Workers' compensation is a primary payer in the event of an injury in the course and scope of employment. Those benefits are usually the only recovery an injured worker may receive from the employer. But, there is the potential for the employee to pursue tort damages against a third party. If such a lawsuit is pursued, the employer/carrier has some right to participate in the recovery, see Lienholding Concept and Questions (October 2018).
This has been discussed recently in light of the changes in Florida tort law effected by CS/CS/HB 837. See Comparative Redux (March 2023) and The 440.39 Lien and Limitation (April 2023). In the event of such a third-party case, the calculation of such recovery will involve mathematical work, determination of the "full value of the case" and more. In broad terms, it is in the best interest of the employee and the employer that the tort recovery is maximized.
Conversely, it is in the injured worker's best interest to show that whatever that recovery, it was less than the "full value of the case" as discussed in the analyses in Lienholding Concept and Questions (October 2018).
An interesting element of the broad revisions in HB837 is the discussion of "letters of protection." This is defined in 768.0427(1)(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."
Simply stated, there may be a need for significant medical care following a personal injury. There is the potential that such care will be rendered at the expense of the victim, or their health insurance company, Medicare, Medicaid, or even a healthcare facility, see Emergency Medical Treatment and Labor Act (EMTALA)(1986). However, it is also probable in the event of a work accident that medical care and treatment will be provided by the employer/carrier.
Thus, from whatever source, there is a probability that some measure of medical attention will be provided in the wake of an injury. If a workers' compensation payer accepts compensability, that will be paid by the carrier in part, perhaps in large part. But if compensability is denied care may still be rendered as the workers' compensation litigation proceeds to determine employer responsibility.
Thus, to some degree, a portion of care will likely be billed to the injured person, or one of these payers, at a rate that is "reasonable and customary." This is often more than the provider expects to be paid, perhaps much more. As noted in the Journal of General Internal Medicine, 2008 Aug; 23(8): 1257–1260, in Learning from the Legal History of Billing for Medical Fees:
"Primary care physicians typically charge uninsured patients one third to one half more than they receive from insurers for basic office or hospital visits, and markups are substantially higher (2 to 2.5 times) for high-tech tests and specialists’ invasive procedures."
The authors contend that the provider bills more than she or he hopes to collect. That the provider knows that insurance companies will reduce the payment based on contractual agreements; Medicare and Medicaid will reduce payment based on schedules and rules. Workers' compensation employer/carriers will reduce payment based on contracts or schedules, and sometimes both. In short, they contend the provider has no real hope of collecting the "reasonable and customary" charges as billed.
That said, the bill is issued. If the injured person has the means and is not protected by some such schedule or contract, there may be instances in which the injured person must pay those provider charges. Often, there is compromise and reduction even then. An exception to that is an important part of Florida workers' compensation. A medical provider cannot bill an injured worker for care. Section 440.13(3)(g), Fla. Stat. Furthermore, workers' compensation benefits are not subject to the claims of most creditors. Section 440.22, Fla. Stat.
When the tort claim is tried, or prosecuted, there is a tendency to calculate the damages resulting from the injury by referencing what the medical providers have billed for those services. Anyone familiar with explanations of benefits (EOB) has likely seen a marked difference between what was billed and what an insurance company paid.
HB837 amended section 768.0427(2), Fla. Stat. regarding the evidence of "medical treatment or service expenses." This now provides:
"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."
Thus, if the total medical bills are $100,000, but the payments for those services total only $50,000, the evidence presented must be of the $50,000. This is for those "satisfied" or paid. This is an important point. The evidence does not have to include what was paid, but is "limited to" what was actually paid.
Section 768.0427(2)(b) addresses the evidence regarding proof of what will be needed to pay charges that have not been paid by some source. If there are such bills, the evidence has to (shall) include "evidence of the amount which such health care coverage is obligated to pay," if any. This is to include also any amount that the injured person must pay "under the insurance contract or regulation." Note that this is a bit less restrictive than the "limited to" that is applied to what was already paid.
This section then proceeds to address instances in which the injured person "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." In that event, if the injured party has such health insurance, the evidence must include proof of what the "health care coverage would pay" regarding those charges.
And, if the injured person lacks health care coverage, or is covered by Medicare or Medicaid, the evidence must include proof of what "120 percent of the Medicare reimbursement rate in effect on the date of . . . medical treatment or services." If there is no Medicare rate regarding that care, then instead there must be evidence of what "170 percent of the applicable state Medicaid rate" is for that service. Note that both of these address inclusion. Note also that in this instance the plaintiff may need to hire someone with special skills to "price" these various unpaid bills.
The statute then addresses another challenge of "letters of protection." Having provided the care, and received that letter, a medical provider may sell that letter. The letter is a promise to be paid if there is recovery. Lawyers would call it a contingency. There is therefore some risk that a provider will render care and yet never be compensated (the injured party might lose the lawsuit, or be found "more than 50% responsible, see Comparative Redux (March 2023). This is known when the provider agrees to the letter and terms.
A physician selling such a contingency may not find a buyer for the "full price." If someone offered you a piece of paper that might be worth $20,000 and might be worth $0.00, what would you pay for it? If you said $20,000, call me (have your checkbook handy). More likely, such a contingent recovery will bring the doctor pennies on the dollar, much in the same manner (not extent) as the reductions by contract or schedule that are associated with the payments discussed above. In short, the contingent promise is very unlikely to be worth $20,000, and the provider is likely to take much less. This is in part the "bird in the hand" idiom but is also a recognition that the provider is not a billing company and would likely rather spend time providing care than bookkeeping and monitoring.
Thus, the statute addresses when "the health care provider subsequently transfers the right to receive payment . . . to a third party." When that occurs, the evidence must include "the amount the third party paid or agreed to pay . . . for the right to receive payment pursuant to the letter of protection." Thus, not the $20,000, but the $_______ actually paid for it.
Similar constraints are applied to the valuation of "damages for any future medical treatment or services."
Furthermore, 768.0427(2) now mandates that evidence regarding the cost of medical care, "rendered under a letter of protection" cannot be introduced until the evidence includes:
- (a) A copy of the letter of protection.
- (b) All billings for the claimant's medical expenses, which must be itemized . . ..
- (c) if the "provider sells the accounts receivable" then
- 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.
- (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 a 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.
Thus, there are requirements regarding the presentation of evidence as to actual medical cost. This is likely intended to either prevent the inflation of damages relative to the "reasonable and customary" and the billed, or to require full disclosure of various elements of evidence such that a finder of fact (often a jury) receives "the rest of the story." Paul Harvey, 1918-2009, RIP.
It bears mentioning, in relation to (e) above, that section 90.502 is the "attorney/client privilege." This is the section of the law that keeps communications between lawyer and client largely protected from disclosure. Section (e) is clarifying that a lawyer cannot conceal that referral to a physician was made by that attorney. Furthermore, the new law is facilitating inquiry into the relationship, if any, between the physician and attorney. Lawyers defending personal injury lawsuits are bound to begin making such inquiries as a matter of course in discovery about physician's care and opinions. Similar questions have been asked about physician relationships with defense attorneys, insurance companies, and more.
What this all means to worker's compensation may be multi-faceted. There are some who perceive that a few populations of injured pursue treatment for untoward reasons. Treatment is for remediation and palliation of medical complaints.
However, there are periodic allegations that someone is persisting in care in an effort to substantiate the severity of an injury or to maximize the overall damages. Nothing in the changes of HB837 is likely to alter that. There is unlikely to be any change in the injured person's motivation to treat for injury, be it sincere and appropriate or not. But, the evidentiary changes may impact some motivation.
Notably, many a personal injury lawyer has utilized the workers' compensation carrier's payment ledger to prove the medical expenses in a case. Of course, those are reduced by some fee schedule. Many times, lawyers will use that easily obtained fee-schedule total and assert it in making a demand for settlement in the tort case. It has not been uncommon for some to multiply that figure by 2 in order to quickly account for the fee schedule. Defense attorneys have persistently been interested in the employer/carrier payment ledger and have striven to use it to argue actual value of medical damages. HB837 will likely bring greater focus to such payment ledgers.
And it is probable that tort recoveries will be less lucrative as the evidence of medical costs and payments is limited to, or at least includes, the actual. This will likely provide a more concrete estimate of medical expenses or loss. Furthermore, the implication of such actual values onto the letter of protection practice may be significant. If a procedure is performed, and there is some contingent price demonstrated in relation to it, that will at least be part of the evidence.
These implications are interesting in the broad perspective of tort suits. There will be impacts on the work necessary to document various elements of proof that are now required. However, the impact of these statutory changes will not likely be as profound as the impact of the "greater than 50%" standard in the new "modified" comparative negligence. See Comparative Redux (March 2023).
