BILL ANALYSIS �
SB 1528
Page 1
Date of Hearing: July 3, 2012
ASSEMBLY COMMITTEE ON JUDICIARY
Mike Feuer, Chair
SB 1528 (Steinberg) - As Amended: June 27, 2012
SENATE VOTE : 22-13
SUBJECT : DAMAGES: MEDICAL SERVICES
KEY ISSUE : SHOULD THIS MEASURE MOVE FORWARD WHILE THE AUTHOR
AND INTERESTED PARTIES CONTINUE THEIR EFFORTS TO RESOLVE THE
IMPORTANT AND COMPLEX ISSUES SURROUNDING THE COMPENSATION OF
INJURED PERSONS AND THE LIEN AND SUBROGRATION RIGHTS OF MEDICAL
PROVIDERS, HOSPITALS, LOCAL GOVERNMENTS AND MEDI-CAL AGAINST THE
PLAINTIFF'S RECOVERY?
FISCAL EFFECT : As currently in print this bill is keyed
non-fiscal.
SYNOPSIS
This bill seeks to establish a framework for compensating
injured persons and clarifying the rights of various parties
regarding lien and subrogation rights when compensation is
recovered. As currently drafted the bill simply extends county
lien rights for medical treatment to settlements and other
sources of recovery for past medical expenses, rather than only
judgments as allowed under existing law, and would make these
liens subject to any liens for attorney's fees and costs
incurred by the person or person's representative, estate, or
survivors. While the author and sponsor contemplate that this
is a work-in-progress, a long list of opponents is arrayed
against that goal. Although they do not object to the current
contents of the bill, the opponents object to what they imagine
the bill may ultimately become based on the supporters' stated
objectives.
SUMMARY : Seeks to reform compensation, lien and subrogation
rights. Specifically, this bill :
1)Provides that the county's right of action would continue as a
first lien against any judgment, settlement, compromise,
arbitration award, mediation settlement, or other recovery for
past medical expenses obtained by the injured or diseased
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person. The bill would make that lien subject to any liens
for attorney's fees and costs incurred by the person or
person's representative, estate, or survivors.
2)Requires specified factors to be considered when a county is
requested to compromise or waive any claim, as provided.
3)Expresses the intent of the Legislature to establish a
framework for compensating persons with injuries due to the
fault of 3rd parties.
EXISTING LAW :
1)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. (Civil Code Sec. 3281.)
2)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. (Civil Code Sec. 3283.)
3)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. (Civil Code Sec. 3333.)
4)Pursuant to 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.)
5)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
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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 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. (Civil Code Sec. 3333.1(a).)
6)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. (Civil
Code Sec. 3333.1(b).)
7)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. (Civil Code Sec. 3040.)
8)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. (Civil Code Sec.
3045 et seq.)
COMMENTS : The author explains that this bill seeks to establish
a basis for compensating medical damages while ensuring that the
existing statutory framework regarding compensatory damages in
medical malpractice cases and actions against public entities is
preserved. The author states:
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 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.
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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].
The sponsor of the bill, 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.
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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.
Background Regarding Measure of Damages . 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.
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 raises
a question of 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
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
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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.
Extension of County Lien Rights. This bill currently extends
the current medical lien rights of counties to settlements in
addition to judgments, as under current law, and provides for
equitable apportionment of those liens. Supporters state that
current law gives counties lien rights only to judgments, not
settlements or other types of compromises. This limits the
ability of counties to be reimbursed when they provide care to
injured persons. This is because courts have strictly
interpreted the county lien statute (Gov. Code Sec. 23004.1) and
have not authorized a county lien on a settlement, only on
judgments. (Mares v Baughman (2001) 92 Cal. App. 4th 672,
676-679; Newton v Clemons (2003) 110 Cal. App. 4th 1, 8-9.)
Because virtually all cases settle and never reach a judgment,
counties give up tens of millions of dollars a year in potential
lien rights due to this decision. Furthermore, supporters
state, under current law counties are under no obligation to
reduce its lien, even if the lien would encompass all or most of
a recovery. (Government Code Sec. 23004.2(a).) The bill
further makes these liens subject to attorneys' liens, which
currently have priority over all medical liens under existing
law - a point that would be similarly applied to common fund
recovery.
In addition, the bill currently provides an opportunity for
equitable apportionment of county liens to remedy some of the
harsh effects that supporters claim current lien law can
inflict. Under the bill new equitable considerations are
created that may be taken into account when an offer to
compromise or waive a lien is presented. Supporters state that
these considerations come from the decades of case law that were
the basis of the United States Supreme Court's decision in
Arkansas Department of Human Services v. Ahlborn (2006) 547 U.S.
268. These include considerations such as the total value of
damages suffered in comparison to the actual amount recovered,
whether other liens exist on the recovery, whether the lien is
in an amount which would exceed fifty percent of the ultimate
recovery, and any other factors that the court finds to be fair
and equitable. These factors do not increase an injured
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person's recovery, supporters state, but simply provide the
court some equitable factors that can be considered to help
injured people receive adequate compensation for their injuries
while still protecting the county's right to be reimbursed.
ARGUMENTS IN OPPOSITION : The Committee received a number of
letters in opposition to this bill reflecting concerns about the
supporters' intentions more than the content of the bill.
For example, the Association of California Insurance Companies
(ACIC) states "While ACIC acknowledges that SB 1528 as amended
appears to address "lien" recoveries, our overall concern
remains that this bill is intended to overturn Howell v.
Hamilton Meats Inc., (2011) 52 C.4th 541. ACIC supports the
Howell decision and is fundamentally oppose to any efforts to
alter that decision."
A coalition of business groups and others lead by the Civil
Justice Association of California states that despite the recent
amendments it continues to oppose the bill on the ground that
the bill "continues to intend to overturn extensive case law,
including but not limited to the recent and well-reasoned
California Supreme Court case, Howell v. Hamilton Meats ((2011)
52 Cal.4th 541)."
REGISTERED SUPPORT / OPPOSITION :
Support
Consumer Attorneys of California
County of Los Angeles
County of San Diego
Opposition
American Insurance Association
American International Group
Asian and Pacific Islanders California Action Network
Association of California Health Care Districts
Association of California Insurance Companies
California Academy of Family Physicians
California Apartment Association
California Asian Chamber of Commerce
California Assisted Living Association
California Association of Bed and Breakfast Inns
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California Association of Health Facilities
California Association of Health Plans
California Association of Joint Powers Authorities
California Chamber of Commerce
California Defense Counsel
California Hotel & Lodging Association
California Manufacturers & Technology Association
California Primary Care Association
Californians Allied for Patient Protection
Chinese Chamber of Commerce of Los Angeles
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
Analysis Prepared by : Kevin G. Baker / JUD. / (916) 319-2334