Biz Group Asks Fla. Justices To Ditch Geico Bad Faith Case

July 31, 2017/in Law360

Biz Group Asks Fla. Justices To Ditch Geico Bad Faith Case

By Jeff Sistrunk

Law360, Los Angeles (July 31, 2017, 9:10 PM EDT) — A Florida business group urged the state’s high court Monday to reject a challenge to an appellate panel’s decision that Geico didn’t act in bad faith by not settling claims against a policyholder later hit with an $8.7 million fatal-crash judgment, saying the panel’s ruling doesn’t directly conflict with any Sunshine State precedent.

In an amicus brief supporting Geico, the Florida Justice Reform Institute — which describes itself as a coalition of businesses and citizens aiming to promote “fair and equitable legal practices” and eliminate “wasteful civil litigation” — said the Florida Supreme Court shouldn’t have agreed to review a state Fourth District Court of Appeal panel’s decision overturning a judgment in favor of Geico policyholder James Harvey and entering a directed verdict in the insurer’s favor on Harvey’s bad faith claims.

According to the institute, the Florida justices should only review appellate decisions that “expressly and directly” conflict with rulings on the same legal question by the Florida high court or other state appellate courts. Here, the group argued, the Fourth District panel’s ruling was in line with applicable precedent regarding the requirements for bad faith claims and directed verdicts.

“In reality, accepting review of the Fourth District’s decision in these circumstances would invite every party that loses at a district court of appeal on the issue of whether a directed verdict should have been granted to come up to this court to seek a second review with the hope to obtain a different result,” the institute’s attorneys wrote.

An attorney for Harvey did not immediately respond to a request for comment late Monday.

The dispute dates back to Aug. 8, 2006, when Harvey was involved in a car accident that resulted in the death of John Potts, according to court papers. Potts’ widow proceeded to sue Harvey, and a jury awarded her $8.7 million. Harvey then sued Geico, saying that if the insurer had handled the claim in good faith, the widow would have settled for Harvey’s $100,000 policy limit before even bringing suit.

Harvey blamed an allegedly overworked, disorganized claims handler at Geico who never passed word from the Potts estate’s lawyer that the estate wanted Harvey to give a recorded statement. Such a statement would have established whether he had sufficient business assets worth pursuing, among other things.

Instead, Harvey has argued, the claims handler, Fran Korkus, said Harvey was unavailable for such a statement and never told Harvey that the statement was even requested. It was not until Korkus faxed Harvey a letter from the Potts estate’s lawyer referencing the prior request for a statement that Harvey first became aware of the request, according to court papers.

Korkus later admitted at trial that she knew the estate’s attorney, Sean Dominick, had to request the statement to satisfy his duty of due diligence to his client, according to court documents. Dominick, meanwhile, testified that he would have told Potts’ widow to settle instead of filing suit had he been made aware that Harvey retained personal counsel to review his business assets, court papers show.

A Florida jury ultimately concluded that Geico had acted in bad faith by failing to settle the Potts estate’s claims against Harvey. In January, though, a Fourth District panel reversed the trial court’s judgment and ordered a directed verdict be entered in Geico’s favor. The appellate panel said that while Geico’s claims-handling process “was not without fault and could be improved,” it did not amount to bad faith.

Harvey then sought review from the Florida Supreme Court, which accepted jurisdiction in June.

In Monday’s brief, the institute contended that the Florida justices had “improvidently granted” review of the case, based on Harvey’s assertions that the Fourth District panel’s conclusion directly conflicted with multiple precedential decisions governing bad faith claims and directed verdicts.

The institute, however, said that the panel’s decision was entirely consistent with precedent. The group asserted that the panel had correctly followed the Florida Supreme Court’s governing decision in the case of Boston Old Colony Insurance Co. v. Gutierrez by analyzing seven factors weighing on whether Geico acted in good faith and applying the facts of the case to each of them.

“What [Harvey] ultimately suggests is that a directed verdict is never appropriate in a bad faith action, implying that any decision in which a court takes the issue of bad faith away from a jury conflicts with this court’s precedent that the totality of circumstances surrounding bad faith must be considered,” the group’s attorneys wrote.

According to the institute, because the Fourth District panel’s decision is “fully reconcilable” with all the Florida Supreme Court’s prior decisions, the Florida justices should now reject jurisdiction of the case.

The Florida Justice Reform Institute is represented by its own William W. Large and by Rodolfo Sorondo Jr. of Holland & Knight LLP.

Harvey is represented by Philip Burlington, Bard D. Rockenbach and Andrew A. Harris of Burlington & Rockenbach PA, Kimberly Boldt, Mario R. Giommoni and Ryan C. Taylor of Boldt Law Firm PA, and Fred Cunningham and Greg Yaffa of Domnick Cunningham & Whalen.

Geico is represented by B. Richard Young, Adam Duke and Cody Pflueger of Young Bill Boles Palmer & Duke PA.

The case is Harvey v. Geico General Insurance Co., case number SC17-85, in the Florida Supreme Court.

–Additional reporting by Cara Salvatore. Editing by Aaron Pelc.

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Attorneys Take No Issue With DWC’s Interpretation of Compounds as ‘Specialty Services’

July 27, 2017/in WorkCompCentral

Friday, July 21, 2017

Attorneys Take No Issue With DWC’s Interpretation of Compounds as ‘Specialty Services’

By J. Todd Foster

The Florida Division of Workers’ Compensation’s decision to require preauthorization for all compounded drugs represents a fair interpretation of a state statute, attorneys on both sides said Thursday.

The requirement went into effect on July 1 with the implementation of the 2016 edition of the Workers’ Compensation Health Care Provider Reimbursement Manual.

The manual now defines the dispensing of compounded drugs as a “specialty service” under 440.13(3)(i) of the Florida Statutes.

The section specifies that claims for specialty services, surgeries and diagnostic tests that cost more than $1,000 require preauthorization. But the DWC is using the phrase “and other specialty services that the department identifies by rule” to label compounds and not require them to be reimbursable, regardless of price, unless approved by the carrier.

If the carrier fails to respond to the written request for authorization within 10 days, or if emergency care is necessary, then preauthorization is not required.

“I think the statute’s very broadly written. Our Legislature understands that broad statutes are going to be broadly interpreted. I have to believe they intended it to broadly interpreted,” said David Langham, deputy chief judge of compensation claims for the Florida Office of Judges of Compensation Claims.

Disputes arising over compounds are not settled by the OJCC, he said.

“Those reimbursement disputes all run through the division. We don’t handle any of those,” Langham said.

Orlando claimants’ attorney Geoff Bichler said preauthorization always gives him pause because it can delay treatment for injured workers.

“I think it’s a fair interpretation,” he said. “But it will likely lead to litigation by a pharmacy, certainly in a civil context, and could spill over to the workers’ compensation arena when someone does not get their medications.”

How a statute is interpreted is less important than how it’s applied, Bichler said.

“I’m always dubious about requiring preauthorization, as it may delay needed care, but it may be necessary with compounded medications, given the rampant abuse and profiteering,” he said. “The question is, will it be fairly applied in those instances when people require compounded medications? That’s always a concern when you’ve got adjusters trying to second-guess medical decisions and overriding doctors. We need to have some fail-safe in place so someone isn’t running out of medications or doing without the medications required for recovery.”

Workers’ compensation law professor Michael Duff of the University of Wyoming said federal and state courts generally defer to agencies in their interpretation of rules.

In the federal system, there are two U.S. Supreme Court decisions that are instructive, Duff said.

The cases are Bowles, Price Administrator v. Seminole Rock & Sand Co. from 1945, and Auer v. Robbins from 1997. Both deal with administrative law.

Under the so-called Auer and Seminole Rock deferences, an agency’s interpretation of its own regulations is given controlling weight unless it is plainly erroneous or inconsistent with the regulation.

“As a general administrative principle of state law, that’s true, too,” Duff said. “The agency doesn’t have to be right in interpreting an ambiguous statute. It simply has to be reasonable.

“Statutes are written vaguely for all kinds of reasons,” he said. “They’re just badly written, or something comes up that no one was thinking of. There’s an argument going on in the legislature and the question is whether we select Option A or Option B, then they just kick the can down the road and it has to be figured out later. What agencies have to do all the time is interpret vaguely worded statutes.”

Winter Park defense attorney Rogers Turner said the DWC informed him recently that the preauthorization of all compounds was in reaction to the Sentrix case.

Sentrix Pharmacy and Discount is the pharmacy arm of HealthIE Network, later known as Health for the Injured Employee. The network solicited workers’ compensation claimants for telemedicine examinations by Dr. Samuel Gerson, a former California physician who was placed on probation for seven years after pleading guilty to forging a narcotic prescription and drunk driving.

Gerson, in a May 11 consent order with the Florida Department of Financial Services, agreed to cancel all prescriptions he had written for injured workers; to not affiliate with any provider that treats injured workers; and to pay a $5,000 fine.

Sentrix, meanwhile, is embroiled in a dispute with two insurance carriers over reimbursement of $2,262 for a single prescription. The case lies with the state Department of Administrative Hearings.

“These people (compounders) are wanting $2,500 for a tube of cream, and the Division of Workers’ Compensation is saying we have to do something,” Turner said. “They’re saying we don’t have the legislation to do anything about it, so we can interpret this statute like this.”

Regulators were able to amend the health care provider reimbursement manual by rule instead of through legislation because the revisions are projected to cost less than $1 million within the first five years of implementation.

Florida regulators also want updates to two other provider reimbursement manuals — for hospitals and ambulatory surgical centers — but those are subject to legislation because the National Council on Compensation Insurance says those updates will exceed the $1 million threshold.

In fact, revising the hospital manual would cost $80 million, an increase on system costs of 2.2%, while updating the ASC manual would cost $22 million, a 0.6% hike in system costs.

William Large, president of the Florida Justice Reform Institute, an anti-trial bar advocacy group, said the DWC’s interpretation of 440.13(3)(i) is correct.

“The problem with compound drugs has to do with both safety and costs,” Large emailed. “The division’s interpretation will only help to better serve injured workers as the medical necessity and efficacy of the proposed compounded medication will be adequately reviewed.”

Miami claimants’ attorney Ramon Malca also took no issue with the DWC’s interpretation of the statute, but worries how “high school-educated adjusters” will be allowed to use it against injured workers by second-guessing physicians handpicked by carriers.

The Florida Justice Association, a labor advocacy group, has taken no position on the DWC’s interpretation of the statute to require preapproval for all compounded drugs, said communications director Ryan Banfill.

Jon Moore, acting press secretary for Florida’s chief financial officer, said: ‘Requiring pre-authorization will remove the uncertainty of charges for these drugs, provide cost containment and still allow dispensing of compounds when medically appropriate.

“The purpose of the rule change is to provide more opportunity for the carrier to evaluate the efficacy of the compounded drug and prevent the unnecessary dispensing of compounded drugs to drive up workers’ compensation costs for Florida’s employers,” Moore emailed.

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Reprinted courtesy of WorkCompCentral.

Florida Medical Community has Few Options After Cap on Non-economic Damages Shot Down

July 17, 2017/in Florida Record

by W.J. Kennedy | Jul. 21, 2017, 1:19pm

ALLAHASSEE – The Florida medical community is still weighing its next steps following the June 8 Florida Supreme Court ruling, North Broward Hospital District v. Kalitan, that declared caps on non-economic damages (pain and suffering) unconstitutional. Options range from the futile and expensive to none.

Jeff Scott, general counsel of the Florida Medical Association, said they could appeal to the Legislature to approve another measure that capped damages, but “with the same activist court we’re going to get the same result.”

The other option, he said, would be a constitutional amendment, but it would be a “very expensive proposition.”

Scott, and William Large, president of the Florida Justice Reform Institute, said that the Legislature approved the caps in 2003 after months of research by the House and by a task force created by the governor responding to Florida’s insurance crisis: liability premiums were averaging much higher than other states; doctors were retiring early or leaving the state; insurance companies were leaving the state in droves — in fact, the number of insurance companies in Florida had dropped from 66 in the late 1990s to just 12 by 2002. Of the 12, only four companies were routinely issuing liability insurance policies.

The final report of the Governor’s Select Task Force on Healthcare Professional Liability Insurance said that “the recommendation that will have the greatest long-term impact on the healthcare provider liability insurance rates, and thus eliminate the crises of availability and affordability of health care in Florida, was a cap on noneconomic damages.”

Yet, Large said that the court in the Kalitan case ruled that the caps did not pass the “rational basis test,” where a challenged law must be rationally related to a legitimate government interest.

“By deciding the Legislature had no rational basis for imposing the caps, the court crowned itself fact-finder and policymaker, rejecting all of the Legislature’s work and its role under our system of government,” Large said.

He and Scott said that with the ruling the likelihood of another crisis in medical malpractice insurance would only grow.

In the case, Susan Kalitan sued North Broward over life threatening complications when her esophagus was punctured during surgery for carpal tunnel syndrome. After surgery to repair her esophagus Kalitan continued to feel pain in her upper body and suffered from mental disorders.

The Supreme Court agreed with an appeal court’s ruling that the caps ranging from $500,000 to $1 million on non-economic damages violated the Equal Protection Clause of the state Constitution.

https://flarecord.com/stories/511151263-florida-medical-community-has-few-options-after-cap-on-non-economic-damages-shot-down

Commentary: Florida Supreme Court Crowns Itself Fact-finder and Policymaker on Malpractice

July 17, 2017/in Orlando Sentinel

Commentary: Florida Supreme Court crowns itself fact-finder and policymaker on malpractice

Jeb

Florida Gov. Jeb Bush pauses as he receives applause from Tampa area doctors and hospital
staff members during a speech on medical malpractice in 2003. (SCOTT AUDETTE / Associated Press)

By William Large – Guest Columnist

July 17, 2017

On June 8, in North Broward Hospital District v. Kalitan, the Florida Supreme Courtruled that caps on noneconomic damages (pain and suffering) in medical malpractice lawsuits violated the equal protection clause. Mostly, the court said that the caps did not pass the “rational basis test,” where a challenged law must be rationally related to a legitimate government interest.

By deciding the Legislature had no rational basis for imposing the caps, the court crowned itself fact-finder and policymaker, rejecting all of the Legislature’s work and its role under our system of government.

Under the rational basis test, the court is supposed to defer to the Legislature if there is any “rational basis” in the record. Here, the court found there was no conceivable rational basis for the Legislature’s action.

Let’s take a look at the record. In 2002, the Governor’s Select Task Force on Healthcare Professional Liability Insurance spent months traveling around the state, listening to all interested parties, gathering relevant data, and analyzing trends. What they observed and documented was alarming:

• In 2002, the average liability premium per doctor in Florida was 55 percent higher than the national average.
• For the period from 1996 to 2002, average insurance premiums in Florida shot up 64 percent compared to the national average increase of 26 percent.
• The number of insurance companies in Florida had dropped from 66 in the late 1990s to just 12 by 2002. Of the 12, only four companies were routinely issuing liability insurance policies.

The final report stated that “the recommendation that will have the greatest long-term impact on the healthcare provider liability insurance rates, and thus eliminate the crises of availability and affordability of health care in Florida, was a cap on noneconomic damages.”

After conducting its own hearings and review, the Legislature agreed with this conclusion and passed its version of caps on noneconomic damages.

Courts have previously held that under a rational basis test, “[t]he burden is upon the party challenging the statute … to show that there is no conceivable factual predicate which would rationally support the classification under attack” and that “a legislative choice is not subject to courtroom fact-finding and may be based on rational speculation unsupported by evidence or empirical data.”

Even Justice Barbara Pariente, in a similar opinion from 2014, Estate of McCall v. United States, agreed that, “there is simply no precedent for this court to engage in its own independent evaluation and reweighing of the facts” under a rational basis test.

Yet, in Kalitan, Pariente joined in Justice Jorge Labarga’s opinion that “because there is no evidence of a continuing medical malpractice insurance crisis justifying the arbitrary and invidious discrimination between medical malpractice victims, there is no rational relationship between the personal injury noneconomic damage caps in section 766.118 and alleviating this purported crisis.”

Justice Ricky Polston said it best in his dissent, joined by Justices Charles Canady and C. Alan Lawson:

“The majority just discards and ignores all of the Legislature’s work and fact-finding. But, under our constitutional system, it is the Legislature, not this Court, that is entitled to make laws as a matter of policy based upon the facts it finds… It is the Legislature’s task to decide whether a medical malpractice crisis exists, whether a medical malpractice crisis has abated, and whether the Florida Statutes should be amended accordingly.”

If the court could still find, after all that fact-finding, that the Legislature’s conclusions were irrational, then any future medical-malpractice reform will need to focus even more squarely on the frequency and severity of medical-malpractice claims. In the meantime, the likelihood of a return to the medical-malpractice crises of the last decade will grow.

William Large is the president of the Florida Justice Reform Institute.

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Biz Group Asks Fla. Justices To Ditch Geico Bad Faith Case

Attorneys Take No Issue With DWC’s Interpretation of Compounds as ‘Specialty Services’

Commentary: Florida Supreme Court crowns itself fact-finder and policymaker on malpractice

Florida Justice Reform Institute

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