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Goble v. Frohman6/25/2003
768.76(2)(a), a settlement agreement with a co-defendant hospital is not a "collateral source" of indemnity. Thus, section 768.76 would not apply in D'Angelo.
The allowance of a setoff for a contractual discount is also consistent with the legislature's express intent to fully compensate the injured party while simultaneously reducing the litigation costs that arise when insurers are required to pay damages beyond what the injured party actually incurred. See ch. 86-160, § 2. The injured party is fully compensated by an award that equals the amounts the injured party paid to the medical provider plus the amounts paid by his insurer, which will ultimately be subrogated by the insurer. See §§ 641.31(8), 768.76(4), Fla. Stat. (1999). Awarding an injured party damages that include a contractual discount, which in this case is in excess of $400,000, results in a windfall to the injured party for damages that have not been incurred. The allowance of such a windfall completely undermines the purpose of the Act by requiring insurers to pay damages based on a billing fiction, especially when the insurers will be sure to pass the cost for these phantom damages on to Floridians. Accordingly, we affirm the trial court's order granting a setoff in favor of Frohman.
On cross-appeal, Frohman argues that the trial court erred in excluding evidence of the contractual discounts. "The collateral source rule functions as both a rule of damages and a rule of evidence." Gormley v. GTE Prods. Corp., 587 So. 2d 455, 457 (Fla. 1991). The evidentiary rule prohibits the admission of evidence regarding collateral sources in the liability trial because it "misleads the jury on the issue of liability." Id. at 458. To challenge the reasonableness or necessity of the medical bills, Frohman could have introduced evidence on the value of or need for the medical treatment. As stated in Gormley, "there generally will be other evidence having more probative value and involving less likelihood of prejudice than the victim's receipt of insurance-type benefits." Id. (quoting Williams v. Pincombe, 309 So. 2d 10, 11 (Fla. 4th DCA 1975)). Furthermore, as this court has previously held, evidence of contractual discounts received by managed care providers is insufficient, standing alone, to prove that nondiscounted medical bills were unreasonable. Hillsborough County Hosp. Auth. v. Fernandez, 664 So. 2d 1071 (Fla. 2d DCA 1995). Therefore, we affirm the exclusion of evidence at trial regarding collateral source benefits.
Because this case presents an issue of great public importance, we certify to the Florida Supreme Court the following question:
UNDER SECTION 768.76, FLORIDA STATUTES (1999), IS IT APPROPRIATE TO SETOFF AGAINST THE DAMAGES PORTION OF AN AWARD THE AMOUNTS OF REASONABLE AND NECESSARY MEDICAL BILLS THAT WERE WRITTEN OFF BY MEDICAL PROVIDERS PURSUANT TO THEIR CONTRACTS WITH A HEALTH MAINTENANCE ORGANIZATION?
Affirmed; question certified.
NORTHCUTT, J., and THREADGILL, EDWARD F., SENIOR JUDGE, Concur.
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