In a personal injury lawsuit, the plaintiff’s medical expenses are accounted for as part of the compensatory damages award, and more specifically, the economic damages subcategory, which covers the financial losses suffered by the plaintiff as a result of their injuries.
For a broader introduction to damages in a California personal injury case, please read our article here.
At first glance, the issue of how medical expenses fit into the overall damages picture can be somewhat overwhelming. Medical expenses not only encapsulate past costs, but also future costs, and further, there is an interplay between insurance coverage and actual costs.
To those unfamiliar with the process of calculating personal injury damages, a number of common concerns begin to crop up.
Will comprehensive insurance coverage hurt my overall claim?
Should I be paying my medical expenses out-of-pocket to maximize the potential damages award?
If my lawsuit is successful, will the defendant be required to pay for all of my medical expenses, or only some of them?
What treatments can I be compensated for?
These concerns can create additional stress for the plaintiff in the months and years after their injury. To better understand these concerns, among others, let’s first consider the legal landscape of medical expenses in the California personal injury context.
The Effect of Medical Insurance on Damage Calculations
In California, thanks to court decisions such as those in Howell v. Hamilton Meats, Haniff v. Housing Authority, and Nishihama v. City and County of San Francisco, medical expenses that have been paid through private insurance may be recovered as damages. To put it in simpler terms, medical expenses are not comprised solely of out-of-pocket expenses. A plaintiff may assert as special, economic damages the expenses paid by their insurance. Thus, plaintiffs are entitled to medical expenses that: a) they personally paid; b) that the insurer paid; and c) that remain unpaid.
To clear up any confusion, consider the following example.
Suppose that a plaintiff injured their neck in an automobile accident. They are well-insured, and the insurance covered a great deal of the necessary treatment that was received over the course of the next year. The plaintiff received various injections, physical therapy, medication, and even surgery on their neck. Suppose also that the plaintiff has another surgery scheduled in the coming year.
Out of the $100,000 in medical expenses, $95,000 were paid by insurance, and only $5,000 were paid out of pocket. A reasonable estimation of future medical expenses is another $100,000. In this example, despite the fact that plaintiff’s health insurance covered a large proportion of the medical expenses, and will cover a large proportion of future medical expenses, the plaintiff is entitled to assert the $200,000 expenses as damages in total.
The rule that allows the plaintiff to claim damages for medical expenses paid by the insurer also somewhat limit the plaintiff’s recovery. Health insurance providers negotiate with medical providers to lower the cost of treatment. In the above example, it’s possible that the $200,000 in medical expenses is the negotiated amount. The market value of treatment may actually be higher than the negotiated amount eventually paid by the plaintiff’s insurance provider. In some cases, if the plaintiff had not been insured, their medical expenses would actually be higher, and thus, their potential damages award would also be higher.
Because the potential damages amount could be higher, some plaintiffs believe that they should be paying their medical expenses out-of-pocket. That is not a good idea. First, it is unclear to what degree the cost is negotiated down by the insurer. Second, no matter how strong your case is, there is always the possibility that litigation may not go as planned. It is always good practice to limit your out-of-pocket expenses. Finally, it would appear to be unethical and perhaps strategic to the judge and jury that – with access to proper health insurance – the plaintiff decided to pay out-of-pocket instead. This may hurt your overall case and even limit the general damages award.
In other words: if you are covered by health insurance, use it!
Understanding Reasonably Necessary Treatment
In order for the plaintiff to recover for their past and/or future medical expenses, the treatment received (or to be received) must have been, or be, reasonably necessary.
What is reasonably necessary depends largely on the circumstances. For a standard fractured leg injury, very expensive experimental surgery is likely to be seen as unnecessary. On the other hand, experimental or highly specific treatments may be seen as necessary for more catastrophic injuries.
As a general rule, reasonably necessary in the medical context means: a) that the treatment was necessary as a result of the injuries suffered from the accident at-issue; and b) that the treatment is customary, to some extent, for the injuries suffered. Expert witnesses will likely be brought in to testify as to whether the treatment is and was reasonably necessary. Because this is quite a fact-based argument, your attorney will have to work diligently with experts to create a persuasive argument for your past and future treatment.
It’s crucial as a plaintiff to not only attend all necessary medical appointments, scheduled treatments, and therapy sessions, but also to maintain proper records of these events. Over the course of litigation, records will be produced as evidence to prove the damages sought by the plaintiff. Records of everything from clinic and hospital bills, to treatment receipts, to pharmaceutical receipts, and more, will be necessary to provide a complete medical expenses picture.
If you encounter any difficulties, your personal injury attorney will work with you to organize, obtain, and assess your records.