California Injury Law: Medical Billing and Settlement Damages

Since the Hanif v. Housing Authority (1988) and Nishihama v. City and County of San Francisco (2001) cases have been decided, the insurance companies have successfully argued over and over that the personal injury claimants should not be entitled to recover damages based on the actual charges for the necessary medical services received, but only for those actually billed to the private health insurer.

In other words, if you have been injured in an accident, have received emergency room care and other medical care totalling $20,000 in medical expenses, but your health insurance provider (such as Blue Cross) that has a special arrangement with the hospital, reduced the bill to $8,000, the third party insurance company for the driver at fault would normally argue that your damages should be based on the latter figure of $8,000 rather than actual billing charges.

However, this argument on reduction of damages might not have much validity any longer. In a recent case Olsen v. Reid, filed on 6/23/2008, the above case decisions and their logic has been condemned and practically shattered by the fourth district appellate court. The court passionately supported the rationale of the long standing “collateral source rule” in California, which states that the recovery of the victim in an injury case should not be reduced just because some of the damages were coverd by a collateral source (such as health insurance company).  The court criticized Hanif and Nishihama decisions, insisting that it is appropriate for the jury at an injury case trial to hear evidence as to the full amount of the injured claimant’s damages and not the reduced amount that was billed.

The forth district emphasized that the more recent cases held that if an injured party receives some compensation for his injuries from a source wholly independent of the tortfeasor (for example, the driver at fault), such payment should not be deducted from the damages which the plaintif would otherwise collect from the defendant.

This recent decision significantly weakens if not eradicates, at least for now – until and unless the California Supreme Court makes a ruling on this issue, the Hanif/Nishihama argument that the insurance companies like to use to reduce their settlement offers.

Releases of Liability for Injuries in California

Many gymnasiums and other facilities where there is a risk that  customer will suffer an injury, have those customers sign a release of liability which is supposed to release the business from any and all liability for injuries and damages sustained by the customer/visitors while on premises. However, not all releases are valid and enforceable as the power of the release to preclude and injury claim depends on the scope of the release and its applicability to the particular incident.

Generally, in order for a release of liabilty to be held enforceable and prevent an injured from having a legal action for personal injuries (1) the release must be clear, unambiguous and explicit in expressing the intent of the parties; (2) the act of negligence that results in injury must be reasonable related to the object or prupose for which the release is given; and (3) the release must not contravene public policy.

The second element is the one that is subject of contention and litigation. To illustrate, in one case the court considered a situation where a vistor of a car race signed a release that purported to release the facility from any injuries sustained by the viewers as a result of the automobile racing. One visitor was injured when one monitor located in the area fell on his head after he tried to adjust it. The court concluded that because the release was not intended to release the premises form this kind of injuries and was only limited to injuries related to the automobile race and the dangers that the race cars directly pose to the viewer, the release did not apply to the claimant’s injuries, and he was allowed to proceed to recover damages.

However, in other case, a gym customer was not allowed to recoverfor injuries sustained when he slipped and fell in the shower, because, as the court pointed out, the release executed by the customer with that gym, provided that the customer releases the facility from liability for any and all injuries, whether related to exercising or not, while on premises.

Personal Injury Case Mediation

Mediation is one of the settlement negotiation “tools” that the parties to an injury action can use to reach a settlement prior to later hearings and trial. Like any other way of settling an injury claim, mediations have their ups and downs. I, personally, believe that the advantages of a mediation in front of a compelling mediator far outweight the possible drawbacks, especially if the case involves serious injuries, substantial wage loss and major pain and suffering.

Mediation is a meeting between the parties to the injury claim and the mediator in an informal setting, that usually takes place soon after the written discovery is complete and the deposition of the injured person is taken. It is an informal hearing that takes place at a mediator’s office. In the beginning of that meeting, the mediator, who is usually as seasoned attorney who practiced in the area of injury law or a retired judge, explains the rules of mediation and reminds the parties that whatever settlement they achieve at the mediation, if any, will remain confidential as required by law.

Then, the mediator will allow the parties to present their case (although not always) and then separate the parties (usually the Plaintiff and the attorne for the insurance company) into separate rooms (caucuses). Then the negotiation will begin. The insurance company’s attorney will routinely start the negotiations with an unreasonably low dollar figure, while the plaintiff’s attorney will recommend an unreasonable high figure.  The mediator will be going back and forth between the caucuses, bringing arguments to their attention why the should move closer to the other side in their position, hoping that a few hours later (or a full working day later), the parties will reach some kind of compromise.

The advantages of the mediation process are the lack of anxiety and stress associated with an informal negotiations process and the statistically high rate of settlements at a mediation of injury cases. After a relatively stressful deposition testimony, at which the injured person is forced to answer the opposing attorney’s questions, many of which are designed to defeat the injured parties claims, the claimant can feel relieved at the mediation in that whatever he or his attorney suggests is not a testimony and has no affect on the case should parties not reach a settlement. Further, getting an opinion of a seasoned attorney on a case may also prove to be very useful regardless of whether the case settles at a mediation.

The main disadvantages of a mediation are that they can be relatively expensive (each party may be required to pay $1,500 or more, depending on how many hours the mediation lasts), and that it is non-binding. In other words, it is possible for the parties to spend all day negotiating, but not reaching a settlement agreement.

One of the common mistakes that injured claimants make when going to the mediation is having a certain, solid expectation – a certain dollar amount they have in mind which they expect to receive for their injuries and damages and below which they are unwilling to negotiate, no matter what. This is not a good mindset for mediation (or any other negotiations for that matter), as being flexible and keeping an open mind are critical to successful mediation. You have to remember that no one really gets all they want at a mediation, as mediating a case is all about finding a compromise and having both parties give something up in order to find a short-cut to the stressful and expensive litigation process.

If you are about to have a mediation of your injury case, it is crucial that you realize and remember that mediation is about flexibility and about keeping an open mind. Too many claimants act impulsively on those expectations and walk out of the mediator’s office as soon as they hear the initial, very low settlement offer of the insurance company, instead of exercising the ever important patience at mediations, listening to the arguments of all the involved parties and acting accordingly.

What do insurance companies/adjusters need to settle an accident injury claim?

Insurance adjusters need documentation to back up every protion of damage claim in the file of any given injury accident. If they do not have that documentation, they cannot get settlement authority from their superiors because they don’t have a basis upon which to advise their managers that a claim should be settled for a certain amount.

Make sure that you obtian itemized medical bills and a narrative report of your injury claim outlining the history of your injury, the treatment you have received so far, as well as prognosis (future treatment) that you will need in your doctor’s professional medical opinion, and the approximate cost of such treatment.

The key to getting any injury claim settled with an insurance adjuster is documentation. When the time comes to settle your accident claim, makes ure that you don’t just throw a figure at the adjuster. For example, if you incurred $1,200 in medical bills and $400 in lost wages, and you want to settle the case for $7,000, explain why the case is worth that much. You may count the number of doctor visits that you incurred during your recovery, the number of pain pills consumed, and how the incident affected your social, professional and even romantic life. (i.e. Did you miss a trip? Educational opportunity? Other events that you planned and expected to attend?) In other words, show some thought into and basis for the settlement figure you propose.

Remember that the adjuster has to sell the value of your injury claim to his supervisors. If you help the adjuster sell your case to his supervisors, he or she will likely help you get a fair settlement for your injury claim.

Effective injury settlement negotiation with insurance adjuster

Although it might appear to many consumers that insurance companies are nothing but greedy money making machines that are only concerned with the bottom line and whose job is to shortchange or “low ball” their customers who suffer injuries in car accident and other injury incidents, it is important to remember that insurance company, like all other companies, are run by people. The claim adjusters who handle your injury claim are also humans and they respond to the different settlement negotiation strategies respectfully. Certain things make them happy and unhappy, satisfied and annoyed. Because insurance adjusters often handle a huge load of claims (up to 200), they are actually interesting in settling an injury claim and they will if you play your cards right.

While there are many aspects to a successful injury settlement negotiations, like any other “sales” the settlement is also in many ways a “sale” – you sell your claim to the insurance company and you want to convince them that the price you are asking is fair and reasonable and that they are not being ripped off. Thus, like in any other sales, your attitude toward the other party – the adjuster, is just as important as the substance of your communications.

After speaking with dozens of adjusters informally and becoming friends with some of them, it became abundantly clear to me that the injured person or his representative’s attitude makes a big difference. An adjuster has a certain authority within the range of the settlement that he is allowed to pay, and he will exercise that authority with the people who he likes and enjoys working with, and he might just take it personally and try to make life harder for those claimants who make his life hard as well.

So, you should avoid treating adjusters as your servants or making authoritative demands to them as if you were their boss and they were owing something to you. Acting like you are entitled to a certain recovery will only hurt your bottom line or will significantly delay your receipt of settlement funds. On the other hand, being firm but courteous and treating insurance adjusters with respect will likely make the insurance representative more willing to help you and be more flexible in settling a claim, potentially paying out more than he would have otherwise.

So, the bottom line is this: it pays being nice when you are negotiating a settlement with an insurance company.

How to negotiate and settle your injury claim effectively

1. Preliminary considerations in settling an injury claim

Most accident injury and other bodily injury claims are settled before a lawsuit is filed, and thus before the insurance carrier of a liable party is required to retain an attorney to defend the party at fault. In all likelihood, therefore, initial settlement discussions will be with an insurance claims representative, also known as the claims adjuster. The adjuster is charged on behalf of the insurance carrier with investigating the facts and formulating a fair settlement value.

To evaluate the claimant’s first demand and make a settlement offer on the carrier’s behalf, the adjuster will need to review whatever reports and records are available regarding claimant’s injuries and damages. Indeed, copies of medical reports and bills, employer’s verification of lost earnings, benefits and other losses suffered as a result of being absent from workplace, property damage bills, photographs and estimates, and documentation of other, out-of-pocket losses, will be essential to support the adjusters request to his principals to extend a settlement offer. Thus, cooperating with the insurance company’s requests for the above records is generally a good practice that will likely expedite the settlement process. However, it is generally unwise to volunteer information about your earlier injuries or pre-existing medical condition, since the defense will use this as a basis to deny that the injury resulted from the present incident. However, there are a few instances in which the earlier medical history should be volunteered as where it will enhance the value of the claim – e.g., where the injury in question was a minor one, but aggravated a pre-existing condition, causing severe disability, as the party at fault cannot escape liability by arguing that the damages would not have been incurred but for the preexisting condition.

And, of course, if the adjuster has already found out about the prior medical history, it may be necessary to furnish the pertinent records and reports to show the prior condition was not the cause of claimant’s present disability.

2. Making an Initial Settlement Demand

Claims adjusters rarely make the first settlement offer. Instead, they expect the claimant’s attorney to make an initial settlement demand. It is important to have the “bottom line” figure in mind. Before making an initial demand, determine an absolutely minimum amount you believe the case should settle for. Once a bottom line figure is determined, it should be changed only if new information bearing on the claim’s value surfaces during the negotiation process.

3. Settlement Negotiations

The adjuster will assume that the first figure demanded is negotiable. Therefore, the initial demand should not be the “bottom line” but rather should start higher, leaving room for negotiation. It is important, however, to make sure that the initially offered settlement figure is reasonable to avoid turning off all negotiations.

A good approach for ascertaining a realistic high-low range is to relate the settlement value to recent jury verdicts returned in similar cases.