On February 1, 2013, Florida Representative, Dave Hood (R–Daytona Beach), filed H.B. 587,[1] a bill proposing to add Section 768.755 to the Florida Statutes. If passed, this statute would at last bring fairness and accuracy to the calculation of medical special damages that a plaintiff may publish to the jury at trial. This would alter current Florida case law which holds that evidence of the gross amount of medical expenses is admissible even if the health care provider accepted a reduced payment pursuant to a contractual discount with the plaintiff’s health insurer.

For example in Nationwide Mutual Fire Insurance Co. v. Harrell,[2] the plaintiff introduced evidence at trial of the gross amount of her medical bills even though the medical provider had accepted a discounted figure from her health insurer as payment-in-full. The defendant appealed, arguing that the admission of the amount charged rather than the amount paid misled the jury as to the true amount of the medical special damages. In its appeal, the defendant cited several precedent cases in which plaintiffs were prohibited from asking the jury to award the gross amount of medical bills when the treater had accepted a lower payment from Medicare on behalf of such plaintiffs. The First District Court of Appeal disagreed, distinguishing the scenario in which the reduced medical bills resulted from Medicare or other government benefit programs as opposed to contractual discounts negotiated by private insurers.

The Nationwide Court found that in situations where the plaintiff “earned (or paid for)” the benefit of reduced health care costs through the payment of private insurance premiums, she was entitled to present evidence of the gross amount of medical expenses charged.[3]  The court cited the “well-settled rule of damages” that “where the tortfeasor did not contribute to the payment of the premiums of such insurance, [he] should not benefit from the expenditures made by the injured party in procuring the insurance coverage.”  This rationale was taken even further in Durse v. Henn,[4] where the Fourth District Court of Appeal allowed the plaintiff to present evidence of his gross medical bills – even though he had no health insurance – because he “earned in some way” the benefit of reduced charges by negotiating a compromise of the amount billed by the medical care provider. 

These two cases fail to account for the inherent fiction of modern healthcare billing.  Today, gross hospital bills are not a truthful indicator of the real costs of the medical services provided. The recent debate over the Patient Protection and Affordable Care Act exposed how medical care providers fabricate vastly inflated bills for their services, disconnected from any real market forces.[5] In an unrelated case, the Florida Fourth DCA discussed this inherent perfidy of modern medical billing:

“[A] hospital’s cost to provide a service no longer bears much relationship to what it charges, but reimbursement rates from third party payors give hospitals an incentive to set their usual charges at an artificially high amount, from which discounts are negotiated; cost-shifting results in discriminatorily high charges to uninsured patients, in that every patient is billed at full charges, but only the uninsured are expected to pay those amounts. As a result, actual charges are not instructive on what is reasonable. [….]”

See Colombia Hospital v. Hasson.[6] The Nationwide and Durse opinions actually encourage this dysfunctional system by allowing false evidence of phantom medical expenses for which the medical provider never required payment. In fact, considering the observation in Columbia Hospital above, the Durse holding could actually discourage an injured person from presenting his health insurance to the hospital in order to maximize the bill in hopes of a higher personal injury award. 

The primary duty of the courts is the search for the truth in order to give justice to the litigants. See Ward v. Ochoa.[7] A rule of law permitting admissibility of fictional damages subverts the very purpose of the civil jury system.  For example, assume a hypothetical in which a pain management doctor provided the plaintiff a series of post-accident trigger point injections at an invoiced cost of $900 per injection. Assume also that the pain doctor had waived subrogation rights and agreed to accept just $150 per injection as payment-in-full based on the cost he negotiated in a preexisting contract with plaintiff’s private health insurer.  As decided in Nationwide, the plaintiff in this hypothetical could nonetheless present false evidence to the jury that her costs were $900 per injection. Nationwide would also permit this plaintiff to present the fictional $900 per injection in calculating future medical care costs despite full knowledge the amount would never be expected by her doctor. 

If the jury awards her that gross amount however, Florida law requires the trial court to deduct the $750 per-injection “discount” from the amount awarded by the jury.[8] This post-verdict setoff is of little consolation to the defendant. Plaintiffs’ lawyers obviously seek to publicize the maximum possible economic damages to the jury based on the very reasonable presumption that they will correlate larger economic losses with a higher severity of injury.[9] The current “setoff” approach is designed only to prevent a windfall on past medical expenses never paid by the plaintiff. The approach fails however, to appreciate that juries calculate awards for pain and suffering and other noneconomic damages based upon the amount of the medical bills submitted by the plaintiff for reimbursement. Thus, any equity worked by the post-verdict setoff will have already been erased by an exaggerated pain and suffering award stemming from the inflated bills. 

If passed, H.B. 587 will change this scenario. The Bill proposes that if the medical provider’s charges have been satisfied, “the actual amounts remitted to the provider are the maximum amounts recoverable.” In such circumstances, the Bill requires that any difference between the amounts originally billed by the provider and the actual amounts accepted by the provider as payment-in-full “are not recoverable or admissible into evidence.” Therefore, in the above hypothetical, the plaintiff would be permitted only to present evidence that the trigger point injections cost $150 per shot. The Bill further proposes that if there remains an outstanding balance or if the claimant alleges the need for future medical services, the maximum amounts recoverable are the amounts customarily accepted – as opposed to billed – in payment for such services by providers in the same geographic area.  

The current state of Florida law reflects an antiquated notion that gross amount of medical bills derive from a rational, market-driven calculation of the true costs of the services provided. This is simply no longer the case. Hopefully, H.B. 587 will bring a fair and accurate statutory approach for jury calculations of medical special damages. In the meantime, RK lawyers continue to use other strategies including aggressive non-party discovery of the billing policies of medical providers in order to ensure the evidence reflects the true costs of tre