VOLUME XVI, NUMBER 8
August, 2004

WHERE PLAINTIFF’S MEDICAL EXPENSES WERE PAID BY MEDICARE, DAMAGES AWARDED FOR PAST MEDICAL EXPENSES ARE LIMITED TO THE AMOUNT ACTUALLY ACCEPTED BY THE PROVIDER

In Thyssenkrupp Elevator Corporation v. Beatrice Lasky, 29 FLW D103 (2003), the Fourth District Court of Appeal held where a plaintiff’s medical expenses are paid by Medicare, the plaintiff is entitled to recover the amount actually accepted by the medical provider as payment, rather than the amount originally billed by the provider without consideration for the reduction taken for Medicare.

Thyssenkrupp argued to the Fourth District that as a matter of law, the plaintiff Lasky would never have to pay the difference between the amount charged by the provider and the amount the provider accepted from Medicare. As a result, either that amount was inadmissible as damages suffered by the plaintiff or a set-off was required by § 768.76, Florida Statutes as a collateral source because it was an unwarranted surplus damage awarded to the plaintiff. The Fourth District agreed that the excess amount discharged by Medicare was inadmissible as damages.

The court further explained the purpose of the collateral source rule is to reduce the amount of an award to a plaintiff by the total of all amounts which have been paid for the benefit of the claimant from all collateral sources unless a subrogation or reimbursement right exists. In Thyssenkrupp, since the plaintiff did not incur the expense, obligation or liability for the cost and application of the collateral source rule was not justified. The Fourth District, in reliance upon Physician’s Insurance Reciprocal v. Stanley, 452 So. 2d 514, 515 (Fla. 1984) reasoned that allowing the admission of evidence of the excess discharged by Medicare payment would have the effect of providing an undeserved and unnecessary windfall to the plaintiff and further would be contrary to the public policy of reducing healthcare costs by allowing an inflated damage recovery to stand without reduction. Thus, the Fourth District concluded that Thyssenkrupp was entitled to a reduction in the damage award and remanded the matter for trial consistent with the court’s ruling.

On motion for rehearing, Thyssenkrupp Elevator Corp. v. Beatrice Lasky, 29 FLW D608 (March 10, 2004), the Fourth District clarified that its ruling pertained to the admission of the evidence and not set-off and is, as such, an evidentiary ruling stating “When a provider charges for medical service or products and later accepts a lesser sum in full satisfaction by Medicare, the original charge becomes irrelevant because it does not tend to prove that the claimant has suffered any loss by reason of the charge.” The court further certified conflict with the case of Goble v. Frohman, 848 So. 2d 406 (Fla. 2nd DCA 2003), review granted, (Fla. Jan. 22, 2004) to the extent that, for purposes of this subject, HMO benefits and Medicare benefits are interchangeable. (See Briefly Speaking, Volume XV, Number 8 (August 2003) for further commentary).

Interestingly, the verdict in this matter was challenged as having been coerced by an improper Allen charge (see, Allen v. United States, 164 U.S. 492, 41 L. Ed. 528, 17 S. Ct. 154 (1896)) despite the subsequent polling of the jury. On appeal, the Fourth District found that the coerced verdict was not preserved because Thyssenkrupp failed to make a contemporaneous objection to the court’s instruction to return to deliberate because the verdict needed to be unanimous. The court held that when there is some question as to the process by which a verdict is returned, a subsequent polling of the jury and their separate answers relieves the verdict from all objections.

Stephanie H. Luongo

PLAINTIFF DENIED WINDFALL FOR MEDICAL EXPENSES NOT OWED

Under Florida law, an injured party is entitled to recover the “reasonable value” of medical care resulting from a defendant’s negligence. The Second District Court of Appeals in Cooperative Leasing, Inc. v. Irma L. Johnson, 29 FLW D902 (Fla. 2nd DCA April 14, 2004), addressed the issue of determining exactly what this “reasonable value” of medical care is with respect to the appropriate measure of compensatory damages an injured party is entitled to recover for past medical expenses.

In Cooperative Leasing, plaintiff, Irma Johnson, was injured when she was hit by an automobile owned by Cooperative Leasing, Inc. Johnson was billed a total of $56,950.70 by her medical care providers for injuries she sustained in the accident.  Johnson’s personal injury protection carrier paid $15,000 of her medical expenses and Johnson’s medical care providers accepted $13,461 from Medicare as payment in full for their services. Under federal law, these medical care providers are precluded from attempting to recover any further amounts from Johnson or any other source.

Prior to the trial in this case, defendant, Cooperative Leasing, filed a motion in limine to prevent Johnson from introducing into evidence the full amount of her medical bills. Cooperative Leasing reasoned that, because Johnson never became liable for any of the medical bills over and above what Medicare paid, any bills above this amount should not be included in Johnson’s compensatory damages. The trial court denied this motion, Johnson presented all of her medical bills to the jury, and the jury awarded her the full amount charged. After trial, Cooperative Leasing sought to have Johnson’s award reduced to the amount that Medicare paid on her behalf. However, the trial court determined that Johnson was entitled to recover the full amount charged by her medical care providers.

The issue before the Second District in this case was the appropriate measure of compensatory damages for Johnson’s past medical expenses. The Second District concluded that the trial court erred in allowing Johnson to introduce into evidence the full amount of her medical bills, as Johnson was not entitled to recover for medical expenses beyond those paid by Medicare because she had no liability for those expenses. Thus, Johnson would have been made whole by an award limited to the amount that Medicare paid to her medical care providers.

In arriving at this decision, the Second District reasoned that the primary basis for an award of damages to an injured party is to compensate the injured party. The court noted that the whole objective of compensatory damages is not to punish defendants or bestow a windfall on plaintiffs, but to make the injured party whole. The court’s decision regarding this limitation on compensatory damages was also supported by the legislative history of Florida’s collateral source rule, §768.76, Florida Statutes (1997), which evinced the legislature’s intent to prevent plaintiffs from receiving windfall recoveries by being compensated twice (by both their insurance company and by the tortfeasor) for the same medical bills.

In summary, the Second District determined that the “reasonable value” measure of recovery means that an injured party may not recover from the tortfeasor more than the actual amount paid or for which liability incurred for past medical care and services. The difference between the amount paid by Medicare (as payment in full for the medical care provided), and the amount actually charged by the injured party’s medical care providers, is not compensable.  Hence, in this case, the total amount of plaintiff’s full compensatory damages was the amount Medicare paid to her medical care providers — no “double dipping” allowed.

Debora R. Moore

RETHINKING THE APPLICATION OF CONTINGENCY RISK MULTIPLIERS IN FEE AWARDS

The Fifth District Court of Appeals recently affirmed a trial court’s order increasing attorney’s fees from the loadstar amount $630,493.75 to $1,387,086.25 using a 2.2 contingency risk multiplier in Bluegrass Art Cast, Inc., Et Al., v. Consolidated Erection Services, Inc., 29 FLW D578 (March 12, 2004). However, in light of the Florida Supreme Court’s decision in Sarkis v. Allstate Ins. Co., 28 FLW S740 (Oct. 2, 2003), the Fifth District certified the following issue for consideration to the Florida Supreme Court:

Can a trial court use a multiplier to enhance an award for attorney’s fees granted under fee shifting statutes such as sections 627.428 and 627.756, Florida Statutes (2001)0?

In Bluegrass, the Fifth District questioned the viability of applying a multiplier for attorney’s fee enhancement purposes in Holiday v. Nationwide Mutual Fire Insurance, 29 FLW D2789 (Jan. 23, 2004) given the Florida Supreme Court’s relatively recent holding in Sarkis v. Allstate Insurance Company, 863 So.2d 210 (Fla. 2003 ).

In Sarkis, where the jury’s verdict for the plaintiff exceeded twenty five percent of Allstate’s offer of judgment for $10,000.00, the trial court awarded attorney’s fees based, in part by incorporating a contingency risk multiplier of 1.5 which yielded attorney’s fees totaling $87,675.00. After reviewing the legislative history of the offer of judgment statutes, and Florida Rule of Civil Procedure 1.442, the Florida Supreme Court reversed the trial court’s order on attorney’s fees. The Florida Supreme Court held that strict statutory construction of the offer of judgment statute (§768.79, Fla. Stat.) precludes the use of multipliers in this context because it was not expressly authorized by the Legislature. The court noted that the authorization of attorney’s fees pursuant to §768.79, Florida Statutes is ‘the sanction’ against the party rejecting the offer of judgment; and is in effect, a means for promoting the early settlement of lawsuits. The right to attorney’s fees attaches to the rejection of the offer of judgment. In contrast, the contingency risk multiplier authorized in Standard Guaranty Insurance Company v. Quanstrom, 555 So.2d 828 (Fla. 1990) appears to attach at the inception of the cause of action, and becomes relevant to ensure that lawyers have an economic incentive to represents those who would normally not have access to the courts.

Although not incorporated in the holding, it appears that the court in Sarkis believes that using a multiplier for purposes of calculating attorney’s fees pursuant to the offer of judgment statute is somewhat akin levying ‘double sanction’ against the party that made the offer of judgment; a ‘double sanction’ that is neither authorized by statute, nor consistent with purpose of §768.79, Florida Statutes. Interestingly, while the Florida Supreme Court appeared to discount the equal protection arguments raised by Judge Casanueva’s concurring and dissenting opinion in Pirelli Armstrong Tire v. Jensen, 752 So.2d 1278-79 (Fla. 1st DCA 2000), they acknowledged his observation that allowing multipliers in this context might potentially shift the overall value of lawsuits in favor of plaintiffs.

The Fifth District’s certification of Bluegrass to the Florida Supreme Court is an important step. While it is impossible to foresee how the Florida Supreme Court will rule in any particular case, the principles set forth in Sarkis provide a strong framework for the court to exclude the application of attorney’s fees multipliers to fee statutes such as sections 627.428 and 627.756, Florida Statutes.

Mark A. Kirsch