HOW TO PROTECT YOUR MEDICAL PRACTICE FROM FLORIDA’S TORT REFORM SCHEME (Section 768.0427 promulgated under HB 837)
Aaron Proulx, Esquire
Owner and Manager
The Doctor’s Lawyer, PLLC
(813) 486-7321
INTRODUCTION
Florida’s Tort Reform bill (HB 837) created Section 768.0427, Florida Statutes.?For pain management doctors, surgeons, surgery centers, and third-party purchasers of medical accounts receivable, this statute is the most detrimental portion of Florida’s Tort Reform.?The statute creates new discovery and evidentiary rules that will guide juries in personal injury (PI) cases to:
(1)?value medical provider’s bills below the charged amount;
(2) call into question the credibility of medical providers.
The expectation is that the statute will reduce jury verdicts in PI cases.?In some instances this reduction will impact medical providers.?In others, it will impact only the patients and PI firms.? The statute will not be as detrimental to medical providers as some fear it will be IF:
(1)??medical providers take action now to (a) revise new patient forms, (b) adjust billing methodologies, and (c) accumulate and maintain certain information that justifies their charges;
(2)??medical providers’ attorneys (a) make the appropriate new motions for protective order that will be required, (b) explain to the medical providers’ billing representatives how to handle the new kind of depositions that defense firms will be taking, and (c) work with PI firms to ensure that before trial, thebest evidentiary motions are filed to present evidence favorable to medical providers and to excludeirrelevant evidence that the jury should not see; and
(3)??PI firms understand that the statute is not so detrimental to PI cases that they uncritically accept the liability insurance industry’s low offers to settle.?Instead, PI firms need take appropriate cases to trial in order to show the liability insurance industry that when the proper steps are taken to protect medical bills, the jury is not going to drastically undercut medical providers’ charges.
You may contact me to discuss any of these strategies.?
(813) 486-7321
In the pages that follow, the actual text of the statute is underlined and my analysis appears as regular text.
DISCUSSION
768.0427 Admissibility of evidence to prove medical expenses in personal injury or wrongful death actions; disclosure of letters of protection; recovery of past and future medical expenses damages.
(1) DEFINITIONS.—As used in this Subsection, the term:
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(d)????????“Letter of protection” means any arrangement by which a health care provider renders treatment in exchange for a promise of payment for the claimant’s medical expenses from any judgment or settlement of a personal injury or wrongful death action.?The term includes any such arrangement, regardless of whether referred to as a letter of protection.
1.????An “LOP” is any arrangement to collect reimbursement from proceeds of litigation regardless of whether in writing and regardless of what the arrangement is called.
2.????The reason the Legislature defined this term is because Subsection (3), below, allows the defense to discover certain information that is detrimental to PI cases if the medical provider uses an LOP.
3.????You may contact me if you want to discuss actions you can take to minimize the impact of Subsections (1) and (3) on your practice.
4.????I will work with the PI attorney on your patient’s case and file motions that maximize the benefit of specific language used in Subsections (1) and (3).?You may contact me if you want to discuss this legal strategy.??
(2) ADMISSIBLE EVIDENCE OF MEDICAL TREATMENT OR SERVICE EXPENSES.
Evidence offered to prove the amount of damages for past or future medical treatment or services in a personal injury or wrongful death action is admissible as provided in this Subsection.
(a) Evidence offered to prove the amount of damages for past medical treatment or services that have been satisfied is limited to evidence of the amount actually paid, regardless of the source of payment.
1.????This Subsection (2)(a) relates to all reimbursements made before trial.?
2.????The jury is permitted to consider only the amount already paid.?The jury cannot consider charged amounts.?Thus, the max that the jury can award is the reimbursed amount.
3.????You may contact me if you want to discuss actions you can take to minimize the impact of Subsection (2)(a) on your practice.
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????????? (b) Evidence offered to prove the amount necessary to satisfy unpaid charges for incurred medical treatment or services shall include, but is not limited to, evidence as ?provided in this paragraph.
1.????This Subsection (2)(b) relates to charges not yet paid at the time of trial, including:
? a.?????????Reimbursements that occur after medical providers negotiate their bills with PI firms.
b.?????????Delayed reimbursements from other payors.
2.????The jury is permitted to consider the charged amount and even award the charged amount
3.????But it is reasonable to expect that when jurors see the reimbursable amounts in Subsections (2)(b)(1)-(4), below, the reimbursable amounts will act as “anchors” in the minds of jurors that may drag their award down from the charged amount. ?We do not know what point on the spectrum between these two amounts that jurors will decide is the reasonable amount to award.
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(1) If the claimant has health care coverage other than Medicare or Medicaid, evidence of the amount which such health care coverage is obligated to pay the health care provider to satisfy the charges for the claimant’s incurred medical treatment or services, plus the claimant’s share of medical expenses under the insurance contract or regulation.
1.????This Subsection (2)(b)(1) is limited to the situation where the patient has insurance other than Medicare/Medicaid that the insurer must pay, but at the time of trial the reimbursement is “delayed” for some reason.
2.????This Subsection (2)(b)(1) applies whether or not the medical provider has a contract with the patient’s insurer.?
3.????The amount that the insurer is “obligated to pay” typically will be much lower than the charged amount.?The jury is permitted to see both amounts.?The amount that the insurer is “obligated to pay” will be an “anchor” in the minds of jurors that may drag their award down from the charged amount.?We do not know what point on the spectrum between these two amounts that jurors will decide is the reasonable amount to award.
4.????You may contact me if you want to discuss actions you can take to minimize the impact of Subsection (2)(b)(1) on your practice.
5.????I will work with the PI attorney on your patient’s case and file motions that minimize the detrimental impact of Subsection (2)(b)(1).?You may contact me if you want to discuss this legal strategy.?
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(2) If the claimant has health care coverage but obtains treatment under a letter of protection or otherwise does not submit charges for any health care?provider’s medical treatment or services to health care coverage, evidence of the amount the claimant’s health care coverage would pay the health care provider to satisfy the past unpaid medical charges under the insurance contract or regulation, plus the claimant’s share of medical expenses under the insurance contract or regulation, had the claimant obtained medical services or treatment pursuant to the health care coverage.
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1.????This Subsection (2)(b)(2) applies when the patient has some kind of health coverage (commercial or governmental), but the medical provider does not submit bills to the patient’s insurer.
2.????This Subsection (2)(b)(2) applies regardless of whether the medical provider has an agreement with a PI firm or patient that meets the statutory definition of “LOP.”
3.????This Subsection (2)(b)(2) applies whether or not the medical provider has a contract with the patient’s insurer.
4.????The amount that the insurer “would pay . . . had the claimant obtained medical services or treatment pursuant to the health care coverage” typically will be much lower than the charged amount.?The jury is permitted to see both amounts.?The amount that the insurer “would pay . . . had the claimant obtained medical services or treatment pursuant to the health care coverage” will be an “anchor” in the minds of jurors that may drag their award down from the charged amount.?We do not know what point on the spectrum between these two amounts that jurors will decide is the reasonable amount to award.
5.????You may contact me if you want to discuss actions you can take to minimize the impact of Subsection (2)(b)(2) on your practice.
6.????I will work with the PI attorney on your patient’s case and file motions that minimize the detrimental impact of Subsection (2)(b)(2).?You may contact me if you want to discuss this legal strategy.??
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(3) If the claimant does not have health care coverage or has health care coverage through Medicare or Medicaid, evidence of 120 percent of the Medicare reimbursement rate in effect on the date of the claimant’s incurred?medical treatment or services, or, if there is no applicable Medicare rate for a service, 170 percent of the applicable state Medicaid rate.
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1.????This Subsection (2)(b)(3) applies when the patient (i) has no insurance at all and when the patient (ii) has Medicare/Medicaid.
2.????When the patient has no insurance at all, the Medicare/Medicaid reimbursement rates will be much lower than the charged amount.?The jury is permitted to see both amounts.?The Medicare/Medicaid reimbursement rates will be an “anchor” in the mind of jurors that may drag their award down from the charged amount.?We do not know what point on the spectrum between the these two amounts that jurors will decide is the reasonable amount to award.
3.????When the patient has Medicare/Medicaid, but the medical provider does not take Medicare/Medicaid (opted out), then the situation is the same as in #1, above.
4.????When the patient has Medicare/Medicaid and the medical provider does take Medicare/Medicaid, the medical provider should submit the bills to Medicare/Medicaid.?
5.????You may contact me if you want to discuss actions you can take to minimize the impact of Subsection (2)(b)(3) on your practice
6.????I will work with the PI attorney on your patient’s case and file motions that minimize the detrimental impact of Subsection (2)(b)(3).?You may contact me if you want to discuss this legal strategy.??
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(4) If the claimant obtains medical treatment or services under a letter of protection and the health care provider subsequently transfers the right to receive payment under the letter of protection to a third party, evidence of the amount the third party paid or agreed to pay the health care provider in exchange for the right to receive payment pursuant to the letter of protection.
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1.????This Subsection (2)(b)(4) applies only to cases where the medical provider has an LOP.?
2.????The “amount the third party paid or agreed to pay the health care provider in exchange for the right to receive payment pursuant to the letter of protection” will be much lower than the charged amount.?The jury is permitted to see both amounts.?The “amount the third party paid or agreed to pay” will be an “anchor” in the minds of jurors that may drag their award down from the charged amount.?We do not know what point on the spectrum between these two amounts that jurors will decide is the reasonable amount to award.
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?????????????????????????(5) Any evidence of reasonable amounts billed to the claimant for medically necessary treatment or medically necessary services provided to the claimant.
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1.????This Subsection (2)(b)(5) is a catchall for the “but is not limited to” language in the main paragraph of Subsection (b), above.?
2.????This Subsection (2)(b)(5) allows PI firms and medical providers to present “any evidence” to establish that the bill is reasonable.?You may contact me if you want to discuss what this evidence would be.
3.????I will work with the PI attorney on your patient’s case and file motions that should maximize the benefit of new evidence that PI firms and medical providers should present to the jury under Subsection (2)(b)(5).
4.????This Subsection (2)(b)(5) also allows the defense to present “any evidence” to suggest that the bill is not reasonable.?
5.????I will work with the PI attorney on your patient’s case and file motions that should minimize the additional evidence that the defense can present to attack medical bills as unreasonable.?You may contact me if you want to discuss this legal strategy.?
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(c) Evidence offered to prove the amount of damages for any future medical treatment or services the claimant will receive shall include, but is not limited to, evidence as provided in this paragraph.
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1.????Unlike Subsections (2)(a) and (2)(b), which relate to past medical treatment, this Subsection (2)(c) relates to future medical treatment.
2.????The analysis in this Subsection (2)(c) is substantially the same as in Subsection (2)(b), above.
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(1) If the claimant has health care coverage other than Medicare or Medicaid, or is eligible for any such health care coverage, evidence of the amount for which the future charges of health care providers could be satisfied if submitted to such health care coverage, plus the claimant’s share of medical expenses under the insurance contract or regulation.
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This Subsection (2)(c)(1) relating to future damages is substantially the same as the analysis for past damages in Subsection (2)(b)(1).
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(2) If the claimant does not have health care coverage or has health carecoverage through Medicare or Medicaid, or is eligible for such health care coverage, evidence of 120 percent of the Medicare reimbursement rate in effect at the time of trial for the medical treatment or services the claimant will receive, or, if there is no applicable Medicare rate for a service, 170 percent of the applicable state Medicaid rate.
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This Subsection (2)(c)(2) relating to future damages is substantially the same as the analysis for past damages in Subsection (2)(b)(3).
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(3) Any evidence of reasonable future amounts to be billed to the claimant for medically necessary treatment or medically necessary services.??
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This Subsection (2)(c)(3) relating to “any” evidence for future damages is substantially the same as the analysis for past damages in Subsection (2)(b)(5).
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?????????????? (d) This Subsection does not impose an affirmative duty upon any party to seek a reduction in billed charges to which the party is not contractually entitled.
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1.????This Subsection (2)(d) means that nothing in the entirety of Subsection (2) requires the patient to seek a reduction in charges unless the patient has insurance and the medical provider has a contract with that insurer.
2.????I will work with the PI attorney on your patient’s case and file motions that maximize the benefit of specific language used in Subsection (2)(d).?You may contact me if you want to discuss this legal strategy.??
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?????????????? (e) Individual contracts between providers and authorized commercial insurers or authorized health maintenance organizations are not subject to discovery or disclosure and are not admissible into evidence.
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1.????This Subsection (2)(e) means that despite everything stated in the entire statute, insurance contracts between medical providers and commercial insurers or HMOs are neither discoverable nor admissible.
2.????I will work with the PI attorney on your patient’s case and file motions that maximize the benefit of specific language used in Subsection (2)(e).?You may contact me if you want to discuss this legal strategy.??
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(3) LETTERS OF PROTECTION; REQUIRED DISCLOSURES.
In a personal injury or wrongful death action, as a condition precedent to asserting any claim for
medical expenses for treatment rendered under a letter of protection, the claimant must disclose:
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1.????This Subsection (3) is about discovery, not admissibility.
2.????I will work with the PI attorney on your patient’s case and file motions that maximize the benefit of specific language used in Subsections (1) and (3).?You may contact me if you want to discuss this legal strategy.??
3.????The remaining analysis in Subsections (3)(a)-(e), below, presumes that for one reason or another, the court determines that a medical provider’s agreement meets the statutory definition of “LOP” and the court allows the agreement into evidence.
4.????You may contact me if you want to discuss actions you can take to minimize the impact of Subsection (3) on your practice.
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?????????????? (a) A copy of the letter of protection.
???????????????(b) All billings for the claimant’s medical expenses, which must be itemized and, to the extent applicable, coded according to:
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Medical providers need to make sure their billing complies with Subsection (3)(b)(1)-(3), below:
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?????????????????????????(1) For health care providers billing at the provider level, the American Medical Association’s Current Procedural Terminology (CPT), or the Healthcare Common Procedure Coding System (HCPCS), in effect on the date the services were rendered.
?????????????????????????(2) For health care providers billing at the facility level for expenses incurred in a clinical or outpatient setting, including when billing through an Ambulatory Payment Classification (APC) or Enhanced Ambulatory Patient Grouping (EAPG), the International Classification of Diseases (ICD) diagnosis code and, if applicable, the American Medical Association’s Current Procedural Terminology (CPT), in effect on the date the services were rendered.
? (3) For health care providers billing at the facility level for expenses incurred in an inpatient setting, including when billing through a Diagnosis Related Group (DRG), the International Classification of Diseases (ICD) diagnosis and procedure codes in effect on the date in which the claimant is discharged.
???????????????(c) If the health care provider sells the accounts receivable for the claimant’s medical expenses to a factoring company or other third party:
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Because Subsection (2)(b)(4), above, already made the information in Subsections (3)(c)(1) and (2), below, admissible, it is not surprising that this same information is discoverable.
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????????????????? (1) The name of the factoring company or other third party who purchased such accounts.
(2) The dollar amount for which the factoring company or other third party purchased such accounts, including any discount provided below the invoice amount.
?????????????? (d) Whether the claimant, at the time medical treatment was rendered, had health care coverage and, if so, the identity of such coverage.
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1.????The purpose of allowing discovery of the name of the patient’s health insurer in this Subsection (3)(d) would likely be so that the defense can discover and then present the insurance reimbursements in Subsections (2)(b)(1) and (2), above.
2.????I will work with the PI attorney on your patient’s case and file motions that maximize the benefit of specific language used in Subsection (3)(d).?You may contact me if you want to discuss this legal strategy.??
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????????????? (e) Whether the claimant was referred for treatment under a letter of protection and, if so, the identity of the person who made the referral. If the referral is made by the?claimant’s attorney, disclosure of the referral is permitted, and evidence of such referral is admissible notwithstanding s. 90.502.?Moreover, in such situation, the financial ??relationship between a law firm and a medical provider, including the number of referrals, frequency, and financial benefit obtained, is relevant to the issue of the bias of a testifying medical provider.
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1.????This Subsection (3)(e) means that any referral for treatment under an LOP will result in the disclosure of:
? a.?????The fact of that referral.
? b.????The identity of the person making the referral (even the PI firm).
? c.?????If the referral is by the PI firm, then the financial relationship between the PI firm and the medical provider is discoverable, including the (i) number of referrals, (ii) frequency of referrals, and (iii) amount paid by the PI firm to the medical provider for both expert services and under LOP settlements.
2.????This Subsection (3)(e) means that in addition to the disclosures called for in this Subsection (3), the particular disclosure of the PI firm’s referral is also admissible, not merely discoverable.?
3.????This Subsection (3)(e) is a statutory abrogation of Florida case law that used to protect PI firms and medical providers from having to disclose this information. ?
4.????You may contact me if you want to discuss actions you can take to minimize the impact of Subsection (3)(e) on your practice.
5.????I will work with the PI attorney on your patient’s case and file motions that maximize the benefit of specific language used in Subsection (3)(e).?You may contact me if you want to discuss this legal strategy.??
(4) DAMAGES RECOVERABLE FOR MEDICAL TREATMENT OR SERVICE
EXPENSES.
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The damages that may be recovered by a claimant in a personal injury or wrongful death actio for the reasonable and necessary cost or value of medical care rendered may not include any amount in excess of the evidence of medical treatment and services expenses admitted pursuant to Subsection (2), and also may not exceed the sum of the following:
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This Subsection (4) puts strong teeth on the admissibility rules stated in Subsections (2) and (3).?It means that a jury award for medical damages cannot exceed the amount that the jury was limited to seeing.???
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(a) Amounts actually paid by or on behalf of the claimant to a health care provider?who rendered medical treatment or services;
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This Subsection (4)(a) means that when the medical provider was already paid at the time of trial for past medical treatment under Subsection (2)(a), above, a jury award for medical damages cannot exceed that payment.?A jury award that does exceed such payment will be nullified.
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????????????? (b) Amounts necessary to satisfy charges for medical treatment or services that are due and owing but at the time of trial are not yet satisfied; and
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This Subsection (4)(b) means that when the medical provider was not yet paid at the time of trial for past medical treatment, under Subsection (2)(b), above, a jury award for medical damages cannot exceed the charged amount.?A jury award that does exceed the charged amount will be nullified.
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????????????? (c) Amounts necessary to provide for any reasonable and necessary medical treatment or services the claimant will receive in the future.
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As for future medical treatment under Subsection (2)(c), above, this Subsection (4)(c) means that a jury award for medical damages cannot exceed the charged amount.?A jury award that does exceed the charged amount will be nullified
CONCLUSION
For pain management doctors, surgeons, surgery centers, and third-party purchasers of medical accounts receivable, Section 768.0427 is the most detrimental portion of Florida’s Tort Reform.?The statute creates new discovery and evidentiary rules that will guide juries in PI cases to:
(1)??value medical provider’s bills below the charged amount; and
(2) call into question the credibility of medical providers.
?While the expectation is that the statute will reduce jury verdicts in PI cases, the statute will not be as detrimental to medical providers as many fear if:
(1)??medical providers take action now to (a) revise new patient forms, (b) adjust billing methodologies, and (c) accumulate and maintain certain information that justifies their charges;
(2)??medical providers’ attorneys (a) make the appropriate new motions for protective order that will be required, (b) explain to medical providers’ billing representatives how to handle the new kind of depositions that defense firms will be taking, and (c) work with PI firms to ensure that before trial, the best evidentiary motions are filed to present evidence favorable to medical providers and to exclude irrelevant evidence that the jury should not see; and
(3)??PI firms understand that the statute is not so detrimental to PI cases that they uncritically accept the liability insurance industry’s low offers to settle.?Instead, PI firms need take appropriate cases to trial in order to show the liability insurance industry that when the proper steps are taken to protect medical bills, the jury is not going to drastically undercut medical providers’ charges.
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You may contact me to discuss any portion of the statute, its expected impact on your practice, and how to minimize that impact.
Aaron Proulx, Esquire
Owner and Manager
The Doctor’s Lawyer, PLLC
(813) 486-7321
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