1 LETTERS OF PROTECTION IN GENERAL LIABIILTY CASES STRATEGIES FOR DEFENSE COUNSEL Submitted by Joe Monello of Wicker, Smith, O Hara, McCoy & Ford, P.A. and Judy S. Davis, Corporate Risk Manager, Tallahassee Memorial Hospital A Letter of Protection (LOP) is a tool used to help an injured person pay for medical care they cannot afford or obtain without creating a substantial financial hardship. They have historically been used in auto cases, where personal injury protection (PIP) benefits are available. In recent years, the use of LOPs has become more prevalent in general liability and medical malpractice cases. These letters are generated by Plaintiff s attorneys to guarantee payment to health care providers. It is an agreement that allows the injured person to get medical care on credit with the healthcare provider agreeing to wait until the conclusion of the case to get payment from either a settlement or judgment. They are often signed by the Plaintiff and the healthcare provider, though they are sometimes signed by the Plaintiff s lawyers as well. Experience has shown that the use of LOPs in general liability and medical malpractice cases is not limited to circumstances where Plaintiffs do not have insurance that would otherwise pay for the care. Oftentimes, Plaintiffs who have private insurance, Medicare, or Medicaid still treat under an LOP, rather than submitting those bills. With reimbursement rates so low, and getting lower, many healthcare providers see LOPs as more financially beneficial to them. If it is a good liability case, with real injuries, the provider has a better opportunity for a higher percentage of reimbursement. Also, if the provider and the lawyer (or law firm) have an ongoing relationship, that lawyer will continually refer clients to that provider. The provider then has a financial incentive to help the Plaintiff s case, while the lawyer has incentive to refer more clients to that provider. So, what does that all mean for the defense of these cases? First and foremost, it affects the potential value of a case. What would a jury award this Plaintiff? Florida law generally provides that a Plaintiff is entitled to recover those reasonable medical expenses incurred from the negligence of another. When it comes to Medicare or Medicaid, the Plaintiff is limited to admitting at trial only the amount that Medicare or Medicaid paid, or is owed. For example, the
2 Plaintiff s total medical bills may be $100,000, but if Medicare only paid $10,000, the jury will be told the total medical bills are $10,000. With private insurance, the Plaintiff is able to admit the total amount of medical bills ($100,000 in the above example). After a verdict is rendered, and if the jury does award medical bills, the trial court will then do a post-trial set off. As such, even if a jury awards $100,000, the Plaintiff s recovery will be reduced to $10,000 in the above example. 1 With LOPs, not only can plaintiff s attorneys argue that the entire amount billed by the healthcare providers be admitted, but there is no post-trial set off. This allows for a larger potential recovery for the Plaintiff. STRATEGIES TO DEAL WITH LETTERS OF PROTECTION So, how do we defend cases involving letters of protection? Here are some strategies you may want to implement in your practice: 1. When obtaining medical records of a claimant or Plaintiff, make sure you get the complete record. Too often, healthcare providers provide only portions of their chart, and exclude billing or other financial records. By getting the entire record, you will be able to determine if a provider is providing care under a LOP, and get a copy of that document. 2. In a plaintiff s deposition, ask how she got referred to the treating physician or to the specialist. This will often meet with an objection as protected by attorney-client which will make the referral self-evident. Establishing who made the referral is oftentimes dispositive in order to seek further discovery regarding the letter of protection and any underlying referral relationship Depose the healthcare provider. Question that provider about the arrangement the provider has with the plaintiff s attorney. Ask whether part of that arrangement is to accept less than what has been billed despite having a LOP. If a physician admits to such 1 See Fla. Stat Compare Katzman v. Rediron Fabrication, Inc., 76 So. 3d 1060, 1064 (Fla. 4 th DCA 2011) (holding that a treating physician may have a stake in litigation because a lawyer referred his client to the doctor, and thus the doctor has injected himself into the litigation ) and Katzman v. Ranjana Corp., 90 So. 3d 873, 877 (Fla. 4 th DCA 2012) (holding that more in-depth discovery into a doctor s financial information to establish bias was improper because the patient was referred by another doctor, not by her attorney).
3 an arrangement but defers to his or her billing department for the specifics, then schedule the billing administrator for deposition. Ask the billing administrator how much the doctor would have been reimbursed if the charges had been submitted to a traditional health insurance company rather than under a LOP. You can then use this evidence to argue that charges were not reasonable. Also, ask the physician whether he socializes with and/or exchanges gifts with plaintiff s counsel. 4. Serve written discovery (requests to produce or interrogatories) on the relationship between the physician and the plaintiff s counsel. In Rediron, discovery into a treating physician and his practice s financial information was appropriate when there was a substantive issue regarding whether procedures were medically necessary, and whether the procedures were done solely due to the ongoing relationship between the lawyer and the physician. 3 This type of discovery is also permitted to determine whether the healthcare provider charges non-litigation patients a lower fee for the same medical services. Through this discovery you can also obtain information on the referral history from plaintiff s counsel; how the provider bills for those referrals; whether there is an individual letter of credit for each referral or a standing letter of credit to cover all referrals; and whether they meet to discuss billing/treatment issues. Defense counsel should also inquire as to the existence of a formal contract between the physician and plaintiff s counsel. 4 One objection defense counsel might encounter is that the discovery is barred under the strict guidelines of Florida Rule of Civil Procedure 1.280, regarding expert witness discovery, because the treating physician is a hybrid witness, i.e. one that testifies as to facts as well as medical opinions. However, Rule 1.280(b)(5) cannot be used as a shield to prevent discovery of relevant information from a material witness such as a treating physician by simply stating that the physician will also be an expert witness in 3 See Rediron, 76 So. 3d at See Steinger, Iscoe & Greene, P.A. v. Geico General Ins. Co., 103 So. 3d 200, 205 (Fla. 4 th DCA 2012) ( [W]here there is a preliminary showing that the plaintiff was referred to the doctor by the lawyer (whether directly or through a third party) or vice versa, the defendant is entitled to discover information regarding the extent of the relationship between the law firm and the doctor. ).
4 litigation. 5 Courts have reasoned that this type of discovery is pertinent especially because [a] physician may derive substantial income from treating patients involved in litigation beyond the provision of services as a retained expert. 6 While this information is discoverable, however, it must not be overly-intrusive. 7 Financial information should normally be sought first from the party, the treating doctor, or other witnesses, rather than the party s legal counsel. 8 In the event that none of these sources has sufficient information, or if the witnesses give nebulous testimony, a law firm is an appropriate source of discovery for information regarding a firm s financial relationship with a doctor Finally, consider using a medical expert or billing/coding expert to render an opinion on what the true cost of the medical services would have been if actually submitted to Medicare/Medicaid or to a private insurance company. Some providers who bill under an LOP may take liberties in the way they code certain treatments or procedures, placing them in a higher acuity level, and thus making them more expensive. 10 These experts would allow the jury to hear an alternative damage number to reduce the medical award. Each case is different, and the strategy implemented will be case specific. However, by implementing one or more of these strategies, you will hopefully be able to decrease the potential value of the case by proving the bias of the provider and the unreasonableness of the bills. Good Luck! 5 See id. at See Brown v. Mittlelman, 390 Fla. L. Weekly D1806, at *1 (Fla. 4 th DCA 2014). 7 See id. at *2; accord Elkins v. Syken, 672 So. 2d 517, 522 (Fla. 1996) (holding that discovery should not be used as a tactical tool to harass, and that courts must balance a party s need for information concerning potential witness bias and the witness s right to be free from burdensome or intrusive production requests). 8 See Steinger, 103 So. 3d at See Lytal, Reiter, Smith, Ivey & Fronrath, L.L.P. v. Malay, 133 So. 3d 1178 (Fla. 4 th DCA 2014). 10 See Rediron, 76 So. 3d at 1064.
5 Joe Monello, Attorney At Law Wicker Smith O Hara McCoy & Ford P.A. 390North Orange Avenue, Suite 1000 Orlando, FL Tel: Fax: Judy S. Davis, MS, LHRM, CHRM Corporate Risk Manager Tallahassee Memorial Hospital 1300 Miccosukee Road Tallahassee, FL Tel: (850)
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