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THE CHALLENGE TO HANIF DEDUCTIONS CONTINUES

– By Sharon L. Hightower, Assistant Managing Partner in the San Jose Office

Defense counsel bring Hanif/Nishihama motions in many personal injury actions to reduce a plaintiff's verdict by the difference between the billing of medical services provided to a plaintiff and the discounted amount accepted by those same providers in full satisfaction of the billings. "[T]he principle of law for which Hanif and Nishihama stand is that a plaintiff's recovery should be limited to 'the actual amount he paid or for which he incurred liability for past medical care and services'. (Hanif v. Housing Authority of Yolo County (1988) 200 Cal.App.3d 635, 640 (italics added); See also Nishihama v. City and County of San Francisco (2001) 93 Cal.App.4th 298, 306; and Greer v. Buzgheia (2006) 141 Cal.App.4th 1150, 1154.)

We are now seeing a concerted effort on the part of Plaintiff attorneys to halt the ability of defense counsel to even file a Hanif motion by interfering with the discovery efforts to ascertain the amounts actually paid in full satisfaction of medical billings early in the case. One Plaintiff's attorney has advocated what he has identified as "model objections" to Form Interrogatory 4.1 or special interrogatories seeking the amount that a medical provider has accepted in full satisfaction of a bill. He suggests a blanket response that a doctor or other provider "accepted his or her entire billed rate as payment in full for treatment received by a claimant/plaintiff as a result of a subject accident." The intent is to force the propounding party to file a motion to compel further responses.

To understand the continued concern and concerted efforts of the Plaintiff attorneys to deny Defendants the information needed to assure an equitable result, one must examine the cases that have followed the ruling in Hanif, supra. Hanif was a lawsuit filed against a public entity. The court modified an award for damages not paid or incurred by the plaintiff, holding that a plaintiff should not to be placed in a better position than he would have been had the wrong not been done and reduced the damages accordingly.

Hanif was followed by the case of Nishihama v. City and County of San Francisco (2001) 93 Cal.App.4th 298 in which the court reduced an award for actual medical costs to the amount the provider had accepted from her health plan as full payment for its services.

The next case cited with regularity is Greer v. Buzgheia, (2006) 141 Cal.App.4th 1150. In that matter a defendant filed a motion in limine at the trial court level to exclude evidence of the full amount of plaintiff's billed medical expenses. The denial of the motion in limine was upheld by the Court of Appeal with its holding that the trial court had the discretion to allow evidence of the reasonable cost of plaintiff's care while reserving the propriety of a Hanif/Nishihama reduction until after the verdict. Unfortunately, the reduction was ultimately not allowed due to the failure of the defendant to request a verdict form containing a separate entry for plaintiff's past medical expenses.

In 2007, the Court of Appeal decided the matter of Katiuzhinsky, et al. v. Perry 152 Cal.App.4th 1288 in which it reversed the trial court ruling that restricted evidence of plaintiffs' medical expenses to the discount rate that a financial services company had paid to medical providers to acquire plaintiffs' accounts.

A recent case is fanning the flames of the controversy over the reduction of medical specials. In the matter of Olsen v. Reid (2008) 164 Cal.App.4th 200, a jury awarded plaintiff the amount of medical costs that were billed. The award was then reduced by the trial court by the amount that the medical providers had written off. The reviewing court reversed the judgment and directed that the trial court reinstate the full amount of the jury's verdict. The court noted that even the cases holding that a plaintiff is entitled to the lesser amount of medical damages (incurred rather than billed) have approved of the jury hearing evidence as to the full amount of plaintiff's damages. It is important to note that the Appellant was seeking to have the court reconsider the holdings in cases such as Hanif, supra, and Nishihama, supra. The appellate court decided that it did not need to go that far in order to decide the case. While some plaintiff's attorneys have hailed the decision as one that will do away with the rulings of Hanif and Nishihama, the fact remains that Hanif and its progeny are alive and well, even cited as authority under CACI Instruction 3903A relating to the "reasonable value" measure of recovery for a plaintiff.

So what can defense attorneys do? It is clear from a review of all of the cases cited that a plaintiff is still not entitled to recover more than he would have received if a wrong had not been done. The first step towards a successful Hanif motion is to be well prepared with all of the critical information relating to the medical specials and bills paid through specific and carefully worded interrogatories and subpoenas, even obtaining the contract between the medical provider and the insurance carrier whenever possible. A Hanif motion, whether pre- or post-judgment, should clearly establish what was paid, what was written off, and the extent to which plaintiff may remain liable for any further charges.

Secondly, defense counsel must be prepared to argue the concepts of fairness and equity to the court, including the fact that a defendant is not a party to any of the contracts between providers and third party payors and receives no benefit as a result. It is useful to point out that third party payors are receiving the benefit of discounted rates while the providers are benefitting from volume, timely payments, and other savings. Plaintiffs are receiving the benefit of indemnification from their insurers for medical services in exchange for payments of premiums. Each of these arguments should be presented to the court in a motion in limine for an order asking that only the actually paid figures be presented to a jury, or in the alternative, allowing both figures to be presented to a trier of fact.