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Health Care

The Quarterly Dose

Florida Tort Reform: The Impact of House Bill 837 on Health Care Litigation

The Quarterly Dose - May 2024

May 1, 2024

by Megan J. Nelson

On March 24, 2023, Florida Governor Ron DeSantis signed House Bill 837 into law. Also known as the “Civil Remedies” or “Tort Reform” law, HB 837 has changed civil litigation in Florida, including providing a uniform standard for calculating the accurate value of past and future medical expenses in personal injury or wrongful death actions. Florida Statute 768.0427 now defines how past and future medical expenses may be entered into evidence at trial and how letters of protection are admission as to medical expenses and discovery related to the treating provider and a plaintiff’s attorney’s relationship.

House Bill 837 changes how cases will be evaluated for settlement negotiations and potentially increases the ability to reasonably settle claims before trial. It is important to note that these changes apply to causes of action filed after the effective date of March 24, 2023. However, if a complaint was filed before March 24, 2023, but is amended after March 24, 2023, there may be an argument that the changes from HB 837 should apply to the amended complaint.

If you find yourself wondering why these changes matter, it’s because a plaintiff’s damages are evaluated based on multiple factors, including past and future medical expenses. For example, if the medical bills are $100,000 but the amount paid is $10,000, a plaintiff should not be able to assert $100,000 in medical expenses. Knowing what can be presented to a jury will help to provide a better evaluation and strategy for settlement negotiations.

Before the new law, a plaintiff was permitted to board the full amount of medical bills charged for services rendered, with the exception of services paid by Medicare or Medicaid. Evidence of adjustments, reductions and setoffs could not be entered into evidence, unless paid by Medicare or Medicaid. Now, under HB 837, the evidence offered to prove the amount of damages related to medical expenses for past medical bills is limited to what was actually paid, regardless of the source of payment.

Example: If the medical bill is $1,000 but the contractual reimbursement rate (private insurance, Medicare, Medicaid) is $450 and the plaintiff’s co-pay is $50, then the amount paid for the bill can be presented to the jury as $500, not the $1,000 billed.

For any unpaid medical bills (past and future), the claim can only be for an amount deemed necessary and reasonable. The amount that may be presented will depend on whether the plaintiff has health care coverage. If a plaintiff has Medicare, Medicaid or no coverage, the amount that may be offered into evidence is 120% of the Medicare reimbursement rate in effect on the date of the medical treatment or service obtained. For future medical expenses, the amount would be the reimbursement rate in effect on the date of trial.

Example: If the medical bill is $1,000 but the Medicare reimbursement rate is $400, then the reasonable value of the unpaid services would be $480.

If there is no Medicare rate for a service, then the amount that may be offered into evidence is 170% of the applicable state Medicaid rate in effect on the date of the medical treatment or service obtained. For future medical expenses, the amount would be the reimbursement rate in effect on the date of trial.

Example: If the medical bill is $1,000 but the state Medicaid reimbursement rate is $400, then the reasonable value of the unpaid services would be $680.

New Definition for Letters of Protection
Florida Statute 768.0427 now defines a letter of protection as “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.” This means any document showing an agreement for services can be called a “Letter of Protection,” “LOP,” or anything else. If there is an agreement to provide medical services to a plaintiff and not to charge the insurance carrier, it falls under the definition of a letter of protection.

If a plaintiff has health coverage (private insurance, Medicare, Medicaid) but does not submit the medical treatment or services to the insurance carrier (i.e., treating under a letter of protection), the amount that may be offered into evidence is limited to what the insurance carrier would have paid plus the plaintiff’s co-pay.

Example: If the medical bill is $1,000 but the contractual reimbursement rate (private insurance, Medicare, Medicaid) is $450 and the plaintiff’s co-pay is $50, then the amount paid for the bill can be presented to the jury as $500, not the $1,000 billed.

If the letter of protection is subsequently transferred to a third party, the amount that may be offered into evidence is limited to the amount the third party paid or agreed to pay in exchange for the right to receive payment pursuant to the letter of protection.

Example: If the medical bill is $1,000 but a third party bought the letter of protection for $700, then the amount paid for the letter of protection can be presented to the jury as $700, not the $1,000 billed.

The law also places new obligations on a plaintiff to disclose information related to the letter of protection, including identifying whether the plaintiff was referred for treatment and the identity of the person who made the referral. If the referral is made by the plaintiff’s attorney, disclosure of the referral is permitted, and evidence of such referral is admissible, notwithstanding attorney client privilege. Moreover, in such situations, 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 the testifying medical provider. This effectively overturns the Florida Supreme Court’s decision in Worley v. Central Florida Young Men’s Christian Ass’n, Inc., 228 So. 2d 185 (2017).

As the new law allows evidence of reasonable amounts for necessary treatments, it is important to be aware that a doctor may claim that their bills are reasonable and medically necessary due to the limited availability of doctors willing to treat patients under a letter of protection. However, a proactive defense that actively pursues what the reasonable and customary cost is for the medical treatment and services received, is likely the best course of action. Florida has implemented price transparency related to minimizing the surprise bills that arrive after medical treatment and services have been provided by hospitals. This price transparency allows the defense to argue what constitutes a reasonable and customary value. 

 

The Quarterly Dose – May 2024, has been prepared for our readers by Marshall Dennehey. It is solely intended to provide information on recent legal developments and is not intended to provide legal advice for a specific situation or to create an attorney-client relationship. We welcome the opportunity to provide such legal assistance as you require on this and other subjects. If you receive the alerts in error, please send a note to tamontemuro@mdwcg.com. ATTORNEY ADVERTISING pursuant to New York RPC 7.1. © 2024 Marshall Dennehey. All Rights Reserved.

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