• Updated: Round 2: Plaintiff wins in collateral source case Tuesday, December 22, 2009

    A California appellate court today sided with accident victims and against insurance companies for the second time in a month on a key issue related to damages, the collateral source rule.

    The latest case involves Daniel Codner and Cody Codner who were riding a motorcylce in Venura and were injured in August 2003 when John Stevenson Wills hit them.

    Here’s a link to our earlier report on the case. Here is an article by the Chronicle’s Bob Egelko about the issue. And here is an analysis by a consumer attorney who is the expert on the topic.

    Dan Codner medical charges amounted to $463,093, and Cody Codner’s medical bills totaled $58,657. The jury returned a verdict awarding full medical damages to the Codners.

    The Codners had paid for medical insurance.

    After the verdict, Judge Vincent O’Neill of Ventura County refused Wills’ request to slash the Codners’ damages to the negotiated amount paid by the insurance company for their care–$247,403 for Dan Codner, and $18,924 for Cody–thus leaving the Codners with nothing for their investment in health insurance. 

    The Court of Appeal in an opinion by Justice Steven Z. Perren affirmed O’Neill’s decision. But the court deemed that its opinion should not be published, limiting its value as a precedent.

    UPDATE: Scott H.Z. Sumner, consumer attorney who filed an amicus brief in the case, said the court in the Codner decision did not delve into collateral source analysis: 

    The defense position improperly seeks to focus on whether a plaintiff ‘still owes’ their medical providers, but of course, if a plaintiff’s ultimate financial detriment were the measure of a defendant’s liability in damages, that would obviate the collateral source rule – not just in health insurance, but in life insurance and income disability insurance as well, since a collateral benefit always reduces the recipient’s financail detriment.  That’s why we buy insurance: to eliminate or reduce a potential financial detriment. 

     Sumner also writes:

    The Supreme Court on prior occasions has observed that a medical patient incurs debt for their medical providers’ full charges. … Similarly … courts of appeal have previously held that a Medicare patient incurs debt for their medical prividers’ full charges. 

    This fact of underlying debt is well-established at law.  … It is the liability insurers that are seeking to radically undermine the law of contracts in the State of California to unfairly enrich themselves at the expense of every citizen in California that has invested in health insurance either directly or through their employment. 

    In November, the San Diego-based Second District Court of Appeal ruled that an insurance company could not avoid its full responsibility, and was required to reimburse Rebecca Howell for medical costs she incurred for stemming from a traffic accident, giving her the benefit she had bargained for when she bought health insurance . In the Howell case, the trial judge had sided with the defense, and slashed the jury verdict.

    Daniel Codner v. John Stevenson Wills, 2d Civil No. B198675.

  • Stay tuned: Consumers won big Monday. Can they win two in a row?
  • More from Scott Sumner on the Yanez decision and the collateral source rule
  • An explanation of the collateral source rule
  • On Yanez v. SOMA Environmental Engineering and the collateral source rule
  • UPDATED: Consumers win one; Rule is arcane but important

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