BILL ANALYSIS �
SB 1528
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SENATE THIRD READING
SB 1528 (Steinberg)
As Amended June 27, 2012
Majority vote
SENATE VOTE :22-13
JUDICIARY 6-4
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|Ayes:|Feuer, Atkins, Dickinson, | | |
| |Monning, Wieckowski, | | |
| |Bonnie Lowenthal | | |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Wagner, Gorell, Huber, | | |
| |Jones | | |
| | | | |
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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
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 third parties.
FISCAL EFFECT : None
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:
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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.
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].
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
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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.) The Consumer Attorneys of California assert
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
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.
This bill 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 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. The bill
further makes these liens subject to attorneys' liens, which
currently have priority over all medical liens under existing
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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 50% of the ultimate recovery,
and any other factors that the court finds to be fair and
equitable. These factors do not increase an injured 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.
The Assembly Judiciary Committee received a number of letters in
opposition to this bill reflecting concerns about the
supporters' intentions more than the contents 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)."
Analysis Prepared by : Kevin G. Baker / JUD. / (916) 319-2334
SB 1528
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