Florida Supreme Court Takes the Air Out of Inflated Medical Damages: Elaine Dial v. Calusa Palms Master Association, Inc. – J.W. Taylor

TLA Feature Articles and Case Notes

Florida Supreme Court Takes the Air Out of Inflated Medical Damages: Elaine Dial v. Calusa Palms Master Association, Inc.

Whether you prefer to call the issue “Truth in Damages”, “Transparency in Damages”, “Phantom Damages,” or even “Inflated Medical Damages,” a great debate has persisted across the nation as attorneys and industry professionals alike attempt to explain frequently inexplicable Nuclear and now Thermonuclear Verdicts. Medicare providers routinely bill patients for services in amounts that greatly exceed what Medicare will ultimately pay for those services. Those providers must accept the amount that Medicare pays in order to participate in the program. Based on previously unclear case law, a jury in a personal injury or wrongful death suit could hear the amounts the provider initially billed, the amounts the provider actually accepted as full and final payment from Medicare for services, or both. On April 28, 2022, with its decision in Dial v. Calusa Palms Master Association, Inc., 1 the Florida Supreme Court made clear that, moving forward, a jury should only have the ability to hear and consider the amount the provider accepted as payment from Medicare and not the grossly inflated amount that was initially billed.

Prior to this decision, there was legislation proposed in Florida’s State Congress directed at both limiting the nature of past medical expenses a plaintiff may present to a jury and curtailing inflated verdicts. House Bill 561 and Senate Bill 846, however, died the slow agonizing legislative death in the 2021 legislative session in early May. All was not lost though - enter Dial. Elaine Dial was injured in a trip-andfall incident which occurred on property owned by Calusa Palms Master Association, Inc. (“Calusa Palms”). At the time of the incident, Ms. Dial had private health insurance, but thereafter became eligible for Medicare. As is the standard protocol in Florida for such litigation involving past medical expenses, both Ms. Dial and Calusa Palms filed motions in limine arguing the admissibility of her past medical expenses and collateral sources of payment. With regard to medical expenses handled by Ms. Dial’s private health insurer, Calusa Palms conceded that Ms. Dial could admit the full past medical expense amounts, even though they had been paid at the private insurer’s discounted rates. With regard to the medical expenses covered by Medicare, however, Calusa Palms argued that Ms. Dial should only present the amount actually paid by Medicare, rather than the figures presented in the provider’s initial billing.

Interestingly, Ms. Dial argued that by paying monthly premiums for Medicare, Medicare should be considered a collateral source and the full amounts of her past medical expenses should be admissible. Notwithstanding Ms. Dial’s argument, the trial court granted Calusa Palms’ motion in limine and denied Ms. Dial’s motion. The resulting calculation of damages, factoring in the Medicare discounted amounts, totaled $34,641.69. Had Ms. Dial been permitted to admit the full amounts, her past medical expenses would have totaled approximately $120,000.00. At the conclusion of trial, the jury awarded Ms. Dial $34,641.69 for past medical expenses, representing a reduction of her potential past medical damages of roughly $85,000! Of course, Ms. Dial appealed and asked Florida’s Second District Court of Appeals for the full amount of her medical damages to be awarded rather than the discounted Medicare amount.

The Second District Court of Appeals upheld the lower court’s determination, stating it was bound by its prior holding in Cooperative Leasing, Inc. v. Johnson.

2 In that case, the Second DCA held that “the appropriate measure of compensatory damages for past medical expenses when a plaintiff has received Medicare benefits does not include the difference between the amount the Medicare providers agreed to accept and the total amount of the plaintiff’s medical bills.”3 While the holding in Johnson appears clear enough, the Second District Court of Appeals had to address the decision in Joerg v. State Farm Mutual Automobile Insurance Co. 4 where the Florida Supreme Court held that the plaintiff, a developmentally disabled adult who was struck by a car while riding his bicycle, could not present the jury with potential eligibility for future Medicare benefits for the purpose of determining future medical expenses. The reasoning behind the Florida Supreme Court’s holding in Joerg noted that a jury should not be prejudiced by speculative benefits which a plaintiff may or may not receive in the future, as it might prompt the jury to return an artificially low judgment if

J.W. Taylor*

the plaintiff never actually receives future compensation from the potential benefit or the potential benefit program is cancelled or otherwise extinguished.5

Although the Second District Court of Appeals was not convinced that Joerg implicitly abrogated its ruling in Cooperative Leasing, it nevertheless felt compelled to certify the question for two reasons. First, the frequency with which the issue arises in negligence cases made it a matter of great and recurring importance. Second, the state’s highest court needed to strike the appropriate balance between the competing policies at play—limiting evidence of collateral sources to avoid jury confusion versus permitting evidence to assist the jury in determining the “reasonable value” of medical expenses.

On April 26, 2021, the Florida Supreme Court accepted jurisdiction of Dial, which reached the Supreme Court on December 11, 2021, after the Second District Court of Appeals certified the following question of great public importance:

Does the holding in Joerg v. State

Farm Mutual Automobile Insurance

Co., 176 So. 3d 1247 (Fla. 2015), prohibiting the introduction of evidence of Medicare benefits in a personal injury case for purposes of a jury’s consideration of future medical expenses, also apply to past medical expenses? The Court’s answer reflects its interpretation of how a true measure of damages must be established – NO!

On April 28, 2022, in a 6-1 opinion, the Florida Supreme Court ruled that the introduction into evidence of Medicare benefits is allowed for a jury’s consideration of past medical expenses. The Court determined that its prior ruling in Joerg only applies to future medical benefits from Medicare. These speculative future medical benefits are distinguished from known past payments made by a collateral source in that they are definite and represent an amount actually paid rather than an unknown figure which may never actually be granted to an injured plaintiff. Moving forward, Florida juries will see the amount actually negotiated and paid for by Medicare rather than the initial billed amount for services. The presented damages will no longer include a significant amount of charges which were never actually paid for by Medicare and, therefore, would not be an accurate valuation of the cost of services and resulting monetary damages.

The Florida Supreme Court also considered and addressed the potential social impact of this issue, as presented by Ms. Dial in her jurisdictional brief. Specifically, Ms. Dial cited to a Centers for Medicare and Medicaid Services (CMS) estimation that approximately 21% of Florida’s population are Medicare beneficiaries. Mrs. Dial also cited to ten circuit court cases in which the judges came to inconsistent conclusions about Joerg’s effect on Cooperative Leasing and/or whether evidence of a plaintiff’s past medical expenses was limited to only the amount paid by Medicare. Additionally, according to the Medicare Enrollment Dashboard, there are over 4.5 million Floridians who are Medicare beneficiaries.6 This opinion will therefore have a significant and broad impact in lowering the amount of medical expenses the jury may consider.

Notably, Justice Polston issued a concurring opinion. The concurring opinion is more pointed than the majority opinion and shows that he would seek to expand the Court’s ruling beyond just Medicare. Justice Polston would limit evidence to the amount medical providers accept in satisfaction of medical bills, regardless of the source of those payments, “whether the discounted amounts are derived from government insurance, private insurance, or other third-party arrangement.”7 Moreover, Justice Couriel joined Justice Polston’s concurrence, which states “[w]hen the proper amount is admitted into evidence, there is no need for a post-trial setoff and no resulting disparate treatment.”8

Should future decisions accept the guidance presented by Justices Polston and Courial, this ruling could expand to include private medical insurance providers. Does this open the door to completely taking the air out of inflated medical damages? It will certainly be “dry powder” in settlement negotiations and legislative drafting.

This ruling is an important and favorable step in deflating excessive jury awards, combating nuclear verdicts, and curbing lawsuit abuse.

Endnotes

1 Case No. SC21-43, 2022 WL 1261150 (Fla. Apr. 28, 2022). 2 872 So. 2d 956 (Fla. Dist. Ct. App. 2004). 3 Id. at 960. 4 176 So. 3d 1247 (Fla. 2015) 5 Id. at 1256-57. 6 Centers for Medicare & Medicare Services, Medicare Total Enrollment, at Table MDCR ENROLL AB 2 2020, https://data.cms.gov/summary-statistics-on-beneficiary-enrollment/medicare-and-medicaid-reports/medicare-total-enrollment. 7 2022 WL 1261150, at *4 (Polston, J., concurring). 8 Id.