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Hospital Pricing Agreements Discoverable in Dispute Over Reasonableness of Georgia Hospital’s Charges

Ms. Bowden was an uninsured patient treated at a hospital in Columbus following a car wreck. The hospital billed her $21,410 for emergency treatment for a broken leg, and subsequent physical therapy, and then filed a lien for that amount against anything she might recover in a lawsuit arising from the wreck under Georgia’s hospital lien statutes, O.C.G.A. §§ 44-14-470 et seq.  Unfortunately there was only $25,000 in available liability coverage, which was paid into court. In the ensuing dispute over the money, the patient argued that the hospital’s charges were excessive. The amount of the hospital’s lien is expressly limited by statute to “the reasonable charges for hospital . . . care and treatment of an injured person,” O.C.G.A. § 44-14-470(b). The patient sought discovery of pricing agreements between the hospital and insurers such as Blue Cross Blue Shield and concerning the hospital’s indigent care program.  The Medical Center objected and she filed a motion to compel discovery, which the trial court granted subject to the entry of a protective order to ensure confidentiality.

The Georgia Supreme Court, in Bowden v. The Medical Center, 2015 Ga. LEXIS 436 (6/15/15), held that in the dispute over the amount of the hospital lien the “subject matter involved in the pending action” indisputably included whether the amount claimed to be due by the hospital was reasonable, under the terms of the hospital lien statutes, O.C.G.A. §§ 44-14-471(a)(2), 44-14-470(b). Therefore the amounts the hospital charged to other patients for the same type of care were relevant and discoverable, under O.C.G.A. § 9-11-26(b)(1).

“The fair and reasonable value of goods and services is often determined by considering what similar buyers and sellers have paid and received for the same product in the same market, with adjustments upward or downward made to account for pertinent differences, and we see no reason why the same cannot be true of health care.”

And, the Court held that even if the patient had agreed to be responsible for the charges, the contract price for goods and services did not necessarily equal their reasonable value.

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Defective Expert Affidavit in Georgia Can be Cured by Substituting Another Expert’s Affidavit

The expert affidavit law, O.C.G.A. § 9-11-9.1, which was originally enacted in 1987, supposedly to reduce litigation by weeding out frivolous lawsuits, is still spawning litigation nearly 30 years later.  What if the plaintiff’s expert is deemed not competent to testify in a medical malpractice case under the stringent requirements of O.C.G.A. § 24-7-702(c)(2)   because he had not been in active practice for at least three of the preceding five years, although he was a Board certified neurosurgeon?  The Supreme Court faced this question in Gala v. Fisher, 2015 Ga. LEXIS 198 (3/27/15), and held that in a professional malpractice action, when a plaintiff files a complaint accompanied by an affidavit from a person not competent to testify as an expert in the action, O.C.G.A. § 9-11-9.1(e) permits the plaintiff to cure that defect by filing an amended complaint with the affidavit of a second, competent expert, within 30 days of service of the motion alleging that the affidavit is defective.

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GEORGIA HOSPITALS CAN FILE LIEN TO RECOVER CO-PAYS AND DEDUCTIBLES

MCG Health filed a $36,177.68 lien against the plaintiff’s cause of action in MCG Health v. Kight, 2015 Ga. LEXIS (3/2/15) pursuant to the Georgia Hospital Lien law, OCGA § 44-14-470 et seq for the “reasonable charges” of hospital care furnished to the plaintiff. However, at that time, the Hospital had been compensated by insurance payments from Blue Cross Blue Shield for the bulk of its discounted charges. However, the hospital was still owed $261.10 in unpaid discounted payments due from Blue Cross, and another $186.48 in unpaid deductibles or co-pays due from the plaintiff. After lien was filed, the plaintiff continued to receive care, and, eventually owed the Hospital a total of $863.10 in deductibles or co-pays. The Hospital has modified its lien to reflect that amount. The plaintiff attacked the validity of the lien arguing that there was no debt owing at the time it was filed, and sought an award of attorney’s fees. The Court of Appeals reversed the trial court and the Supreme Court affirmed:

“Contrary to the ruling of the trial court and Kight’s arguments to this Court, the Hospital was owed money on the date that the lien was filed. As a result, Kight’s principal argument that there was no debt on which to base any lien must fail. Likewise, Kight’s corollary argument that the Hospital waived its right to impose a lien also fails based on the facts of this case. The Hospital’s contract with Blue Cross explicitly reserves the Hospital’s right to collect deductibles and co-pays directly from Kight, irrespective of the agreement to hold Kight responsible only for a discounted price of treatment. Contrary to Kight’s argument, this is not a situation in which the Hospital has agreed to no recourse whatsoever except against the patient’s insurer. For that reason, Kight’s reliance on cases such as MCG Health, Inc. v. Owners Ins. Co., 288 Ga. 782 (707 SE2d 349) (2011) is misplaced. Finally, Kight’s tertiary argument that the Hospital’s lien was required to be exact on the date it was filed or be considered void ab initio also fails. There is nothing in OCGA § 44-14-470 et seq. imposing such a requirement, and we will not judicially legislate one.”

This decision appears to permit hospitals to file a lien for the full amount billed and then reduce it later to adjust for payments by a medical insurer. However, it appears that a hospital cannot use the hospital lien statute to “balance bill” the plaintiff for the difference between the full amount and the discounted payment it has accepted. The Court seems to be limiting the recovery to deductible and co-pays.

Link to Georgia Supreme Court Opinion: http://www.gasupreme.us/sc-op/pdf/s14g0603.pdf

 

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Retaliatory Discharge – Tennessee

In Haynes v. Formac Stables, Inc., (Tenn. 2015), the plaintiff brought suit against his employer after he was allegedly terminated as the result of complaining of illegal conduct on the part of the owner/employer.   The trial court dismissed the plaintiff’s retaliatory discharge claims because he failed to report the illegal activity to anyone other than the person who allegedly engaged in the activity; namely, the owner/employer.  The Court of appeals affirmed the dismissal. The Tennessee Supreme Court held that an employee must report an employer’s wrongdoing to someone other than the wrongdoer to qualify as a “whistleblower.”  In a situation where the wrongdoer is a manager, owner, or highest ranking officer within the company, the employee would need to report the employer’s wrongdoing to an outside entity.   As a result, the judgment dismissing the claim was affirmed.

 

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Hamilton County Circuit Court Judge Finds Caps on Non-economic Damages to be Unconstitutional

On Monday, March 9, 2015, Judge Neal Thomas issued a 24 page opinion in Clark v. Cain, 12C1147, Hamilton County Circuit Court, finding that Tennessee’s caps on non-economic damages (T.C.A. § 29-39-101) are unconstitutional. The decision affects only the pending case, but if it goes up on appeal, it will have statewide impact. In 2011, the Tennessee legislature passed a law limiting damages for pain and suffering in personal injury and wrongful death cases to $750,000, or $1,000,000 in cases of catastrophic injury. However, Article I, Sec. 6 of the Tennessee Constitution provides:

“That the right of trial by a jury shall remain inviolate, and no religious or political test shall ever be required as a qualification for jurors”

Judge Thomas reviewed the history of trial by jury in England, the British colonies and the United States and concluded that the legislative branch cannot take away the right of citizen juries to determine the amount damages. The opinion was issued after the defendants filed a motion for summary judgment seeking a pretrial ruling on the issue.

Below is a link to the article published in the Chattanooga Times Free Press

http://www.timesfreepress.com/news/local/story/2015/mar/09/judge-rules-tennessees-cap-jury-damages-unconstitutional/292361/

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What is an Arm Worth?

In a shocking comparison of the differences in workers compensation benefits from state to state, NPR and Propublica just released a nationwide study, in conjunction stories on NPR’s Morning Edition radio program this week.  To illustrate, they compared the benefits available in Alabama to the benefits available in Georgia for the loss of an arm on the job, and interviewed Josh Potter of Ringgold, Georgia.  Josh lost his left hand and most of his forearm in an accident at Unique Fabrications in LaFayette, GA.  While he will never be made whole, he has been fitted with a remarkable prosthetic arm, and is doing well, considering the circumstances.  The financial adjustments have been very difficult, however, for him and his family as workers compensation benefits do not replace a paycheck.  He fortunate that the accident did not happen in Alabama, however, where an amputated arm was only worth $49,000.

Click here for the full story on Josh.

For the full report, “The Demolition of Workers’ Comp”, prepared by Michael Grabell of Propublica and Howard Berkes of NPR, click here.

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What is a “collateral source” and why is the Tennessee legislature trying to changes the rules?

What is a “collateral source”?  It is a source of payment or benefit that is not relevant to issue of legal liability and damages in a personal injury case.  For example, an injured person may be covered under a group medical plan at work, or have an individual medical policy that covers some of the medical expenses caused by the accident.  Or, Medicare, Medicaid or some other governmental program may have paid most of the medical bills.  Loss of earnings due to an injury may be partially offset by Social Security disability benefits, or other disability benefits, or workers compensation benefits.

The collateral source rule is a rule of evidence that prohibits consideration of such collateral sources of payment or benefit to the plaintiff in a personal injury case.  So, where the collateral source rule is in effect, upon the trial of a personal injury case, a defendant cannot offer evidence that the plaintiff had medical insurance coverage that paid all or part of the medical expenses caused by the accident, or that he or she had a long term disability (LTD) policy, or other disability benefits.  Currently, certain advocates of “tort reform” in Tennessee (big business, insurance companies and the Chamber of Commerce) want to abolish the collateral source rule in Tennessee and permit defendants to introduce evidence of the injured plaintiff’s own medical and disability insurance coverage at trial.

Tennessee already gives doctors and hospital a big break by disallowing recovery of many collateral sources of payment or benefit to the plaintiff in medical malpractice or “health care liability” cases, T.C.A. § 29-26-119:

“In a health care liability action in which liability is admitted or established, the damages awarded may include (in addition to other elements of damages authorized by law) actual economic losses suffered by the claimant by reason of the personal injury, including, but not limited to, cost of reasonable and necessary medical care, rehabilitation services, and custodial care, loss of services and loss of earned income, but only to the extent that such costs are not paid or payable and such losses are not replaced, or indemnified in whole or in part, by insurance provided by an employer either governmental or private, by social security benefits, service benefit programs, unemployment benefits, or any other source except the assets of the claimant or of the members of the claimant’s immediate family and insurance purchased in whole or in part, privately and individually.” (Emphasis supplied)

But this is not a rule of evidence.  It is a limitation on damages, and the Tennessee Supreme Court has held that T.C.A. § 29-26-119 is “in derogation of the common law rule that allowed plaintiffs to recover medical expenses, whether paid by insurance or not” so “it must be strictly construed”, Hunter v. Ura, 163 S.W.3d 686 (2005).

How do neighboring states handle collateral source “evidence”?  Collateral sources of payment or benefit to the injured plaintiff are not allowed into evidence in Georgia.  See Denton v. Con-way Southern Express, 261 Ga. 41 (1991), (overruled on other grounds).

In Alabama, collateral sources of payment of medical expenses are admissible, under Ala. Code Sec. 12-21-45(a):

“In all civil actions where damages for any medical or hospital expenses are claimed and are legally recoverable for personal injury or death, evidence that the plaintiff’s medical or hospital expenses have been or will be paid or reimbursed shall be admissible as competent evidence. In such actions upon admission of evidence respecting reimbursement or payment of medical or hospital expenses, the plaintiff shall be entitled to introduce evidence of the cost of obtaining reimbursement or payment of medical or hospital expenses.”

But the plaintiff can offer evidence that he or she is “obligated to repay the medical or hospital expenses which have been or will be paid or reimbursed.”

In Alabama, the “collateral source rule has been abrogated, but it is a rule of evidence and not a law of damages.  Therefore, the jury has discretion to consider all the evidence and to either reduce the award or not based on the collateral source payments.”  AMF Bowling Ctrs. v. Dearman, 683 So. 2d 436, (Ala. Civ. App. 1995).

So, while Georgia does not permit any evidence of collateral sources at trial, Alabama does allow evidence of payment of medical expenses.  What should the Tennessee legislature do? If collateral sources are to be considered, should it be a rule of evidence or a rule of damages?  Tennessee already limits recovery of medical expenses to those that are reasonable and necessary and places a considerable evidentiary burden on the plaintiff to prove such with expert testimony.  And, Tennessee does not allow recovery of most “collateral sources” in medical malpractice cases.  In Georgia, by contrast, “the patient or the member of his or her family or other person responsible for the care of the patient shall be a competent witness to identify bills for expenses incurred in the treatment of the patient upon a showing by such a witness that the expenses were incurred in connection with the treatment of the injury, disease, or disability involved in the subject of litigation”, without the necessity of any expert testimony, O.C.G.A. § 24-9-921.

If collateral sources are to be admissible, why not ease the evidentiary burden on the plaintiff, and allow the bills to be considered upon testimony by the patient that he or she incurred the bills?

If the plaintiff’s medical or disability insurance coverage is be considered, what about the defendant’s liability insurance coverage?  Tennessee currently follows an archaic rule that even prohibits discovery of the defendant’s liability insurance coverage. Why not put all the cards on the table and let the jury know all the facts?

Note:  In one of the early “tort reform” efforts, in 1987, the Georgia legislature passed a law allowing evidence of collateral sources into evidence at trial.  The law was challenged and declared unconstitutional in 1991, in Denton v. Con-way Southern Express.  Hubert E. Hamilton was counsel for the plaintiff, Carol Denton, and successfully argued the case before the Georgia Supreme Court.

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What is a “Reasonable” Medical Bill in Tennessee?

It depends!  Under T.C.A. § 24-5-113(a), “medical, hospital or doctor bills” incurred due to an injury that are itemized in the complaint and attached as an exhibit are deemed to be “necessary and reasonable” as long as the total amount of the bills does not exceed $4000.

And, under T.C.A. § 24-5-113(b):

“ . . . if an itemization of or copies of the medical, hospital or doctor bills which were paid or incurred because of such personal injury are served upon the other parties at least ninety (90) days prior to the date set for trial, there shall be a rebuttable presumption that such medical, hospital or doctor bills are reasonable.”

But what if, after an injury causing accident, a hospital files submits its charges to Blue Cross Blue Shield (BCBS) or some other insurance company, gets paid the reasonable and customary amount provided by their contract, and then tries to collect the difference between the billed amount and the contract amount by perfecting a lien against the cause of action under T.C.A. §§ 29-22-102 (Tennessee Hospital Lien Act)?

In West v. Shelby County Healthcare Corp. 2014 Tenn. LEXIS 1033, (12/19/14), the Tennessee Supreme Court, said, in essence, that hospitals cannot have their cake and eat it too.  If they accept the contract amount, that is all they get.

“We have already held that persons insured by an insurance company are intended third-party beneficiaries of the contract between their insurance company and a hospital. Benton v. Vanderbilt Univ., 137 S.W.3d 614, 620 (Tenn. 2004). Thus, with regard to an insurance company’s customers, “reasonable charges” are the charges agreed to by the insurance company and the hospital. Nishihama v. City & County of San Francisco, 93 Cal. App. 4th 298, 112 Cal. Rptr.2d 861, 867 (App. Ct. 2001); Hoffman v. Travelers Indem. Co. of Am., 2013-1575, p. 10 (La. 5/7/2014); 144 So.3d 993, 1000. The Med’s contract with BCBST and BHSG defined what the reasonable charges for the medical services provided to Mses. West and Heags-Johnson would be.”

But even the Court got a bit confused when it pointed out that:

“The presumption in Tenn. Code Ann. § 24-5-113(a)(1) (2000) that itemized medical bills are necessary and reasonable does not apply to this case. That presumption applies only to personal injury actions brought in any court by injured parties against the persons responsible for causing their injuries. Tenn. Code Ann. § 24-5-113(a)(2). In addition, the presumption does not apply when the total cost of the medical bills exceeds $4,000. Tenn. Code Ann. § 24-5-113(a)(3). The claims made by Mses. West and Heags-Johnson are not personal injury claims against the persons who caused their injuries, and the amount of each claim exceeded $4,000. Accordingly, we must assess the reasonableness of the Med’s charges without the presumption that they are reasonable.”

Actually, as we point here, there is a rebuttable presumption of reasonableness, regardless of the amount, if the bills are served on the other parties at least 90 days in advance of trial under T.C.A. § 24-5-113(b).

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Trial Court Should Have Been Reversed for Erroneous Jury Instruction in FELA Case.

Plaintiffs usually fare well in FELA cases, which provide compensation for railroad employees injured on the job.  Unlike state workers compensation systems, however, which are no-fault systems, under FELA, the plaintiff must prove some negligence on the part of the railroad in causing the injury.  In Spencer v. Norfolk Southern Railway Co.  2014 Tenn. LEXIS 626 (8/29/14), the plaintiff injured his back when he threw a switch. The trial court told the jury that the plaintiff had to prove the railroad knew or should have known on the day of the incident that the switch was not operating properly.  The jury found in favor of the railroad, and the plaintiff appealed.  The Tennessee Court of Appeals found the jury instruction was erroneous and reversed, granting the plaintiff a new trial. Surprisingly, however, the Tennessee Supreme Court reversed the Court of Appeals and reinstated the jury verdict in favor of the railroad, finding the erroneous instruction to have been “substantially accurate.”  The Supreme Court acknowledged that the instruction could have been given more precisely and suggested that the jury should have been instructed to determine whether the railroad knew or should have known at a time sufficiently before the incident such that it could have taken action to prevent or ameliorate the incident.  But that was no help to the injured plaintiff, who will get not a second chance to prove his FELA case, and who will receive no compensation for his back injuries.

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Preparing Your Personal Injury Client to Testify

 “It’s hard to live your life in color and tell the truth in black and white”

(Gregg Allman)

“Few cases go to trial.  In virtually all serious injury cases, however, the plaintiff will have to give a deposition.  As a result, for most personal injury plaintiffs, the deposition is the trial.”

In its fall issue, The Verdict, the journal of the Georgia Trial Lawyers Association, has published an in-depth article entitled, “Preparing Your Personal Injury Client to Testify,” by Hu Hamilton and Patrick Cruise. The material outlined in the article was gleaned from years of trial experience in the school of hard knocks. It offers detailed practical suggestions for preparing injury clients for depositions, as well as for trial.

The Hamilton Firm LLC is committed to improving the practice of law through continuing legal education, leading workshops and seminars, and sharing with others through professional journals and magazines.

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