Sec. 3281.)
Existing law provides that damages may be awarded, in a judicial
proceeding, for loss or harm resulting after the commencement of
the judicial proceeding, or certain to result in the future.
(Civ. Code Sec. 3283.)
Existing law provides that, for the breach of an obligation not
arising from contract, the measure of damages, except where
otherwise expressly provided, is the amount which will
compensate for all the detriment proximately caused thereby,
whether it could have been anticipated or not. (Civ. Code Sec.
3333.)
Existing law , the collateral source rule, provides that evidence
of a plaintiff's collateral source of payment for medical
services, such as payment provided by an insurer, should not be
introduced to reduce the amount of compensatory damages to be
award to the plaintiff. (Helfend v. Southern Cal. Rapid Transit
Dist. (1970) 2 Cal.3d 1, 6.)
Existing law provides that, in the event the defendant so
elects, in an action for personal injury against a health care
provider based upon professional negligence, he may introduce
evidence of any amount payable as a benefit to the plaintiff as
a result of the personal injury pursuant to the United States
Social Security Act, any state or federal income disability or
worker's compensation act, any health, sickness or
income-disability insurance, accident insurance that provides
health benefits or income-disability coverage, and any contract
or agreement of any group, organization, partnership, or
corporation to provide, pay for, or reimburse the cost of
medical, hospital, dental, or other health care services. Where
SB 1528 (Steinberg)
Page 3 of ?
the defendant elects to introduce such evidence, the plaintiff
may introduce evidence of any amount which the plaintiff has
paid or contributed to secure his right to any insurance
benefits concerning which the defendant has introduced evidence.
(Civ. Code Sec. 3333.1.(a).)
Existing law provides that no source of collateral benefits
shall recover any amount against the plaintiff, nor shall it be
subrogated to the rights of the plaintiff against a defendant.
(Civ. Code Sec. 3333.1.(b).)
Existing law permits a health care provider to assert a lien
against an injured person's recovery from a third party who is
liable for the injuries, but limits the proportion of the
recovery that may be subject to the lien. (Civ. Code Sec.
3040.)
Existing law establishes a procedure for a hospital to place a
lien upon the damages recovered or to be recovered by an injured
person from a third party liable for the injury. (Civ. Code
Sec. 3045 et seq.)
This bill would declare the intent of the Legislature to
establish a framework for compensating persons with injuries.
This bill would provide that, when a person is compensated for
an injury due to the fault of another, the lien rights provided
Civil Code Sections 3040 and 3045.1, the medical provider
provisions under Civil Code Section 3333.1, and existing law
regarding claims made against a public agency or of public
entities under Government Code Section 985 shall be maintained.
COMMENT
1. Stated need for the bill
The author writes:
It is a goal of our tort system to ensure that injured people
are compensated. Although plaintiffs have an existing right
to sue and the collateral source rule precludes a deduction of
compensation to the injured party for amounts paid by the
injured party's insurer, a recent California Supreme Court
decision, Howell v. Hamilton Meats, Inc. , 52 Cal.4th 541
(2011), created uncertainty as to the measure of compensation.
The Howell court held that proof of reasonable value of
SB 1528 (Steinberg)
Page 4 of ?
medical services paid for by the injured party's insurer or
rendered by the provider contracting with the insurer is not
admissible when measuring the plaintiff's compensatory
damages.
Howell brought up other issues regarding third party
compensation related to plaintiff injury cases, including:
How does Medi-Cal recover costs? How are providers affected?
How are county governments who provide needed services to
their community affected? How are our public Hospitals
affected?
Because of the variety of stakeholder interests in injury
awards, the author has committed to working with all affected
stakeholders to find a reasonable solution for all affected
parties. This bill is not intended to impact MICRA �Medical
Injury Compensation Reform Act].
Sponsor Consumer Attorneys of California (CAOC) writes:
The goal of SB 1528 is to create a framework for assessing
medical damages when a person is injured by a third party.
Unfortunately, a series of court decisions have thrown into
question how medical damages are determined, and in many cases
injured people have no recovery for their medical injury.
When that happens, costs are shifted from the person causing
injury back to the patient and those who provide care,
including fiscally strapped government health care programs.
By statute, California law also allows the state Medi-Cal
program to recoup the costs of medical care it provides to
covered individuals wrongfully injured by another. (�Welf. &
Inst.] Code Sec. 14124.70 et seq.) The Director can maintain
a direct action against the responsible person for
reimbursement of the reasonable value of services, or place a
lien on an injured person's recovery. If an injured person is
able to seek the reasonable value of medical services as
damages, the beneficiary will have greater capacity to
reimburse the full amount sought by the Director. If the
injured person does not collect, it is harder for the Director
to collect. An award that is calculated on the charges
actually paid by Medi-Cal for the services provided is
generally significantly lower than the actual cost of the
care. Thus, in these cases, providers and DHS �Department of
Health Services] are unable to recover the reasonable value of
care and are left to cover the shortfall themselves.
SB 1528 (Steinberg)
Page 5 of ?
The same holds true outside the Medi-Cal setting. Because of
the Howell case, it is unclear how an injured person proves
their damages. Hospitals (Civ. Code Sec. 3045.1) and HMOs
�health maintenance organizations] (Civ. Code Sec. 3040) have
subrogation and lien rights to be reimbursed out of an injured
person's recovery. Again, if the injured person cannot
introduce the reasonable cost of medical care, and therefore
cannot recover those costs, they are unable to reimburse
hospitals or HMOs.
2. Framework to provide certainty regarding medical damages
compensation
This bill would provide for establishing a framework to clarify
the measure of damages related to injuries suffered by a
plaintiff. Existing law, the collateral source rule, provides
that evidence of a plaintiff's collateral source of payment for
medical services, such as payment provided by insurer, should
not be introduced to reduce the amount of compensatory damages
to be award to the plaintiff. (Helfend v. Southern Cal. Rapid
Transit Dist. (1970) 2 Cal.3d 1, 6.) The collateral source rule
reflects public policy that a tortfeasor should not be able to
avoid paying full compensation for the injury inflicted because
the victim had the foresight to purchase health insurance. (Id.
at 10.)
Recently, in Howell v. Hamilton Meats & Provisions, Inc. (2011)
52 Cal.4th 541, the Supreme Court of California created an
evidentiary limitation on proving the full value of an injured
plaintiff's non-economic damages. Prior to Howell, courts
allowed juries, in assessing the non-economic damages for pain
and suffering, to consider the reasonable value of medical
services provided to the injured party because courts recognized
that "the cost of medical care often provides both attorneys and
juries in tort cases with an important measure for assessing the
plaintiff's general damages." (Helfend v. Southern Cal. Rapid
Transit Dist. (1970) 2 Cal.3d; Greer v. Buzgheia (2006) 141
Cal.App.4th 1150.)
CAOC asserts that the Howell decision creates the question as to
how medical damages are determined.
The author argues that because the Howell decision raised policy
concerns regarding the just and appropriate measure of damages
that an injured plaintiff should be entitled to recover from a
tortfeasor, an appropriate framework addressing the measure of
SB 1528 (Steinberg)
Page 6 of ?
damages to be recovered should be established. The author
asserts that, because of the numerous issues raised by the
Howell decision, this bill necessitates communication between
stakeholders of damages awards, and the author and sponsor have
committed to ongoing discussions with stakeholders to establish
an appropriate compensatory damages framework that will provide
a fair recovery to injured persons and provide an opportunity
for state and local governments, as well as health care
providers, to obtain fair reimbursement for services from the
responsible party.
3. Providing for compensation while maintaining lien and
interested party rights
Existing law provides for medical liens on a plaintiff's
recovery of damages. (Civ. Code Secs. 3040, 3045.1.) Existing
law also provides a statutory framework regarding compensatory
damages in medical provider actions and actions against public
entities. (Civ. Code Sec. 3333.1 and Gov. Code Sec. 985.)
This bill would provide that existing medical services-related
lien rights would be maintained when a person is compensated for
injuries caused by third parties. This bill also would maintain
the existing statutory framework regarding compensatory damages
in medical malpractice actions and actions against public
entities. The author states that this bill is intended to
provide for an appropriate framework for compensating plaintiffs
for injuries caused by tortfeasors, not to diminish existing
laws pertaining to third parties.
Further, CAOC asserts that, "�o]nce the framework for assessing
damages is set, SB 1528 makes clear that those subrogation and
lien rights will attach to any recovery by an injured person.
Additionally, in creating that framework, the mechanism for
assessing damages under Civil Code �Section] 3333.1 (health care
providers collateral source protections) and Government Code
�Section] 985 (government entity, including the UC �University
of California], collateral source protections) remain intact."
In order to clarify this point, the author has agreed to amend
this bill to provide that lien rights and other existing laws
affecting interested parties will not be diminished in the
framework.
Author's amendments :
SB 1528 (Steinberg)
Page 7 of ?
On page 2, delete lines 4-9 and insert:
(b) When a person is compensated for an injury due to the
fault of another, the lien rights provided for in Sections
3040 and 3045.1 of this code and the rights of the parties
under Section 3333.1 of this code or of public entities
under Section 985 of the Government Code shall be
maintained.
4. Opposition
The letters timely received by this Committee in opposition to
this bill reflected concerns about the prior version of this
bill. In order to clarify the author's intent, this bill was
amended to provide for a framework for compensating injured
persons.
Support : None Known
Opposition to current version (submitted May 4, 2012) : American
Insurance Association; American International Group; Association
of California Insurance Companies; California Assisted Living
Association; California Association of Bed and Breakfast Inns;
California Association of Health Facilities; California Chamber
of Commerce; California Defense Counsel; California Hotel &
Lodging Association; Civil Justice Association of California;
Cooperative of American Physicians; CSAC Excess Insurance
Authority; National Association of Mutual Insurance Companies;
Pacific Association of Domestic Insurance Companies; The Doctors
Company
Opposition to Introduced version : American Congress of
Obstetricians and Gynecologists; American Insurance Association;
American International Group; American Society for Reproductive
Medicine; Association of California Healthcare Districts;
Association of California Insurance Companies; California
Ambulance Association; California Association of Bed and
Breakfast Inns; California Association of Health Facilities;
California Association of Health Plans; California Association
of Health Underwriters; California Association of Joint Powers
Authorities; California Chamber of Commerce; California Citizens
Against Lawsuit Abuse; California Hotel & Lodging Association;
California Independent Grocers Association; Californians Allied
for Patient Protection; Civil Justice Association of California;
Cooperative of American Physicians; CSAC Excess Insurance
Authority; Fresno Chamber of Commerce; Mercury Insurance Group;
SB 1528 (Steinberg)
Page 8 of ?
National Association of Mutual Insurance Companies; Pacific
Association of Domestic Insurance Companies; Palm Desert Area
Chamber of Commerce; Personal Insurance Federation of
California; Santa Clara Chamber of Commerce and CVB; State Farm;
The Doctors Company
HISTORY
Source : Consumer Attorneys of California
Related Pending Legislation : None Known
Prior Legislation : None Known
**************