Knock, Knock, Knocking on Hanif's Door

A recent appellate court decision, Olsen v. Reid,164 Cal. App. 4th 200(2008) calls into question the viability of the post verdict hearing and raises anew the issue of whether the collateral source rule mandates that the full amount of the medical bills should be recoverable whether reduced by contract or not.

In Olsen, the plaintiff obtained a verdict which included the full amount of medical expenses. Defendant moved for a post verdict reduction and submitted some billing records which contained ambiguous references to a write off by the health care provider. The trial court reduced the verdict.

The Olsen court held that there was an insufficient basis to allow for a post verdict adjustment because of the paucity of supporting evidence.

The court then used the case as a sounding board to discuss the conflict between Hanif/Nishihama and the collateral source rule.

In the first of two concurring opinions, Justice Eileen Moore, “raised the alarm” that the Hanif/Nishihama rationales for limiting the amount of recoverable medical expenses had “buried” the collateral source rule without “the dignity of any services or parting words.” After discussing the history and rationale of the collateral source rule, Justice Moore declined to apply the post verdict schemes articulated in Greer in a private insurer context, absent “statutory authority or endorsement from the Supreme Court.”

Justice Richard Flybel picked up the gauntlet in his concurrence, and argued that Hanif/Nishihama reductions were in fact consistent with the collateral source rule.

He then laid out a prescription for meeting the hefty evidentiary burden in a post verdict hearing.

A detailed and thoughtful article on both sides of the issue can be found in the current issue of California Litigation, published by the State Bar’s litigation section. This is a must read discussion for attorneys, insurance representatives and health care professionals. Scott Sumner, a partner at Hinton,Alfert and Sumner, who has written and argued extensively on this subject, wrote the brief in favor of application of the collateral source rule.

Happy Thankgiving.