Discounted Third Party Purchase of Medical Account Doesn’t “Hanif-y” Plaintiff’s Recovery

Mention Hanif v. Housing Authority (1988) 200 Cal.App.3d 635 to a personal injury lawyer, and he’ll likely bristle.  Hanif, along with Nishihama v. City and County of San Francisco (2001) 93 Cal.App.4th 298, held that an injured tort plaintiff may recover only the amount of medical expenses he or she paid or incurred, even if the reasonable value of those services is much higher.  Thus, a medical provider who writes down the bill or accepts a lesser amount from an insurer as payment in full effectively reduces the potential recovery of the plaintiff.

Should the same rule apply if the medical provider sells the plaintiff’s account (including a lien against plaintiff’s potential recovery) to a third party financial services company at a discount, even though plaintiff remains liable (now to the financial services company) for the full amount of the services?  No, says the Third District Court of Appeal in Katiuzhinsky v. Perry, case no. C050376 (June 29, 2007).  As long as the plaintiff legitimately incurs the medical expenses and remains liable for their payment, plaintiff may recover the billed amount regardless of the discount at which his account was sold to the third party.

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