Florida Senate Advances Bill That Looks to Eliminate ‘Phantom Damages’

Author: Amy Chambers

Guest Editor: Cinnamon J. Carr

March 4, 2020 10:00am

Currently, in the state of Florida, defendants in personal injury cases often pay more in medical treatment damages than what the plaintiff or his or her insurer actually paid.  These overpayments are often referred to as “phantom damages.”  In an effort to curb these phantom damages, the Florida Senate Judiciary Committee recently advanced S.B. 1668, which would create a new standard for determining future medical costs based on “usual and customary” charges or the amount that a commercial or governmental health insurer would pay for medical services and treatment when determining medical damages from personal injury or wrongful death cases.

The Judiciary Committee’s Bill Analysis and Fiscal Impact Statement points out that the requirement in the bill that evidence of medical costs be based on usual and customary charges in the community will decrease the opportunity for plaintiffs to present evidence of inflated costs through the use of letters of protection (“LOP”).[1]

LOPs are agreements between personal injury lawyers and medical providers through which the medical providers allow the plaintiff to defer payment of the medical bills during the pendency of the litigation.  In return, the medical providers receive a portion of the plaintiff’s recovery.

Under Florida Statute Section 786.76, Florida courts are required to “set-off” collateral sources from jury awards unless a right of subrogation or reimbursement exists.  In other words, if a plaintiff’s insurer pays for and/or discounts plaintiff’s medical bills, the court must reduce the plaintiff’s award by that amount.

A growing number of personal injury attorneys in Florida have taken advantage of abusing LOPs in order to get around the restrictions of Section 786.76.  In these situations, plaintiff attorneys refer their clients to the same group of medical providers who issue LOPs for medical services provided and repeatedly appear in litigation across the state.  Because the LOPs defer payment until after judgment, there is no evidence at trial to establish the medical provider would have accepted a lower amount than the billed rate, resulting in artificially inflated medical damages.

There is a legitimate use of LOPs.  They were intended to allow injured plaintiff’s who were uninsured or underinsured to obtain medical care.  However, a growing number of insured plaintiffs are choosing to forego treatment under their insurance, and are using LOPs at their attorney’s recommendation in an effort to obtain higher medical damages.  Because “the question of whether a plaintiff’s attorney referred him or her to a doctor for treatment is protected by the attorney-client privilege,” LOPs are inadmissible to prove bias.[2] Thus, defense counsel have been unable to combat the abuse of LOPs by showing the jury that the use of LOPs by insured plaintiffs is merely a ploy to obtain a higher damages award.

If S.B. 1668 is passed, the jury would hear evidence of the usual and customary cost of medical treatment incurred by an injured individual in the applicable geographic area as opposed to the initial billed costs, which is typically reduced.  The bill sates that such evidence may not include evidence of increased or additional charges based on the outcome of the litigation, therefore preventing the use of costs that have been inflated in anticipation of a jury award that might be larger than the amount insurers are willing to pay and the amounts medical providers typically accept.  Additionally, the bill states that the amounts paid or payable to claimants under insurance coverage are the usual and customary medical charges.  Thus, the amount of an award of past medical damages would be determined without consideration of evidence of the billed costs of any medical treatment actually rendered to the plaintiff.

While versions of SB 1668 “have been floated nearly every year for the past decade,” experts predict this bill has a good chance of getting passed as it is “the first time it has been passed by a Senate committee and has the support of the House leadership and the governor.”[3]

We will continue to monitor the progress of S.B. 1668 and provide updates as the law changes.


[1] https://www.flsenate.gov/Session/Bill/2020/1668/Analyses/2020s01668.pre.ju.PDF

[2] Worley v. Central Florida Young Men’s Christian Ass’n, Inc., 228 So. 3d 18, 25 (Fla. 2017).

[3] https://www.law360.com/articles/1240356/fla-injury-defense-attys-hope-to-thwart-phantom-damages-

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