You are in a car accident. You have medical bills. You file a lawsuit. You present proof of your medical expenses. You have two sets of data: the amounts billed by the medical providers and the amounts paid by the insurance carrier. Which is the correct measure of your damages? That is, what is the amount the jury will be allowed to hear as your real cost? The CA Supreme Court ruled on August 18, 2011 that the correct measure is the amount negotiated and concluded as the agreed payment, whatever might be the billing.
The reasoning is that insurance companies set standard values for payment of medical services. Providers routinely inflate their billings hoping to eventually negotiate a higher approved rate. The number has a certain ficitional quality to it. Yes, it's a bill, but often the provider accepts the insurance payment as full payment. Industry experts estimate that the annual difference in personal injury damage claims will be about $500 million to $2.8 billion. California is in the minority in capping damages in this manner.
The case in question is Howell v. Hamilton meats & Provisions, Inc. 2011 DJDAR 12533, and involved review of a trial court decision to cut billings of $190,000 to $60,000, that is, the amount actually paid by insurance. The 4th District Court of Appeal reversed the trial court, stating the correct amount was $190,000. The Supreme Court reversed the Court of Appeal, returning the amount to $60,000. The implications of this decision for P.I. cases will be not just the payment of medical expenses, but also the calculation of personal injury "pain and suffering" damages, which has a relation to the medical and other economic losses.