Legal Question in Personal Injury in California

What you do as to blacking out numbers is not a question of being legal or not. The adjuster will assume that your medical insurance did not pay the full amount becuase they neer do. Seeing the actual figure wil remind him/her and such a sharp discount might make them down play the amount of the billing. You could black it out and just say in an accompaning note that what your medical insurance paid is irrelevant. Either the California Supreme Court or United States Supreme Court, I thnk the latter, is going to hear somethime this court year whether the defendant must use the full amount billed or can use the amount reimbursed as a measure of the damages. But your case will likely settle before that issue is decided.

You are entitled to be reimbursed for the amount the insurer paid plus the amount that you either have paid or are responsible for. Once you receive the payment, you must then reimburse the insurer for its share.

(This answer is a bit oversimplified, especially if your claim exceeds your policy limits. But it's a useful summary.)