LUTTRELL V. ISLAND PACIFIC SUPERMARKETS, INC.

 In an important decision for the defense, on April 8, 2013, the First Appellate District of the Court of Appeal held that reductions to a plaintiff’s past medical expenses made pursuant to Howell v. Hamilton Meats & Provisions, Inc. (2011) 52 Cal.4^th 541, must be made before amounts are further reduced by a party’s failure to mitigate damages or by offsets for no-fault insurance payments. The Court further clarified that the Howell reductions are to be applied whether the providers were paid by a private insurer or Medicare.

    The Luttrell case arose from an injury to an elderly gentleman which occurred when plaintiff was repeatedly struck by automatic closing doors as he tried to exit a grocery store. He later suffered from a skin ulcer during his recovery period. The evidence indicated that plaintiff’s injuries from the incident were exacerbated by his failure to follow the directions of his health care provider.

    At trial, the jury found that plaintiff had 5% contributory negligence for his injuries from the door, and concluded that plaintiff was only entitled to 15 percent recovery for his ulcer because he had a pre-existing condition. Plaintiff was also awarded damages for future medical expenses and pain and suffering.

    Post-trial the court reduced the awarded past medical expenses to the amounts actually accepted by the medical providers from Medicare pursuant to Howell, and reduced plaintiff’s medical expenses for his ulcer by 50% due to plaintiff’s failure to mitigate damages. The 50% reduction was applied to the amounts paid by Medicare, not the amounts billed by the provider.

    Plaintiff disputed the order in which the reductions were made, and argued that the 50% mitigation should be applied to the amounts billed, not the amounts paid. Plaintiff further argued that Medicare or Medi-Cal payments should not be treated the same as payments from private insurers under Howell. The court disagreed.

    First, the court found that there was no basis for treating payments by Medicare or Medi-Cal differently than payments from private insurers under Howell since, in both cases, the medical providers agree to accept a sum less than their usual and customary charges.

    Second, the court determined that the Howell cap had to be applied before any reductions for failure to mitigate damages since the amount actually paid on plaintiff’s behalf represented the maximum amount that plaintiff could recover from defendant for past medical expenses. If the mitigation reduction was applied to the higher billed amounts, plaintiff’s failure to mitigate would have no consequences.

    Finally, the court rejected plaintiff’s argument that the amount of the Medicare lien should be added to the judgment since the amount awarded was sufficient to pay the Medicare lien (except to the extent that plaintiff failed to mitigate).

    In short, the court found that any reductions or offsets to plaintiff’s award for past medical expenses were to be applied after application of the Howell cap. Otherwise, plaintiff would be receiving a windfall and the offsets and reductions would be meaningless.