News & Thought Leadership from Sulloway & Hollis

May 24, 2018

Damages, Fair Health, and Medical Bill Write-Offs

It has been eight years since the Supreme Judicial Court decided Law v. Griffith, 457 Mass. 349, 930 N.E.2d 126 (2010), and provided defendants in personal injury actions guidance concerning the admissible bounds of a challenge to a plaintiff’s medical bill damages.

Recently, Massachusetts Lawyers Weekly published an article concerning a pair of decisions from two District Court Appellate Division panels regarding the admissibility of medical billing data in the context of personal injury protection benefits (G.L. c. 90, §§ 34A and 34M). The two cases are Lomibo LLC v. Vermont Mutual Ins. Group (Apr. 25, 2018) and Patriot All Pro Physical Therapy Centers, Inc. v. Vermont Mutual Ins. Group (Dec. 18, 2017). Both cases involved a medical provider that treated a patient who was injured in an automobile accident and sought payment from the insurer that provided PIP benefits. The insurer paid what it considered a reasonable cost, and the medical provider sued for the unpaid balance. Both cases involved a dispute over the admissibility of medical billing data that was compiled by Fair Health, Inc., a non-profit organization that maintains a database on healthcare provider charges. The defendant attempted to introduce Fair Health to dispute the plaintiffs’ claims. Both courts ruled that the evidence was inadmissible, citing the hearsay rule and questioning the reliability of the data. By its terms, G.L. c. 233, § 79G did not apply as an exception to the hearsay rule.

Interestingly, these new cases reflect a dispute over the reasonableness of charges for medical services, but Law is not part of the discussion. In Law, the SJC wrestled with the relationship between G.L. c. 233, § 79G and the collateral source rule. It’s holding is straightforward:

“We conclude that evidence of amounts actually paid to the plaintiffs’ medical providers is not admissible, but evidence may be introduced concerning the range of payments that the providers accept for the types of medical services that the plaintiff received.”

The SJC provided a detailed discussion of what such an evidentiary submission might look like. For example, the SJC stated, “The witness would be limited to testimony solely about the amounts in the range that the provider accepted for the services at issue, with no information relating to what was paid by or on behalf of the plaintiff herself.” The SJC’s decision is based on an analysis of G.L. c. 233, § 79G’s hearsay exception and reconciling it with Massachusetts’ common law collateral source rule. I think that the SJC stretched the language of § 79G in order to deal with the inherent unfairness of the then-existing law, which ignored the real world, practical problem concerning evidence of the reasonable value of medical services, i.e., that the list price of medical services often bears no relationship to what anyone pays. See e.g., Law, 457 Mass. at 357-358. As it stands now, you could take a deposition of any two medical providers and discover that they have different payment structures.

Admittedly, prior to reading Lomibo and Patriot All Pro I was not familiar with the Fair Health data. It is probably not admissible under a strict reading of Law because the information is not evidence or testimony from the medical provider itself; however, the Fair Health data may be useful if packaged properly. Law does not permit evidence of the actual payment amount, but in attempting to work around the collateral source rule, it created a viable path for other evidence of the reasonable value of medical services. Packaging Fair Health data (or an analogous database) in a different way – such as via an expert witness – might insulate it from the problems identified by the District Court Appellate Divisions’ opinions and be consistent with Law.

In Lomibo, the Court noted troublesome questions concerning the reliability of the Fair Health data:

“In finding that the Fair Health data was not admissible, the judge specifically found, based upon testimony, that (1) Fair Health obtained information from insurers, but not from any medical providers; (2) though Fair Health utilized information received from sixty insurers, the identity of the contributors was not provided; (3) no information as to what percentage of national insurers submitted data was provided; (4) no information on the percentage of contributing Massachusetts insurers was introduced; (5) no information as to the percentage of the market within Massachusetts that give their information to Fair Health was provided; (6) no auditing of the data provided by Massachusetts insurers was conducted; and (7) only submitted data falling within the 5th to 95th percentile is used.”

In Patriot All Pro, the Court discussed the problem issue with this case in terms of relevance:

“There is ample evidence in the record to support trial judge’s determination that the Fair Health data was not relevant to the question of whether Patriot’s charges were reasonable under G.L. c. 90, § 34M, or alternatively, if marginally relevant, had the potential to mislead or confuse the jury … The data was collected from insurers around the country, narrowed by zip code, or “geo zip” (a term apparently coined by Fair Health), to an area that included Patriot’s place of business. Vermont Mutual paid the claim at the eightieth percentile, a figure it described as the “industry standard” but not a figure agreed to by Patriot. As stated by the trial judge, the Fair Health data was “raw data” drawn from the bills of unidentified providers. While the trial judge agreed with Vermont Mutual that it would be impractical to summons in the various providers on a $745 claim, he was persuaded that the Fair Heath data was an admissible substitute for such testimony. We see no error in that decision.”

Law would not change the results of either of these cases. There are at least two ways that Fair Health data could be useful. One, use Fair Health data in connection with an expert to address the concerns expressed in Lomibo and Patriot All Pro and keep the evidence in line with Law’s analysis. The idea being that this is a principled basis for challenging the list value medical services with evidence of the reasonable value of medical services in the relevant area and it potentially alters the framework for analyzing admissibility (i.e., Daubert-Lanigan). Two, a defendant could use the Fair Health data to cross-examine a representative from a medical provider.

Law highlights the fact that the intersection between medical bills, who paid those bills, and questions of admissibility can be tricky to navigate. Law did not discuss information like the Fair Health data. Massachusetts modified the collateral source rule as to awards of medical damages in medical malpractice cases (G.L. c. 231, § 60G), but left the traditional common-law rule otherwise intact. Depending on the case and circumstances, it may be worth exploring other ways to present evidence that is analogous to what is currently permitted under Massachusetts practice or whatever jurisdiction you find yourself in.