Recent Legal Developments

Howell Is Now The Leading Decision On The Collateral Source Rule
By Elizabeth D. Rhodes of Willis | DePasquale, LLP

The California Supreme Court in Howell v. Hamilton Meat & Provisions, Inc. has clarified a split in California authority on the amount of medical expenses that may be recovered in personal injury actions. One line of authority is exemplified by Hanif v. Housing Authority (1988) 200 Cal.App.3d 635, which held that a plaintiff may recover only the amount of medical damages actually paid relevant to a personal injury action, and excluded recovery for to any undisclosed bills not actually paid. The lower court in Howell exemplified the other line of authority: that any limit on past medical expenses below the amount charged excluding any provider discount was a violation of the collateral source rule. The Supreme Court has ruled on the split: Hanif wins. Howell now represents the leading California case on the application of the collateral source rule. As of August 18, 2011, "a plaintiff may recover as economic damages no more than the reasonable value of the medical services received, and is not entitled to recover the reasonable value if his or her actual loss was less."

There is no doubt that this panel of California Supreme Court judges intended to establish a bright-line rule on this issue. The proof is the Court's corollary holding establishing that a defendant may move for a new trial on grounds of excessive damages "where a trial jury has heard evidence of the amount accepted as full payment by the medical provider but has awarded a greater sum as damages for past medical expenses." To drive home the point, the court also held that "[a] nonstatutory "Hanif motion" is unnecessary." Instead, if a trial court grants a motion for a new trial, the plaintiff still has the option to accept reduced damages in line with the Howell rule. Otherwise, plaintiff can go back to the drawing board.

The decision was unanimous for the regularly sitting Supreme Court, with one dissenting opinion from Justice Klein who was sitting on the panel by designation.

Privette Trumps The Nondelegable Duty Doctrine
By Elizabeth D. Rhodes of Willis | DePasquale, LLP

On August 22, 2011, the Supreme Court of California issued its latest decision extending the protections afforded under the Privette doctrine to companies sued under allegedly nondelegable duties set forth in Cal-OSHA regulations, in its landmark decision Seabright Insurance Co. v. US Airways, Inc., Case No. S182508 ("Seabright"). The Privette doctrine, based on a 1993 Supreme Court decision, is essentially that one who hires a contractor generally cannot be held liable to a contractor's employee for work-related injuries unless the hirer has concealed a preexisting dangerous condition or engaged in some other form of affirmative misconduct that contributes to the employee's injury. In the 2002, the Supreme Court further clarified the Privette doctrine in the multi-employer worksite context, holding that the hirer of an independent contractor is liable for a workplace injury of the contractor's employee only if the hirer retained control over the contractor's work and exercised that control so as to "affirmatively contribute" to the employee's workplace injury. (Hooker v. Department of Transportation(2002) 27 Cal.4th 198, 210.) With the Seabright decision, the Supreme Court has now applied that analysis to circumstances where an injured worker of an independent contractor sues on a nondelegable duty theory. In that context, Seabright holds that where a passive hirer retains no control over the work being undertaken by the contractor, the hirer "presumptively delegates any tort law duty of care the hirer had under Cal-OSHA safety regulations to ensure workplace safety of the independent contractor's employees."

The Seabright case arises from a work-related injury accident at San Francisco International Airport. The defendant airline US Airways hired an experienced millwright company Lloyd W. Aubry (Aubry) to repair and maintain baggage conveyor belt systems that are so vital to the airlines' operations, because the maintenance and repair of those systems constitute specialty expertise that the airline does not have. The airport is the actual owner of the conveyor, but U.S. Airways uses it under a permit and has responsibility for its maintenance. US Airways neither directed nor had its employees participate in Aubry's work. The conveyor lacked a safety guard which was required under the applicable Cal-OSHA regulation. Aubry's employee Verdon caught his arm in the moving parts of the conveyor belt during an inspection. Plaintiff Seabright Insurance Company, Aubry's workers' compensation insurer, paid Verdon benefits based on the injury and then sued defendant US Airways, claiming the airline caused Verdon's injury by failing to comply with an allegedly nondelegable safety regulation requiring a safety guard. The Supreme Court has now clarified that even where such a safety regulation has been breached, where the evidence demonstrates that the hirer has not "retained control so as to affirmatively contribute to the injuries claimed by the worker," no liability attaches. Had the Court ruled in favor of the workers' compensation insurer, the holding would have considerably increased the risks associated with doing business in commercial and industrial business sectors.

(Seabright Decision)