TALLAHASSEE – In liability cases, many would assume that the amount billed for medical expenses and the actual amount paid are the same. However, one of the grave issues harming Florida’s legal system is over-inflated accuracy in damages in personal injury claims, sometimes referred to as “phantom damages.”
Phantom damages are the difference between medical expenses billed by a health care provider and the amount actually paid by a plaintiff and its insurer.
Although Florida state law limits recovery of exaggerated damages, juries are often misled into believing a plaintiff paid a certain amount in medical expenses, yet in reality, only a portion of the billed amount was actually paid.
“What often happens in a liability case, where liability is clear but the damages are small, plaintiff’s attorneys are incentivized to send their clients to doctors that use letters of protection,” William Large, president of Florida Justice Reform Institute, told the Florida Record. “A letter of protection is a promise to pay the health care provider in the future when the verdict or settlement comes in. But the letter of protection doesn’t reflect market prices for the procedures.”
Large gave an example of a letter of protection claiming $100,000 in past medical expenses while the market price for the health care services may actually be $30,000. The jury sees the $100,000 in the letter of protection.
“That means the past medicals, if the jury believes liability, is obviously going to be a big number like $100,000 and the past medicals impact the entire verdict. So I would expect future medical, future economic, everything to be greater because the past medicals are greater,” Large said.
Sometimes health care providers may charge a specified amount for a service yet accept a significantly lower amount as full payment. And of that reduced amount, a plaintiff may have paid a co-pay while the insurer picked up the rest of the tab. But when the claim heads to court in a state where recovery of phantom damages is permitted, the defendant is required to pay the plaintiff the full amount reflected on the original bill.
According to a report, of the 77 files reviewed in 2012, plaintiffs submitted medical bills that exceeded the usual and customary fee by more than $3 million – placing the excess billed percentage at 110 percent. Between 2005 and 2012, 295 files were reviewed and found to have collectively billed $10,389,567 (92 percent) more than the usual fee.
Over-inflated damages go against what the tort system is designed to do, which is to allow a plaintiff to recover whatever reasonable expenses they incurred as a result of a defendant’s actions or lack of action. If expenses are over exaggerated, defendants end up paying more than the actual amount the plaintiff is obligated to pay.
In order to eliminate inconsistencies in accuracy in damages litigation, some experts believe Florida should adapt an approach similar to one used in states like California, North Carolina, Oklahoma, Texas and others, where courts prohibit the introduction of any evidence pertaining to medical bills during trial when the amounts billed fail to reflect the amount the plaintiff actually paid, or is obligated to pay.
“What we want the jury to see is the actual market price for medical procedures, not an inflated letter of protection,” Large said. “One of the missions of the Florida Justice Reform Institute is to advocate for tort reform at our state capital.”