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Florida Update: Tort Reform Phantom Damages Bill Fails

Author: Emily Berman

Guest Editor: Raymond K. Wilson Jr.

April 6, 2020 2:58pm

Last month, our newsletter discussed the state of tort reform legislation in Florida with a focus on a proposed bill that would have barred so-called “Phantom Damages.” [click to read article ] Much to the disappointment of the insurance defense bar, the vote on S.B. 1668 stalled this month and has been indefinitely postponed.

To recap, “Phantom Damages” are the amounts that defendants in personal injury cases end up paying, which surpass what the Plaintiff or his insurer actually paid for Plaintiff’s treatment. S.B. 1668 would have created 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.

S.B. 1668 would have barred juries from only hearing about the billed price of medical expenses, which is often not the actual, lower amount paid by an insurance company that already negotiated discount prices with health care providers. It would have also targeted the alleged abuse by certain plaintiff’s personal injury attorneys accused of colluding with physicians to inflate costs in order to obtain bigger payouts, via the issuance of “letters of protection” or “LOPs.” The proposed bill stated that the amounts paid or payable to claimants under their 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.

Last month, the bill made it through the Judiciary and Health Policy Committees of the Florida Senate, and the Banking and Insurance Committee was set to vote on February 19. The vote stalled at that time due to one member of the committee, who was seen as the final swing vote. This member stated that he could not support such a bill, so the Committee declined to vote.

While S.B. 1668 was only the latest in a series of proposed bills aimed at “phantom damages” in Florida, it was said to have stood the best chance at passing this year. This was due to the fact that it did away with previous attempts to have the jury hear about a fixed cost of medical services that would be based on Medicare or Medicaid figures, or numbers taken from a public health database. Instead, as mentioned above, the jury would have been told of the “usual and customary costs” of medical services.

While the future of this version of the bill is unclear, it is likely that the litigation defense bar will forward a similar measure in the 2021 Florida legislative session. We will continue to monitor future bill proposals and their progress through the Florida legislature, and provide updates as the law changes.

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