California Senate Approves Bill to Overturn Howell vs. Hamilton Meats Supreme Court Decision

SACRAMENTO, Calif., May 30 -- The Property Casualty Insurers Association of America issued the following news release:

The California State Senate gave "thumbs up" to a bill that will give a windfall to personal injury lawyers at the expense of consumers and businesses, said the Association of California Insurance Companies (ACIC). SB 1528 is sponsored by the Consumer Attorneys of California and, despite being amended into a substantive spot bill; the bill is intended to overturn the 2011 Howell vs. Hamilton Meats Supreme Court decision. The Howell case held that medical damages should be based on the actual or contracted amount paid to the provider, rather than what the provider billed.

"SB 1528 is a wolf in sheep's clothing in its current form. The sponsors of this measure say the Howell decision has "caused some confusion" and that SB 1528 "is intended to clarify" the measure of an injured person's medical damages. In reality, this 6 to 1 decision by California's highest court reaffirmed a bright line rule in calculating medical damages - actual or contracted amount," said Armand Feliciano, ACIC vice president. "The Court clearly said in their decision "We hold no such recovery is allowed, for the simple reason that the injured plaintiff did not suffer any economic loss in that amount." To suggest that the calculation of medical damages in California is uncertain or needs clarification is patently misleading. The Howell decision and supporting case law has been the law in California since at least1988."

A diverse coalition of public entities, non-profits and businesses has joined forces to oppose SB 1528. A few of the members of the opposition coalition include: the California Assisted Living Association, the California Chamber of Commerce, the Civil Justice Association of California, the Association of California Insurance Companies, the California Defense Counsel, the Cooperative of American Physicians, the Pacific Association of Domestic Insurance Companies, the Doctors Company, the California Association of Health Facilities and the California Association of Bed & Breakfast Inns.

"Businesses and consumers will pay the price if this bill becomes law. If legislation is enacted to overturn the Howell decision, insurance rates could significantly rise because the higher billed charges will increase payouts to plaintiffs and their attorneys, which will be absorbed by everyone. State and local governments, non-profits and all businesses that self-insure to fund their own litigation damages could expect to pay higher amounts for the inflated medical damages in all personal injury cases," said Feliciano. "In 2010, auto and homeowner insurers paid $3.31 billion for medical expenses in personal lines injury claims. If the Howell decision is overturned, auto and homeowner insurers could pay an additional $2.93 billion in medical expenses - that is nearly double what is currently paid and that is just for personal lines insurance."

"Members of the Assembly should take a very close look at this bill when it comes before them," said Feliciano. "Assembly members should ask two questions: 1. Is it right to compensate someone for damages that were never paid or incurred? 2. Is now the time to increase the cost of insurance to homeowners and drivers and every business and public entity that buys liability coverage in California?"

SB 1528 was approved by the State Senate on a vote of 22 to 13. The bill now moves over the California State Assembly.

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