Capitol Alert: Insurers win, lawyers lose in big state Supreme Court ruling

The state Supreme Court handed insurers and business groups a major legal victory -- and personal injury lawyers an equally big setback -- on Thursday by imposing limits on medical damages in one of the era's closest watched civil cases.

The issue in the case, Howell v. Hamilton Meats & Provisions, was whether an injured party could collect the full medical care costs billed by doctors and hospitals, or the lesser amount that the medical providers accepted from an insurance company.

As the 6-1 decision put it:

"In that circumstance, may the injured person recover from the tortfeasor, as economic damages for past medical expenses, the undiscounted sum stated in the provider's bill but never paid by or on behalf of the injured person? We hold no such recovery is allowed, for the simple reason that the injured plaintiff did not suffer any economic loss in that amount."

Insurers had said that if they had lost the case, it would add as much as $3 billion a year to their payouts in auto accidents and other personal injury cases. Plaintiffs' attorneys would have been entitled to about a third of that amount.

The case stemmed from a San Diego County collision in which Rebecca Howell was injured by a truck, driven by an employee of Hamilton Meats, which was making an illegal u-turn. Her medical bills totaled $190,000 but her health insurer settled the bills for $59,691 and the question was whether she would receive the full $190,000 from Hamilton's insurer.

Hamilton won at the trial level but lost at the appellate level. The case went to the state Supreme Court along with several other appellate decisions on the same issue, one of which was authored by Chief Justice Tani Cantil-Sakauye before her elevation last year to the Supreme Court.

However, Cantil-Sakauye in effect reversed herself by voting with five other justices that the payout should be limited to $59,691.

Joan Klein, an appellate court justice sitting on the Supreme Court for the Howell case, was the lone dissenter in Thursday's ruling. She agreed that the $190,000 was too much, but said the trial court should be empowered to decide what the proper amount should be.