Under a line of decisions which may be generally referred to as the Hanif/Howe/1 progeny of cases (seemy blog from 2014 as to how this case law evolved), a claimant can only claim as economic damagesthe full amount billed by any given healthcare provider if there have been no payments made on thebill from a collateral source, such as the claimant’s own medical insurance. If there have beenpayments from the claimant’s own medical insurance and the provider has adjusted their charges inreciprocity for being paid, then the claimant can only claim the adjusted amount received by the provideras damages (i.e., the amount the medical insurance carrier paid plus any co-pay coming or otherwise duefrom the claimant’s own pocket).
As most healthcare providers will routinely adjust their total charges in order to get paid by medicalinsurance, this will reduce the total amount that the claimant can otherwise claim as damages. For thereasons stated hereafter, this is not necessarily a bad thing. Under what is known as the Collateral SourceRule, the fact that the claimant’s own medical insurance paid some of the bills is not admissible asevidence at trial, nor does the defendant get a credit against what they are legally responsible for in medicalexpense damages just because the claimant’s own medical insurance paid down the bills.
The plaintiffs’ bar has had a difficult time accepting the Hanif/Howe/1 restrictions on what amounts canbe claimed as medical damages in light of the above. In the experience of this practitioner, manyplaintiffs’ attorneys will counsel their clients NOT to use their medical insurance, or alternatively won’t evenapprise their clients of the impact of Hanif/Howe/1 on their claim, much less of what might happen if therecovery at trial isn’t sufficient to cover the unpaid medical bills.
In the opinion of this practitioner, in order to protect the client the attorney should always counsel the clientto use their own medical insurance to pay down the bills, to the extent that they have coverage and the healthcare provider will accept it.
There are three (3) basic reasons behind following this approach:
- Even when liability in a personal injury case is clear, there is no guarantee that a plaintiff will recoverany damages at all if the case goes to trial. If the plaintiff still owes medical bills for treatment of theirinjuries and the bills were not submitted to their medical insurance carrier in a timely fashion, then if theyget nothing or an amount less than the amount of the bills at trial they will be left holding the bag forpersonal responsibility for paying same. Medical insurance companies require timely submission of billsas a condition of extending coverage.
- Given the Hanif/Howe/1 authorities, some trial judges may allow the introduction into evidence at trial ofthe plaintiff having had medical insurance, at least if it has not been used. This is because the plaintiffhas an affirmative legal duty to mitigate their damages, and the defendant will argue that they did not doso by not using their own medical insurance. This type of evidence would give the defendant theargument that the plaintiff should get nothing in damages for their medical bills, and will cast the plaintiff inan unfavorable light in front of a jury.
- Whether medical insurance is used or not, the defendant’s obligation to pay economic damages formedical bills is limited only to those bills that are “reasonable and necessary”. There is even a juryinstruction on this point. When the bills haven’t been submitted to medical insurance and the provider istreating purely on a lien basis, then such providers will commonly “jack up” the amount of the bills giventhe fact that they may not be paid for a year down the line, and because they expect the plaintiffsattorney to try and negotiate with them later on to take a lesser amount as payment in full. Such inflatedlienholder bills are harder to characterize as being “reasonable and necessary”. The argument becomeseasier for the plaintiff to make if the bills have been adjusted downwards due to payment being made bytheir own medical insurance carrier.
It is somewhat of an open question as to whether it constitutes legal malpractice for a plaintiffs attorney to counsel the client not to use their own medical insurance to pay down their bills. But at the veryleast, it is potentially very dangerous for the plaintiff not to do so. Attorneys should err on the side of cautionand put their client’s case and financial situation in the best possible position, especially if the matterdoes not turn out favorably for the client.