HIALEAH MEDICAL ASSOC INC

v.

UNITED AUTOMOBILE INSURANCE COMPANY

mnnnnn MEDICAL ASSOCIATES, ma. ~ 54*’ I - a/a/0 IANY COTO v. UNITED AUTOMOBILE INSURANCE COMPANY, IN Ti-IE‘. CIRCUIT COURT OF THE

ELEVENTH JUDICIAL CIRCUIT

IN AND FOR MIAMI-DADE COUNT

FLORIDA

'

APPELLATE DIVISION

air,’ Appellant, CASE NO.: I1-712 AP LOWER TRIBUNAL CA _l%2=s02 '~ . \... -‘pf

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V.

CASE NO; I2-197 AP LOWER TRIBUNAL CASE: 02-16536 CC O5

HIALEAH MEDICAL ASSOCIATES, INC.

a/a/0 JANY COTO Appeliee. _ L ____ T;____ __ / Opinion filed:

CONSOLIDATED OPINION

An Appeal from the County Court of the llth Judicial Circuit; GLADYS PEREZ, Judge. Marlene. S. Rciss, Esq, of Law Offices of Marlene Reiss, P.A., Attorney for Appellant/Cross Appcllcc Michael J. Neirnancl, Esq., General Counsel of United Automobile Insurance Co., Attorney for AppeIle$!Cr0$$~Appell€1\1t [*2] -02311! H145 FROM" T-138 P0002/0010 F-23? Hialeah Med v. United Auto; United Auto v. l-lialeah Med Case # t 1-712 AP and Case # I2-19'! AP Before SOTO, BLAKE, and DIAZ, JJ. DIAZ, Judge. _ Pending before this Court is an appeal and cross-appeal of a purportedly adverse decision rendered by the County Court. in its decision, the County Court reduced the sum of the jury’s verdict by the amount of the insurance deductible, permitted the insurer’s expert witness to testify to certain reimbursement practices, and denied a request for attorney‘s fees. This Court, having considered the briefs, the record, the law and oral argument, is reversing, in part, and affirming, in part, the County Court’s decision. Procedural History The pending appeal and cross~appeal stem from a PIP claim tiled by Hialeah Medical Associates, Inc. (Hialeah Med), the assignee of Jany Coto. Following an automobile accident occurring in December 2001, Jany Coto sought and received medical and rehabilitative treatment from Hialeah Med for the injuries sustained from the accident. Ms. Coto assigned her PIP claim for the payment of medical benefits to Hialeah Med. Hialeah Med timely submitted its bills to Coto‘s insurer, United Automobile Insurance Company (United Auto). The bills totaled to $3,470. United Auto refused to pay the bills submitted. In September 2002, Hialeah Med filed its law suit against United Auto for the unpaid claim. United Auto filed its answer to the complaint, and ultimately filed, in December 2003, a proposal for settlement which offered $100 to settle the lawsuit. The $100 settlement sum included attorney's fees, costs, interests and penalties, in addition to covering PIP benefits. Hialeah Med rejected the offer, and the case proceeded to trial. On June 13, 2006, the jury found in favor of Hialeah Med and awarded Hialeah Med $5000. Two days later, a final judgment was entered by the trial judge, who reduced the award to $3,605.53. The final award consisted of the costs incurred for medical services, reduced to 80%, plus pre-judgment interest on the reduced amount. United Auto appealed the final judgment. On appeal, this circuit, sitting in its appellate capacity, reversed the final judgment. In an opinion, dated December 14, 2007, the appellate court determined that the trial court erred regarding the competency of the expert witness, among other things. Specifically, the appellate court ruled that United Auto's_ 8XpG1't witness was competent to testify as to the reasonableness of Page 2 of 10 [*3] — 2-’l4 ililiii Fit0ll- T-l3B Pilllllfifillillll F-23? Hialeah Med v. United Auto; United Auto v. Hialeah Med Casetl I 1-712 AP and Case #12-197 AP Hialeah Med's fees. The court noted that the PIP statute, sttliough amended after the date of the claim, permits expert witnesses to rely on various state and f6(iCl‘£lll]1H[lflg6d-C2t.I‘6 fee schedules when relevant to the reasonableness of charges for medical services, treatment or supplies. Accordingly, the appellate court remanded the matter for further proceedings consistent with that court‘s ruling. » In December 2010, prior to the second trial and 7 years after the first proposal, United Auto made a second pre-trial offer ofjudgment in the amount of $500. The terms of the second settlement proposal allocated to cover Hialeah Me<l's attorney's fees and costs incurred in the preceding years, and $450 for all medical claims, inclusive of interests. This offer was rejected by Hialeah Med. The second trial was then held in August 2011. In its pretrial motion, presented on the first day of trial, Hialeah Med moved to exclude andlor limit the videotaped deposition testimony of United Auto's medical expert, Dr. Millhoiser. Hialeah Med contended, once again, that Dr. Millheiser was not competent to testify on the reasonableness of medical charges given Dr. Millheiser is not an expert on managed care billing practices and methodologies. The trial court denied the pre-trial motion. During the course of the second trial, the insurance policy was entered into evidence for the jury's consideration. The policy's declaration page, which includes references to a $2000 deductible, was admitted into evidence without objection. lniaddition, medical hills in the amount of $3,245 were presented also for the jury's consideration. Plus, Dr. Millheiser‘s videotaped deposition was played during United Auto's case-in-chief. The trial court and attorneys offered little guidance to the jury in determining which factors may be considered in awarding damages. The jury again found in favor of Hialeah Med. However, the jury awarded Hialeah Med only $930. Following the second trial, the trial judge held a post-trial hearing on the issue ofwhether the jury's verdict should he offset by the amount of the PIP deductible, which is paid by the insured. The trial judge ruled in United Autc‘s favor. Two thousand dollars ($2000) was deducted from the $930 verdict, resulting in a negative not judgment. The reduced verdict entitled United Auto to a judgment in its favor and attorney's fees under the offer of judgrnettt statute. However, the trial court denied United Auto’s motion for attorney’s fees, reasoning the settlement offer was just a token offer, not reasonable or propounded in good faith as required under the offer ofjudgment statute. Page 3 of 10 [*4] li5~il2-’ l4 ll :46 Such assumptions are not substantiated by the record. _ In practice, it is the trial judge who reduces the amount of ajury verdict to offset certain payments made to or on behalf of the injured party by sources other than the defendant. Thus, the task of reducing damages is generally deemed a function of the court, not the jury. In such instances, reviewing courts of this state have consistently affinned an award of damages, as determined by the trial judge, if the decision is supported by competent, substantial evidence. Pearce & Pearceglnc v. Kroh Bros. DevelopntenL_C_J__o., 4'74 So.2c1 369, 371 (Fla. lst DOA I985); Borges v. Infinity Ins. Co., 896 So. 2d 665, 676 (Fla. 2005) (appellate court will not disturb a final judgment if there is cotnpcteut, substantial evidence to support the verdict on which the judgment rests); North American lslarnig>_.i1'rusLjnc. v. Muslim Centenof l\/liami,_Inc., 771 So. 2d 1227 (Fla. 3d DCA 2000) (findings of fact by a judge in a nonjury case will be affirmed where there is competent and substantial evidence to support those findings). Y Page 4 of l0 [*5] "@2314 ll :4? FRllll- T-‘E³⁸ Hialeah Med Case #1!-712 AP and Case #12-I97 AP Based on a review of the record, this Court finds the trial judge's decision to reduce the award of damages by the amount of the insurance deductible is not supported by competent, substantial evidence. " The record discloses that the policy's declaration page, which includes references to a $2000 deductible payable by the insured, may have been inadvertently presented to the jury for consideration. Because the collateral source evidence was not excluded fiom consitleratiorrby the jury, nor expressly reserved for consideration by the judge in post-verdict proceedings; it is possible that the jury's calculation of damages may have vitiated the need for a post-trial set off. It is likewise possible the jury may have completely overlooked the collateral source evidence when assessing damages. Both parties acknowledge that the trial court and attorneys offered little guidance to the jury in determining which factors may be considered in awarding damages. Given the uncertainty as to the appropriate amount of compensation considered by the jury, it is difficult to determine whether the jurors were generally able to avoid being; influenced by relevant but inadmissible insurance information, of which they are aware. To determine whether the jury verdict, tainted by an error, may or may not have included the deductible in computing the amount of damages to be awarded would require the trial court to speculate on the deliberative process of the jury. Since the trial judge cannot ascertain from the general verdict form whether the jury may or may not have included the deductihlo, the trial judge did not have competent substantial evidence to support its decision to reduce the amount awarded. Therefore, this Coutt cannot with certainty sustain the County Court‘s verdict. Thus, the County Court’s decision is reversed, and a new trial is ordered. _Great American I_t_t§“._,_Co. ofN.‘[. v.__Sua1'ez, 146 So. 644, 713-714 (1932) (when evidence of damages are so fragmentary and lacking in essential particulars material to a reasonably appropriate estimate of damages that it is insufficient to sustain the amount of the verdict, and the court cannot with satisfactory certainty determine what would be a proper rernittitur, the judgment must be reversed for a new trial); Goldman v , 906 So. 2d 1240 (Fla. 4th DCA 2005) (when it is shown that the verdict was the product of a misconception of the law or the evidence, it is appropriate to grant a new trial), Expert's Competency This Court is likewise reversing the trial court's decision which admitted the deposition testimony of Dr. Millheiser on the subject ofbilling and rein_ibursement practices. Page 5 of I0 [*6] 05—02—’l1l 11:47 Fii0ll- T-138 P0il06,"00l0 F-23? Hialeah Med v, United Auto; United Auto v. l-iialeah Med Case ti l l-‘I¹² Milihelser’s expert testimony on managed care fee schedules for purposes of evaluating the reasonableness of medical charges. in the current appeal, Hialeah Med contends that the appellate courl’s directive was erroneous; and thus non-binding. In support of this contention, Hialeah Med contends the statutory provision, upon which the appellate court relied, does not apply retroactively to insurance claims which pre-date the provision. Consequently, the trial judge was not hound by tho appellate court?s directive. This Court agrees. V Usually, successive appeals require the succeeding appellate court to honor the prior appellate court's decision. I-_‘la._ Dep't,,pf__Igansp. v. Juliang, 801 So. 2d 101, 105 (Fla. 2001). However, as a corollary to the law-of-thewease doctrine, its application may be limited if there is a change in the law or niaterial facts, or the prior appellate decision was erroneous. l_d., at 106. Under such cirouinstanees, successive appellate courts are not bound to adhere to the law of the case. particularly if the prior ruling was in error. _VLX Props. inc. v..S. States Utiisu Inc_., 792 So. 2d 504, 509 (Fla. Sth DCA 2001). . In the pending appeal, this Court deems the prior appellate court, in reviewing Q<1o_I, erred in incorporating the 2008 PIP provisions within a 2001 ~2002 insurance policy; and thereby ultimately erred as to the scope of Dr. Miilheiser's testimony. Subsection (5) of §627.736, Fla. Stat, which sets forth the criteria for determining the appropriate charges for medical services provided to a PIP claimant in a PIP case, was significantly changed in 2003 and 2007. The Florida legislature reenacted and revised §627.736(5) by adding provisions which permit PIP insurers to limit reimbursement for medical services. The revisions, effective October 1, 2003 and January l, 2008, extended to PIP insurers the option to apply federal Medicare coding policies and payment methodologies to determine the appropriate amount of reimbursement. The revised and added text also granted PIP insurers authorization to rely on various federal and state medical fee schedules and managed care fee schedules in determining whether a charge for a particular service or treatment qualifies as reasonable. See §627.736(5)(a)(l) and (2), Fla. Stat.; Laws of Florida 2003, chapt. 2003-411, § 8, eff. Oct. 1, 2003; and Laws of Florida 2007, chapt. 2007-324, § 20, eff. Jan. 1, 2008. Prior to the effective date and implernentation of §62'Z.736(5)(a), Fla. Stat., as revised, most reimbursements for medical services were not capped or pegged to fee schedules. Instead, providers were generally free to set their fee for services, limited only by the requirement that the Page 6 of I0 [*7] -02-’l4 ll :41‘ Fli0il- T—l3B P000?/0010 P23? Hialeah Med v. United Auto; United Auto v. Hialeah Med Case # l 1-712 AP and Case #12-197 AP charge be “reasonable” based on the customary charges in the community. Russel Lazega, Flo. Motor Vehicle N0-Fault Law (PIP), 7 Fla. Prac. § 5:4 (2013-2014 ed). With the advent of state and federal pre-set fees and managed care fee schedules, the i’IP statute was arnenried in 2003 and 2007 to add text inootpoiatiiig these schedules as an alternative reimbursement system. Consequently, insurers can consider charges derived fi'0m public sector programs and managed care plans, in addition to the customary billed-charges ofprivate providers. This Court notes the 2003 revisions — which granted PiP insurers authorization to rely on various federal and state medical fee schedules — only apply to treatment and services occurring on or after October 1, 2003. Laws of Florida 2003, chapt. 2003-411, § 3, eff. Oct. 1, 2003. Thus, in this case, the 2003 revisions do not apply to the pending 2002 reimbursement claim. Conversely, the 2008 revisions apply to insurance policies in existence on or issued alter the Act's effective date of January 1, 2008. Laws of Florida, Chapt. 200'/1324, §21(2), eff. Jan. 1, 2008. Therefore, by its terms, the 2008 statute is retroactive as well as prospective in its application. Thus, as in the pending case, insurance policies issued prior to 2008, yet still in effect in 2008, would be subject to the 2008 PIP revisions. The Florida Supreme Court, however, has precluded retroactive application of certain legislation if its application poses a legal impediment. in our view, a retroactive implementation ofthe new reimbursement scheme poses a legal impediment. In Menendez v. Progre_s_s_iy§__Exp. Ins. Co.,_In_§_;_., 35 So. 3d 873 (Fla. 2010), the Florida Supreme Court limited retroactive legislation applied to insurance policies issued before the effective date of the legislation. The Court expressed concern as to the fundamental unfairness in retroactively altering substantive rights. Specifically, in Menendez v. Progressive Eng ins. §_3o,_im:., 35 So. 3d 873 (Fla. 2010), the Florida Supreme Court held that an amendment to the PIP statute, which constitutes tt substantive change (and not a procedural change) to the statute, cannot be retroactively applied to insurance policies issued hefore the effective date of the emondlnent. The Florida Supreme Court applied a two-fold inquiry for determining whether a statute enacted alter the issuance of an insurance policy should be applied to the pro-enactment policy. The Court considered the threshold question of whether the state legislature expressed its intent regarding retroactive or prospective application. If the legislator-6 i11tc]1(l¢d rhe statute to apply retroactively, the Court next determined whether a retroactive application would violate constitutional principles. Page '7 of 10 [*8] -02-’l4 ll :48 These substantive changes to the Stalutc, BS it 6XiStcd before the amendment, could not be applied retroactively. cu This Court applied the Menendcz standard to the pending case, 'which required a comparison of §627.736(5)(a) as it existed in 2001/2002 versus the section as amended in 2008.. The ¢0rnptu‘iSOn discloses substantive changes which appear to adversely modify contractual obligations between the insurer and the insured. For example, payment for medical services may now be limited by the insurer to the Medicare allowable amount for services, state and federal fee schedules, or managed care schedules. In some cases, this will mean the physician's reimbursement for services rendered will be less than the customary billed-charges of private providers. This revision decreases the level of payment, alters the manner in which reimbursements are calculated or deemed reasonable, and provides the insurer with considerable flexibility inldetermining reimbursement rates for health care; This revision could also result in the insured being required to pay the difference between the charge actually billed and the reimbursement made by the insurer, once PIP benefits are exhausted. In effect, a retrospective application of the re-enacted and amended provision would, potentially provides less coverage to the insured by substantially revising the reasonable charge method of rc_imb1u'scment, and by shitting payment obligations from the insurer to the insured. In sum, the revision modifies contractual obligations between the insured and the insurer. This modification constitutes a substantive change to the statute as it existed at the time the insurance policy was issued. This Court concludes the 2008 revision should operate prospectively. In Qotpwl, the prior appellate panel did not address or examine whether §627.736(5)(a), as amended, applied to the 2001-2002 policy or pregenactment transactions. This oversight casts doubt as to the correctness of the prior appellate ruling. It appears the appellate court's decision to retroactively apply new substantive reimbursement criteria to an insurance policy executed before the legislatioifs enactment date is, per so, non-bindingf Consequently, this Conn, in reviewing the issue anew, is receding from Coto I; and correspondingly reversing the trial court‘s Page 8 of 10 [*9] — 2-’l¢l ll:⁴⁸ l‘li0ll— T-138 Pl30l}9fllE1l{l F-23? Hialeah Med v, United Auto; United Auto v. Hialeah Med Case it I1-712 AP and Case #12-l97 AP decision to admit the videotaped deposition testimony of Dr. Millheiser. Consequently, this Court is rernanding this matter for further proceedings regarding the reasonableness of the medical bills. Attorneys fees - With regard to United Auto’s cross appeal, this Court’s decision to reverse and remand for further proceedings renders the cross appeal moot. However, for purposes of judicial guidance and future reference, this Court offers some general observations. As gathered from a review of the cross appeal, United Auto is seeking reversal of the trial court’s decision denying United Auto’s request for attorney’s fees, sought pursuant to the offer ofjudgment statute. In p_articular, United Auto contends it is entitled to invoke the attorney’s fees provisions of the offer of judgmentstatute in light of the successful net judgment and rejected settlement offers which were based on a realistic assessment of the (nfllflinflll damages- United Auto claims the trial court has misconstrued case law and statutory law governing the award of attorney’s fees in instances involving offers of juclgnient deemed nominal. Thus, United Auto claims the trial court erred in refusing to grant attorney's fees. As noted, this Court declines to provide a definitive pronouncement on a matter which, at this time, is not required to be resolved. Nevertheless, we believe the trial judge did not exceed the hounds of the court's discretion. Under Florida's offer of judgment statute, set forth in §768.79, Fla. Stat, a patty is usually entitled to an award of costsand attorneys’ fees if the party follows the requirements of the statute, and the judgment in the case fails within certainstatutorily prescribed parameters. However, an award of costs and fees is not an absolute if the court ‘determines the settlement proposal leeks good faith. Event Sves. America, Int_;,_\g. Rggusti, supra at 884; Eagleman v. Eagleman, 673 S0. 2d 946, 943 (_F1s. 4th DCA 1996). While an offerordoes not necessarily act in bad faith in making a nominal offer which is vastly below the amount already expended on attorneys‘ fees, as of the date of the offer; a belief that the amount offered will not be accepted is indicative of the absence of good faith. TGI Fritltu/s, Inc. V. Dvorak, 663 So. 2d 606, 613 (Fla. 1995) (finding an offer was not made in good faith since the efferor did not intend to settle the case on the terms offered). Bridges v. Newton, SS6 So. 2d I170 (Fla. 3d DCA 199tl)(when Page 9 of ll) [*10] — 2-‘l4 ll:⁴⁹ Hialeah Med l Case#ll-712 AP and Case# I2-I97 AP offeror has no intent to settle, the offer is a bad faith offer) (disapproved of on other grounds by TGI Frirlagmeinc. v._Dvo1'ak, 663 So. 2d 606 (Fin. 1995)). The record $tlpp0t'iS an inference that United Auto's nominal offers ofjudgment - which may have been based on a realistic assessment of(minimal) liability »~ did not have a reasonable prospect of acceptance, a factor indicative of bad faith; and simply were proffered as a means of gemesmnnship to open the possibility of obtaining attorney's fees, with no intent to settle. Essentially, this Court generally concurs with the trial court’s decision, albeit in theory. Ruling In sum, this Court is reversing the trial judge’s decision which: (1) reduced the amount of the ju1'y’s verdict by the amount of the deductible, and (2) allowed the videotaped deposition testimony of Dr. Miilheiser concerning contemporary fee schedules as a method of calculating reasonable medical costs. This Court is remanding this matter for further proceedings consistent with this opinion. In addition, this Court is dismissing the cross appeal in light of the decision to reverse and remand. Accordiiiglp, both parties’ requests for appellate attorney’s fees are denied. SOTO and BLAKE, JJ., concur. ~t°°““t~et“e'““i‘ts@i%sac grimmetnot l scum» Page t0ofi0