by Dale Swope
There are several new cases which suggest the continual attacks by insurance companies on treating physicians are beginning to resonate with the courts.
It began with the Katzman decision which originally created a category of “hybrid” witnesses who were first-hand observers and were also asked for opinion specifically for litigation. Those hybrids would be required to comply with more intrusive discovery designed to reveal bias, similar to that required from CM examiners. Plaintiffs were not happy with this, but there is some justification for using professional witness discovery on a doctor who voluntarily agrees to form litigation opinions presumably for compensation.
The court denied rehearing, but “clarified” its prior ruling and said the new opinion is restricted to the specific facts surrounding the case. However, it appears the current rule in Florida is that a doctor’s financial records are open for opposing attorneys to romp around however they please if the patient was referred to the doctor by his/her lawyer.
The order affirmed required the doctor to produce records related to a procedure the defense wanted to challenge. These records would show what the doctor charged each time the procedure was performed, and indicate how much the doctor charged health insurance companies vs. patients being treated on LOP.
The “discrete” issue justifying the more invasive financial discovery from the expert was whether Dr. Katzman was recommending more percutaneous discectomies at higher prices to patients treated from this referral relationship than other patients. The Court held that the facts of the case met the requirement of “the most unusual and compelling circumstances” of Rule 1.280(b)(4)(A)(iii), Fla. R. Civ. P., because the limited information sought was relevant to the substantive issues of the reasonableness of the cost and the necessity of the procedures. Katzman v. Rediron Fabrication, Inc., So. 3d , 36 FLW D2790a (Fla. 4th DCA 12-21-11).
Now don’t get me wrong, I was skeptical as well. The $81,000 dollars charged for “percutaneous discectomies” within weeks after a crash the defense called “minor” seemed questionable. Many, of us are concerned about the symbiotic relationships between lawyers and doctors that seem to generate excessive billings supporting the monstrous marketing programs of some non-lawyer referral networks.
But it does seem these excesses could have been managed, in court, with expert testimony and other less cumbersome methods.
Now, an insurance company will be free to contest all charges from the initial visit forward once it confirms that a lawyer referred a client to a doctor. The doctor will then be required to produce the charges to every patient who received services under any of those billing codes for the last four years.
When you are faced with this discovery, you will need to recommend that the doctor hire his own attorney to defend against the subpoena; so, if nothing else, doctors are going to come to hate the legal profession even more than they already do.
Florida Standard Jury Instruction (Civil) 501.2b provides an element of damages is the reasonable value or expense of medical care and treatment necessarily or reasonably obtained, so the “reasonableness” of the treating doctor’s billing is relevant despite the fact that the plaintiff agreed to pay what to some might be an inflated amount. An argument that it would be unfair for the jury to award less because the plaintiff could face a lawsuit from the doctor for the balance on the account just invites the defendant to join the doctor, a complication to be avoided at all costs.
You may be wondering how, aside from the discovery burden on the doctor, this will affect trial to do to the trial? These days, the web of billing rates under HMO, PPO and health insurance contracts is extremely complicated. Wholesale purchasers of services buy blocks under each other’s contract rates that were negotiated in through shifting groups of practices and organizations, who get discounts based on guaranteed volume, or based on fixed monthly “capitation” payments, and based on the doctor’s own design of his practice, with a core of patients at the lowest rates to cover overhead, with increasingly higher rates being demanded as the capacity is consumed.
Do we really want to add on two extra days to every whiplash trial by bringing in experts to explain the honest truth behind why one patient’s bill is different from another’s in the catastrophically failed system that is currently American Medicine?
Furthermore, this will require another day and a couple of experts to analyze why people referred from lawyers (presumably after trauma, and most frequently an auto accident or fall) are statistically much more likely to need a discectomy than those who come in through their HMO for, say, diabetes control or a bleeding rectum.
The total cost to the judicial system from this collateral litigation now required in the least of our cases will dwarf the construction overruns of the Taj Mahal, and are just not necessary to reveal the abusive excesses some doctors and lawyers may be promoting.
Paintiff’s treating doctors were scrutinized again in Armada Protection Systems 2000, Inc. v. Yandell, So. 3d , 36 FLW D2485a (Fla. 4th DCA 11-16-11). Not only were the reasonableness of both treatment and associated costs contested, but one physician was even accused of breaking the law in his efforts to help his patient.
After a rear-end mva, the plaintiff, a former arena football player, visited a chiropractor on the “three times a week for eight months” treatment plan, costing him $40,000 on an LOP.
The plaintiff’s neurosurgeon charged him $55,000 for epidurals, a discogram, and a percutaneous discectomy, all after the doctor had sent him for MRIs at the doctor’s own facility. Per this doctor, future treatment would cost $100,000-$120,000.
The defense hired a couple of medical experts to say the plaintiff’s condition was degenerative and football-related, that the treatment was not necessary, and there was no reason for any further treatment. One defense expert’s report claimed the charges were seven times the Medicare allowable charge, four times what local doctors charged, and twice the top 10% of charges in the USA for identical services.
With total disregard for the court’s order on the plaintiff’s motion in limine, the defense let the jury hear about the defense experts’ opinions the plaintiff’s treatment was unnecessary. They even accused the neurosurgeon of violating the Patient Self-Referral Act, §456.052, Fla. Statutes, by sending the plaintiff for MRIs to a facility owned by the neurosurgeon.
Clearly influenced by the defense doctors’ testimony, the jury’s award for past and future medicals was only $65,000. The court did not disturb the plaintiff’s judgment, but there was troubling language in the opinion about that red herring, the “Patient Self-Referral Act.”
In discussing exemptions for referrals under F.S. §456.053(3)(o)3.f, the court states the record wasn’t clear “whether the statute was violated.” That wording leaves the door open for the defense to continue attempts to derail a plaintiff’s case whenever a treating doctor has an ownership interest in an outpatient surgery center, a diagnostic testing facility, a physical therapy clinic, etc.. Count on several hours of valuable time being spent preparing to deflect that bullet, not to mention the time and money that can be wasted on the issue during trial.
In Berrios v. Deuk Spine, So. 3d , 36 FLW D2536a (Fla. 5th DCA 11-18-2011), the issue before the court was whether the defendant could join the medical provider in a dec action to determine the provider’s charges to the plaintiff were “lawful” and proper. The court recognized the potential for abuse and affirmed dismissal of the defendant’s claim for declaratory relief. Not only could this ruin doctor/patient relationship, but the defendant’s marginal claim had the capacity to transform a straight-forward plaintiff’s damages claim into a drawn out and expensive inquisition of medical providers.
Attaching the policy doesn’t make it evidence
Don’t forget to actually include the policy with the evidence if you are suing for contract benefits. Defense lawyers are cute with their pleadings that look like admissions (to limit your fee claim) but really aren’t quite, so make a checklist for your proofs and stick with it. Don’t ever assume the defense lawyer will be as friendly once you start closing the noose, as he was when he was asking for another continuance or extension. Check out Grider-Garcia v. State Farm Mut. Auto. Ins. Co., So. 3d , 36 FLW D2408a (Fla. 5th DCA 11-4-11).
Legal expenses for both parties
The prevailing party test is irrelevant to a determination of fees under F. S. §624.428. Fees can be awarded to both parties, as held in Rodriguez v. Government Employees Insurance Company, So. 3d , 36 FLW D2788a (Fla. 4th DCA 12-21-11). GEICO triggered fees under an OJ when it beat the plaintiff’s claim for benefits, and the plaintiff should have gotten fees for successfully defending against GEICO’s counterclaim for fraud.
Broad definition of consent applied to permissive drivers
In Chandler v. GEICO Indemnity Co., So. 3d , 36 FLW S660a (Fla. 11-23-11), the supreme court refused to accept the First District’s bold-faced attempt to narrow the definition of consent under Florida’s dangerous instrumentality doctrine. Despite differing precedent in Susco and Roth, the First District authorized Geico to hide behind Avis rental contract language that said no one other than the named renter was allowed to drive the rented car. Susco Car Rental System of Florida v. Leonard, 112 So. 2d 832 (Fla. 1959); Roth v. Old Republic Insurance Co., 269 So. 2d 3 (Fla. 1972).
Geico’s insured rented a car from Avis Rent-A-Car while her Ford was being repaired. She designated Geico as her primary insurer on the rental contract, but didn’t list any drivers other than herself. She loaned the rental car to a friend who loaned it to another driver who, of course, crashed it and caused injuries to Chandler.
Geico relied on the prohibition against “unauthorized” drivers in the Avis contract to deny its insured a defense and indemnity. Geico’s policy defined “temporary substitute auto” as one temporarily used with the permission of the owner as a substitute for the owned vehicle.
In Geico’s myopic “gotcha,” the fact that Avis did not give permission authorizing the driver at the time of the crash to drive meant there was no liability coverage for Geico’s insured. The trial court disagreed with Geico’s logic, and entered a final summary judgment against Geico in the dec action.
Reversing the trial court, the First District agreed with Geico that the Avis contract meant literally and narrowly that the named driver and no other had permission to drive the car; and, accordingly, was not a “temporary substitute auto” pursuant to the defined Geico policy.
In quashing the First District’s decision, Justice Lewis pointed out the First District had previously decided only “breach of custody amounting to a species of conversion or theft” could relieve the owner of a motor vehicle from liability for its use or misuse by another. American Fire & Casualty Co. v. Blanton, 182 So. 2d 36 (Fla. 1st DCA 1966). Blanton followed the law of Susco and Roth, both Florida supreme court opinions refusing to abolish the protection insured renters who lent their rented vehicle to someone else.
Duty to defend reinforced
Category 5 Management Group, LLC v. Companion Property and Casualty Insurance Company, So. 3d (36 FLW D2520a 11-16-11) is another example of an insurance company’s attempt to dodge its responsibilities to its insured. A general contractor hired Category 5 Management Group, LLC, (the LLC), the Pensacola policyholder, to oversee several subcontractors doing post-Katrina cleanup work in New Orleans. Joe Johnson, an employee of one of the subs, was driving a truck owned by yet another sub when he drove through a red light in Alabama, injuring the Stewarts.
The LLC was among the defendants sued in Alabama by the Stewarts. The complaint alleged Johnson had been operating the vehicle at the time of the crash for the benefit of all defendants. It was also alleged that Johnson was hired by or under the direction, control and supervision of John and Dorothy Sims, as major stockholders of the LLC.
Interpreting these allegations to suggest an employer-employee relationships existed between LLC and Johnson, the LLC’s insurance company used owned auto and employee exclusions in the policy to validate its refusal to provide a defense or indemnity to the LLC. Abandoned by its insurer, the LLC hired its own attorney and agreed to the entry of a six million dollar consent judgment in favor of the Stewarts.
The LLC filed an action for declaratory relief in Florida, trying to get the benefits of the policy it had paid premiums for. The trial court agreed with the insurer, finding the exclusionary language in the LLC’s policy precluded the LLC’s insurer from having to provide a defense or indemnity.
The First District cited Colony and Grissom for the following principles: 1) the insurer’s responsibility to defend is broader than, and distinct from, its duty to indemnify; 2) duty to defend is determined “solely by the allegations in the complaint;” and, 3) if allegations set forth “facts partially within and partially outside the coverage of the policy,” the insurer is obligated to defend the entire lawsuit. Colony Ins. Co. v. G & E Tires & Serv., Inc., 777 So. 2d 1034, 1036-1037 (Fla. 1st DCA 2000), and Grissom v. Commercial Union Ins. Co., 610 So. 2d 1299, 1306-1307 (Fla. 1st DCA 1992). Neither Colony nor Grissom involved motor vehicle coverage, so the language in F. S. §324.022(1), that no insurer has “any duty to defend uncovered claims irrespective of their joinder with covered claims” was not relevant.
The court mentions “a more generalized principal-agent relationship” perhaps existing between the LLC and the defendant. This idea may be the result of a defense attempt to obfuscate the difference between master/servant in tort and principal/agent in contract law, because there just isn’t any class of “semi-employees” that doesn’t fit the definition of servant in tort law.
When the insurance company had notice of the action against LLC and decided not to appear to defend when it had an chance to do so, one of the consequences is that the terms of the consent judgment can’t be challenged without the insurance company proving fraud or collusion. In the absence of fraud or collusion, the consent judgment would be “conclusive against the insurer as to all material matters determined therein” when the insurer has failed to appear and defend after notice of the action and opportunity to do so. Gallagher v. Dupont, 918 So. 2d 342, 348 (Fla. 5th DCA 2005). This is a friendlier standard of proof than “reasonableness of amount and absence of bad faith” set forth in Steil v. Florida Physicians’ Ins. Reciprocal, 448 So. 2d 589, 592 (Fla. 2d DCA 1984); and Shook v. Allstate Ins. Co., 498 So. 2d 498, 500 (Fla. 4th DCA 1986).
