Daily Blast April 8, 2013

On April 8, 2013, the California Court of Appeal, First Appellate District, Division Five (San Francisco) issued an opinion in Luttrell v. Island Pacific Supermarkets, Inc. (April 8, 2013, A134089) ___ Cal.App.4th ___, analyzing whether the Howell rule—which limits recovery to the amount paid for past medical expenses rather than the amount billed—should be imposed before a reduction for failure to mitigate damages. (Slip. opn., pp. 2, 13.) The Court of Appeal held that the Howell cap should be applied before any reduction for failure to mitigate damages. (Id. at pp. 14, 16.)

The case arose out of injuries sustained when an automatic door repeatedly hit plaintiff while he was leaving defendant grocery store. (Slip. opn., p. 2.) As a result of the accident, plaintiff fractured his left hip and received treatment at Washington Hospital and Park Central Care & Rehabilitation Center (“Park Central”). (Ibid.) Three months after being discharged from Park Central, plaintiff was admitted to St. Rose Hospital for treatment and care of a bedsore that was later diagnosed with a decubitus ulcer. (Ibid.) Plaintiff’s healthcare providers billed $179,443.72 for the fractured hip and $511,105.21 for the ulcer—a total of $690,548.93, but settled these bills with Medicare (and Medi-Cal) for $138,082.25.  (Id. at pp. 2-3, 7.) Plaintiff later sued defendant grocery store for failing to maintain the automatic door. (Id. at pp. 2, 7.) The jury returned a verdict awarding plaintiff damages for past medical expenses of $256,109.50—100 percent of the bill for the fractured hip and 15 percent of the bill for the decubitus ulcer. (Id. at p. 7.) The trial court granted defendant’s motion to reduce the damages awarded for past medical expenses to the amount that was actually paid by Medicare. (Id. at p. 8.) The court then concluded that the evidence supported a reduction of 50 percent of past medical expenses because of plaintiff’s failure to mitigate his damages. (Ibid.) 

The Court of Appeal affirmed the trial court’s amended judgment. (Slip. opn., p. 9.) The court first held that the trial court properly applied Howell and that Howell governs where past medical expenses have been paid by Medicare. (Id. at p. 2.) According to the court, “whatever the source of the payments—private insurer or Medicare—the end result is the same: has no liability for past medical services in excess of those payments, so he is not entitled to recover anything more than the payment amount.”  (Id. at p. 14, emphasis in original.)  Further, the court held that the Howell cap must be applied before the mitigation reduction, “since the amount actually paid on the plaintiff’s behalf represents the maximum amount a plaintiff could recover.” (Id. at p. 16, emphasis in original.) The court explained that “the point of the Hanif-Howell line of cases is that the tortfeasor should be held to pay the full cost of its negligence or wrongdoing — no more and no less. . . . This can be accomplished if the maximum potential recovery is first ascertained by reference to the amounts actually paid for medical expenses and then reducing it by the percentage attributable to the plaintiff’s contribution to that expense.” (Id. at p. 16.) If the reduction is taken first from the amounts billed, then the plaintiff would have received a windfall and liability would have been imposed on the defendant in excess of the damage it caused. (Id. at p. 17.) As a result, the trial court did not err in reducing the amounts paid for plaintiff’s decubitus ulcer by 50 percent. (Ibid.)

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