Victory for Oakland Personal Injury Accident Victims: Medical Bills and the Collateral Source Rule

When someone has been injured in an accident, whether that was in an auto accident, a slip and fall or any other type of injury accident, the person responsible for the injury must pay all of the injured victim’s medical bills. This is true even if the medical bills have been paid for by health insurance. This is called the collateral source rule and has been the rule of law in California for over fifty years.

The way the rule works is as follows: If someone incurs medical bills of $100,000.00 and they have been paid in full by the injured person’s health insurance, the person responsible for the accident, is still liable for the full $100,000.00. This is true even if the health insurance company paid a contractually discounted amount to the healthcare provider. For example, if the health insurer paid a discounted amount of $75,000.00 in full payment of a $100,000.00 bill, the person responsible for the injury is still liable for the full $100,000.00, which was the amount originally billed.

In the mid 1980’s a California personal injury case, called Hanif v Housing authority was decided by the appellate courts. In that case, the court said that the injured party could not recover any more for their medical bills than the health insurance company actually paid. As a result, injured parties were not able to recover the full amount of their medical bills. This case incorrectly decided the case by not following the collateral source rule. As an Oakland personal injury lawyer, I have seen insurance companies use this case for years to unfairly reduce injured person’s recoveries. That was until last week.

On June 24, 2010, the appellate court in a case entitled Yanez v SOMA Enviornmental Engineering held that the Hanif court was wrong. It held the collateral source rule was still the law of California. Therefore, persons injured in accidents in California will not have their recoveries unfairly reduced simply because they had the prudence to buy health insurance. No longer will wrongdoers get a windfall because the injured person had health insurance. This was a huge victory not only for Oakland personal injury accident victims, but also for accident victims throughout the State.


California Court of Appeals, June 24, 2010, Yanez v SOMA Enviornmental Engineering

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