22 Fla. L. Weekly Supp. 142a

Online Reference: FLWSUPP 2201BAPTInsurance — Personal injury protection — Evidence — Motion in limine to exclude reference to rates contracted with health insurance companies and Medicare and workers’ compensation fee schedules is granted — Health insurance rates and fee schedules are irrelevant to PIP case, and any probative value is substantially outweighed by danger of unfair prejudice, confusing issues, and misleading jury

QUANTUM IMAGING HOLDINGS, LLC, A/A/O GEROME BAPTELMY, Plaintiff, vs. UNITED AUTOMOBILE INSURANCE COMPANY, Defendant. County Court, 17th Judicial Circuit in and for Broward County. Case No. 12-07475 COCE 50. June 17, 2014. Honorable Peter B. Skolnik, Judge. Counsel: Emilio Roland Stillo, for Plaintiff. Norma Guadalupe Kassner, Eric Belsky, and Justin Cincola, for Defendant.

ORDER GRANTING PLAINTIFF’S MOTION IN LIMINETO EXCLUDE REFERENCE TO HEALTH INSURANCE,MEDICARE, AND WORKERS COMPENSATION

THIS CAUSE having come on for consideration on Plaintiff’s, QUANTUM IMAGING HOLDINGS, LLC., a/a/o GEROME BAPTELMY, Motion in Limine to exclude any reference to health insurance amounts accepted by negotiated rate contracts, workers compensation and Medicare.

Background. In this PIP case, the parties have stipulated that the only remaining issue is the reasonableness of Plaintiff’s charges. The date of service in the instant case is April 13, 2011. The Plaintiff seeks to preclude the introduction of evidence at trial and to exclude any reference to health insurance amounts accepted by negotiated rate contracts and Medicare as confusing and more prejudicial than probative under a 403 analysis as well being irrelevant.

Facts: Attached to Plaintiff’s Motion is the trial testimony of corporate representative Stephanie Preston in another dispute between these same two parties. Ms. Preston’s testimony indicates that health insurance was less than two percent of Plaintiff Quantum’s business model and Medicare less than one percent of Plaintiff’s business model through 2013. Further, workers compensation claims were less than one percent of Quantum’s business model in 2010. Further, Plaintiff relies on the deposition testimony of owner/operator Dr. Steven Burack D.O. Dr. Burack testified, that the process of entering the Medicare network did not begin until December 2012. Further, Dr. Burack testifies that Quantum has been reimbursed for a total of 8 or 9 Medicare patients. Both health insurance and Medicare payments combined comprise 3% or less of Plaintiff’s business model through 2013. Further, all health insurance contracts were applied for in 2012 well after the date of service in the instant action and after substantive changes to the Florida PIP law potentially reducing benefits from $ 10,000.00 to $ 2,500.00 for various claims that had been implemented. Further, it is undisputed United Auto has no contracts with Plaintiff Quantum Imaging Holdings LLC.

I. Evidence of health insurance contracts and the contracted rate are not relevant in PIP.

The language of Fla. Stats. § 627.736 (5)(a)1, which governs medical provider charges, provides in pertinent part:

(a)1. . . .With respect to a determination of whether a charge for a particular service, treatment, or otherwise is reasonable, consideration may be given to evidence of usual and customary charges and payments accepted by the provider involved in the dispute, and, reimbursement levels in the community and various federal and state medical fee schedules applicable to automobile and other insurance coverages, and other information relevant to the reasonableness of the reimbursement for the service, treatment or supply.

Fla. Stats. § 627.736 (5)(a)1 (emphasis added).

The Court notes that § 627.736(5)(a)1 makes no mention of negotiated rates between the medical provider “in this dispute” and other insurers.¹ Rivero Diagnostic Center Inc. (a/a/o Marisely Trujillo) v. State Farm Mutual Auto. Ins. Co. Case No. 13-12144 SP (25) (Fla. Miami-Dade County, Cnty. Ct. April 23, 2014) [21 Fla. L. Weekly Supp. 804a] (Cohn, J.).

Allstate Ins. Co. v Holy Cross Hosp. Inc., 961 So.2d 328 (Fla. 2007) [32 Fla. L. Weekly S453a] supports Quantum’s position. There, the Florida Supreme Court discussed the benefits of negotiated rate contracts. In exchange for paying a reduced negotiated rate for medical services, an insurer will allow for an increase in medical benefits to be paid, from 80% to 100%, and for reduction or waiver of the standard PIP deductibles in certain circumstances. See Fla. Stats. § 627.736 (9).² In exchange for accepting a reduced negotiated rate, a medical provider enjoys a pool of patients that it otherwise might never reach.

In Holy Cross, Allstate paid 80% of a reduced PPO rate to Holy Cross Hospital for care provided to two of Allstate’s insureds. That payment was predicated on separate contracts that Holy Cross and Allstate each had with a provider network, Beech Street Corporation. Holy Cross argued that, because neither of its patients had PPO policies with Allstate, and because Allstate had not contracted directly with any provider, Allstate could not take advantage of the PPO reduced rates, and instead was required to pay the reduced PPO rate even though it had not issued PPO policies to its insureds. The contractual relationship amongst the parties in Holy Cross is key to the Supreme Court’s decision to allow Allstate to pay the reduced PPO rate.

In the instant case, United Auto has NOT entered into a PPO or HMO contract with Quantum Imaging, nor is any third party provider network involved with which any of the parties may have contracted. This is simply a case which United Auto seeks to avail itself of the reduced negotiated rates under contracts between Quantum and other insurers to which United Auto is not a party. Nothing prevented United Auto from directly entering into a PPO or HMO contract with Quantum if desired to avail itself of reduced negotiated rates.

Long-standing Florida law specifically states that evidence that a medical provider entered into negotiated rate agreements with managed care payers is insufficient to prove that the provider’s charge is unreasonable. Hillsborough County Hospital Authority v. Fernandez, 664 So.2d 1071 (Fla. 2d DCA 1995) [20 Fla. L. Weekly D2650b]. The focus of reasonableness of a charge is the prevailing cost of services to patients not otherwise protected by contracted rates of payment. DPI of North Broward (a/a/o Aquilina Ligot) v. State Farm Mutual Aut. Ins. Co., Case No. 12-5576 COCE 53 (Broward Cty. Ct. 2014, (Lee, J.), citing Leitinger v. Dbart, Inc., 302 Wis.2d 110, 144, n.65, 73 N.W.2d 1, 18 n, 65 (2007); Radvany v. Davis, 262 Va. 308, 551, E.E.2d 347, 348 (2008). This is because today’s health care system employs a wide variety of health care finance arrangements. As part of the system, negotiated and contracted discounts between health care providers and insurers are increasingly prevalent. Pursuant to these agreements, an insurer’s liability for the medical expenses billed to its insured is satisfied at discounted rates. But the monetary amount of the discounted rates is misleading because the amount of dollars in the door is only a part of the equation of the negotiated rate. See Goble v. Frohman, 901 So.2d 830 (Fla. 2005) [30 Fla. L. Weekly S280b]. The rest of the equation is the non-monetary value of the contracts to the provider. See Id. The non-monetary consideration includes a volume of steady business for which the provider would save on advertising and marketing, pre-approval, guaranty of payment and avoidance of the risks inherent in the PIP system. These risks include but are not limited to denials relating to exhaustion of benefits, failure to attend a sworn statement or compulsory medical examination, and paper peer reviews. As a result, “a provider providing treatment to those injured in automobile accidents faces the real risk that the provider may well not be paid — a far more substantial risk than a provider accepting a lower contractual amount under an insurance policy for the non-automobile accident case,” DPI of North Broward (a/a/o Aquilina Ligot) at 6.

Any PPO or HMO contracts that Plaintiff has with other insurers are not relevant in this case because United Auto is not a party to any of those contracts and, thus, the terms of those contracts (which necessarily implicate both the rights and obligations that the parties to the contract enjoy) are not applicable to United Auto. United Auto cannot enjoy the benefits that other insurers may enjoy without affording the same consideration.

Defendant argues that because Plaintiff accepted less from health insurers, Plaintiff’s charge is not reasonable. Defendant’s theory is based on two inferences. First, that the circumstances surrounding transactions between a provider and a PIP insurer are the same as those between a provider and health insurer with negotiated rate contracts. Second, that the amount of dollars accepted from health insurers is the maximum payment that may be considered reasonable. Defendant’s theory, based on two separate inferences, is clearly flawed. To have any evidentiary value, inferences must be appropriate and reasonable, as opposed to misleading and confusing. Fla. Stat. 90.301(3); Fla. Std. Jury Instr. (Civ) 601.1. If a party depends upon inferences to be drawn from circumstantial evidence as proof of one fact, it cannot construct a further inference upon the initial one in order to establish a further fact unless it can be found that the original, basic inference was established to the exclusion of all other reasonable inferences. Nelson v. City of Sarasota, 117 So.2d 731, 733 (Fla. 1960); See also O’Malley v. Ranger Const. Ind., Case No. 4D12-4158 (Fla. 4th DCA 2014) [39 Fla. L. Weekly D130b]. Defendant’s theory, premised on two separate inferences, fails because the benefits and consideration to the provider that are inherent in the health insurance context, but not in the PIP context are ignored. Defendant disregards the radical differences between payment in the PIP context and that of the managed care context. Defendant attempts to establish its inferences to the exclusion of all other reasonable inferences, such as health insurers with negotiated contracts pay less as the result of a negotiated arm’s length transaction that includes non-monetary benefits in the forms of pre-approval of guaranteed payment and steady flow of business, and avoidance of the risk of non-payment that are inherent in the PIP context. The Court disagrees with Defendant’s theory and inferences which requires the jury to impermissibly stack one erroneous inference on top of another erroneous inference. Hallandale Open MRI LLC (Rosario Ham) v. State Farm Mutual Auto. Ins. Co., 21 Fla. L. Weekly Supp. 586b (Fla. Broward County, Cnty. Ct. 2014) (DeLuca, J.).

II. Any probative value that the provider accepts health insurance is substantially outweighed by the danger of unfair prejudice, confusion of the issues and misleading the jury.

Under 90.403.1, evidence is inadmissible when its probative value is substantially outweighed by the danger of unfair prejudice, confusion of the issues, misleading the jury or needless presentation of cumulative evidence. Canales v. Compania De Vapores Realma S.A., 564 So.2d 1212 (Fla. 3d DCA 1990). Plaintiff maintains that as it relates to this provider, that even assuming an iota of probative value, the introduction of this evidence is substantially outweighed by the danger of unfair prejudice, confusion of the issues and misleading of the jury. The trial transcript attached to Plaintiff’s Motion indicates that health insurance payments are less than two percent of Plaintiff’s business model as well as Dr. Burack’s testimony regarding the date of entry of these contracts. Plaintiff argues that because these contractual payments comprise a minute portion of the Plaintiff’s business model, even assuming in arguendo that there was an iota of probative value, that the introduction of such evidence is substantially outweighed by the danger of unfair prejudice, confusion and misleading of the jury. Plaintiff maintains the jury could easily become confused as the Plaintiff would introduce evidence of statutory changes, statutory language, contractual language, legislative history, the benefits and consideration of entering these contracts, evidence that United Auto could have but choose not to enter these contracts, premium reductions that would have been required if United Auto entered these contracts, United Auto denials for records review, failure to attend sworn statements, coverage issues, compulsory medical examination cutoff, records review as well as a myriad of other evidence that would be necessary to explain the apples to pudding comparison between these two vastly different types of insurance coverages. Against this backdrop of unfair prejudice and confusion, the Court must consider the probative value of the introduction of this evidence which reflects a minute amount of Plaintiff’s business model. The Court agrees with the Plaintiff that the danger of substantial prejudice and confusion substantially outweigh any probative value the Defendant purports the evidence holds.

III. Medicare Fee Schedules are Not Relevant in PIP Where the reasonableness of charges are at issue

The Plaintiff maintains that Medicare Fee Schedules are not relevant in PIP where the reasonableness of a medical provider’s charge is at issue. Atkins v. Allstate Inc. Co., 382 So.2d 1276 (Fla. 1980) (“Medicare is a social welfare program and not an insurance or reimbursement plan within the everyday and ordinary meaning of the terms.); American Risk Assur. Co. v. Bentrube, 407 So.2d 993 (Fla. 3d DCA 1981)(“The waiver authority is consistent with prior judicial determinations that Medicare is a social welfare program and not an insurance or reimbursement plan with the ordinary meaning of these terms.”); Hialeah Med. Assoc, Inc (a/a/o Ana Lexcano) v. United Auto. Ins. Co., Case No. 12-229 (AP) (Fla. 11th Jud. Cir. March 7, 2014) [21 Fla. L. Weekly Supp. 487b], rhng. den.; Rivero Diagnostic Center Inc. (a/a/o Marisely Trujillo) v. State Farm Mutual Auto. Ins. Co., (Case No. 13-12144 SP (25) (Fla. Miami-Dade County, Cnty. Ct. April 23, 2014) (Cohn, J.) [21 Fla. L. Weekly Supp. 804a]; Hallandale Open MRI, LLC., (a/a/o Guerda Pierre) v. United Auto. Ins. Co., Case No.: 11-22995 COCE (50) (Fla. Broward County, Cnty. Ct. April 4, 2014) (Skolnik, J.) [21 Fla. L. Weekly Supp. 709a]; Plantation Open MRI LLC (a/a/o Licia Scott) v. United Auto Ins. Co., Case No. 12-04195 COCE (50) (Fla. Broward County, Cnty. Ct. March 18, 2014) (Skolnik, J.) [21 Fla. L. Weekly Supp. 702a]; Open Magnetic Scanning LTD d/b/a Windsor Imaging (a/a/o Princesse Beacuchamp) v. United Auto. Ins. Co., Case No. 11-23954 COCE (54), (Fla. Broward County, Cnty. Ct. March 2014) (Cowart, J.); Hallandale Open MRI LLC (Rosario Ham) v. State Farm Mutual Auto. Ins. Co., 21 Fla. L. Weekly Supp. 586b (Fla. Broward County, Cnty. Ct. 2014) (DeLuca, J.); Advanced X-Ray Analysis Inc. (a/a/o Antonio Gomes) v. State Farm Mutual Automobile Insurance Company, 21 Fla. L. Weekly Supp. 581a (Fla. Miami-Dade County, Cnty. Ct. 2013) (Stein, J.); Bayfront Medical Center Inc. (a/a/o Denise Parenteau) v. State Farm Mutual Auto. Ins. Co., 21 Fla. L. Weekly Supp. 565b (Fla. Pinellas County, Cnty. Ct. 2013) (McNary, J.).

IV. Any probative value that the provider accepts Medicare is substantially outweighed by the danger of unfair prejudice, confusion of the issues and misleading the jury.

Plaintiff also argues that even if relevant as less than 1% of the medical provider’s business model involves Medicare, any probative value is substantially outweighed by the danger of confusion of the issues and unfair prejudice as it would require extensive testimony concerning the federally funded nature of Medicare, implementation of Medicare, legislative changes altering the benefits potentially paid on PIP claims, legislative history, the public service aspect of treating Medicare patients as well as consideration the provider receives in treating Medicare patients. Considering that the provider treated one Medicare patient for certain codes for an entire year and has received payment for a total of 8 or 9 Medicare patients, the Plaintiff argues there is no probative value. The Court agrees with the Plaintiff that evidence that the Plaintiff accepted a handful of Medicare patients throughout the years is more prejudicial than probative and in weighing any probative value against the danger of unfair prejudice and confusion the evidence should be excluded.

ORDERED AND ADJUDGED that said Motion be, and the same is hereby GRANTED. The Court finds as it relates to this provider and these facts that the introduction of health insurance, workers compensation and Medicare for which there is additional consideration given to the provider has no probative value and is irrelevant. Further, the Court finds that even if the evidence could be determined to be minimally probative the evidence should be excluded as any probative value is substantially outweighed by the danger of unfair prejudice, confusion of issues and misleading the jury.

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¹The Court notes that, in 1992, the PIP Statute was amended to allow insurers to enter into PPO contracts with medical providers, currently numbered as §627.736 (9).

²In Holy Cross, the Supreme Court discussed PPO policies:

PPO policies are in essence a managed care option to insurance, in which insurers “strongly encourage [policyholders] to choose a ‘preferred’ provider . . . [through] economic incentives such as no copayments, lower deductibles, and higher coverage.”

Holy Cross, supra at 3355 n.5 quoting Provider-Based Preferred Provider Organization : A viable Alternative Under Present Federal Antitrust Policies?, (66 N.C.L. Rev. 253, 255 (1988).