MEDICAL EXPENSES IN PERSONAL INJURY CLAIMS:
THE COLLATERAL SOURCE RULE AND NISHIHAMA
In presenting a personal injury claim, the objective is to recover a monetary amount that will place the injured person in as good a position as he was prior to being injured, to the greatest extent possible. Typically, the amount recovered will factor in medical expenses and pain and suffering. In order to achieve maximum recovery, the collateral source rule and the ruling in Nishihama must be taken into account.
The collateral source rule provides that any compensation that an injured party receives for his or her injuries from a source wholly independent of the person responsible for the injury shall not be deducted from the damages to be collected from the person responsible for the injury.Helfend v. So. Cal. RTD (1970) 2 Cal 3d 1, 84 Cal Rptr 173, 465 P2d 61. The collateral source rule prevents a wrongdoer from claiming an offset or reduction for compensation that an injured party received from an independent source, such as insurance. The underlying rationale for the rule is that a wrongdoer should not be able to gain the benefit of the diligence of an injured party in actually or constructively obtaining insurance.
Somewhat in contravention to the collateral source rule are the rulings inNishihama v City and County of San Francisco (2001) 93 Cal App 4th 298, 112 Cal Rptr 2d 861, and Hanif v. Housing Authority (1998) 200 Cal App 3d 635, 246 Cal Rptr 192, which support the proposition the where insurance pays for medical expenses to a provider at a discounted rate, that amount is the maximum amount an injured party may recover for his medical bills. In those cases, after judgment was entered, a credit was given reflecting the reduced amount that the collateral source paid on the medical expenses.
The collateral source rule and the ruling in Nishihama are important to take into account in that quite often the total amount recovered is based on the medical expenses incurred. A common way of reaching an amount for pain and suffering is simply multiplying the amount of medical expenses. Under that approach, a higher amount of medical expenses would bring a greater amount for pain and suffering, and a greater overall recovery. Counsel for the injured party will rely on the collateral source rule in support of barring a reduction in medical expenses. Counsel for the wrongdoer will argue for a reduction in medical expenses under Nishihama. Accordingly, if you have suffered personal injury, it is advised that you consult with an experience attorney in order to achieve maximum recovery.
Please note that this article is not legal advice and is not intended as legal advice. The article is intended to provide only general, non-specific legal information. This article is not intended to cover all the issues related to the topic discussed. The specific facts that apply to your matter may make the outcome different than would be anticipated by you. This article does not create any attorney-client relationship between you and the Law Offices of Kenneth U. Reyes, P.C. This article is not a solicitation.
Attorney Kenneth Ursua Reyes was President of the Philippine American Bar Association for 2005. He is a member of both the Family law section and Immigration law section of the Los Angeles County Bar Association. Mr. Reyes is a Certified Family Law Specialist. He is a graduate of Southwestern University Law School in Los Angeles and California State University, San Bernardino School of Business Administration. He has extensive CPA experience prior to law practice. LAW OFFICES OF KENNETH REYES, P.C. is located at 3699 Wilshire Blvd., Suite 700, Los Angeles, CA, 90010. Tel. (213) 388-1611 or e-mail firstname.lastname@example.org; visit at www.kenreyeslaw.com