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FMG Law Blog Line

Posts Tagged ‘medical bills’

Is Georgia Game for Growing Bad Faith Liability?

Posted on: July 17th, 2018

By: Jessica Samford

As discussed in my last blog on bad faith, seeking bifurcation can be a proactive means to distinguish the issue of coverage from the issue of bad faith and appropriately manage the all too often unwieldy discovery process before it’s too late.  A recent case in Georgia is an interesting illustration of an insurer’s attempt to bifurcate issues after the discovery stage in a bad faith failure to settle claim in particular and is yet another cautionary example for insurers to carefully consider the increasing potential for extracontractual liability in Georgia.  Whiteside v. GEICO Indem. Co., 2018 U.S. Dist. LEXIS 87868, *3-*4 (M.D. Ga. May 25, 2018).

In that case, the trial court declined to bifurcate the issues of liability and proximate cause of damages at the trial stage as requested by Geico, which sought to have a jury determine whether or not Geico could be held liable for bad faith failure to settle before being presented with evidence of the default judgment entered against Geico’s insured of almost $3 million and causation of same.  Separation of liability and damages issues was not warranted according to the trial court because facts relating to Geico’s claim handling were relevant to both, and Geico’s concerns could be handled through proper jury instructions, special interrogatories, and the verdict form.  See also Whiteside v. GEICO Indem. Co., 2018 U.S. Dist. LEXIS 52761 (M.D. Ga. Mar. 29, 2018).  The trial court did, however, bifurcate the claim for punitive damages from the rest of the jury trial.

The result was a jury verdict of $2 million against Geico for failing to settle in response to a bicyclist’s demand for the $30,000 policy limit based on medical bills of almost $10,000 following a motor vehicle accident.  Previously, Geico had argued there was no coverage due to the insured’s failure to notify Geico of the subsequent lawsuit she was served.  Whiteside v. GEICO Indem. Co., 2017 U.S. Dist. LEXIS 203617, *6, 2017 WL 6347174 (M.D. Ga. Dec. 12, 2017).  Notwithstanding such a flagrant breach of the policy’s notice conditions, the trial court did not see coverage as being an issue since that coverage defense did not exist at the time Geico responded to the demand by offering to settle for about half the limits instead.

These unusual circumstances are certainly noteworthy, and extracontractual damages such as these are becoming less uncommon in Georgia bad faith cases.  FMG’s Insurance Coverage and Bad Faith BlogLine has already geared up to cover the Georgia Supreme Court’s upcoming rulings after granting cert on the scope of what triggers failure to settle liability in Georgia, not to mention the proposed changes to the Restatement of the Law of Liability Insurance and their impact.  Whatever is in the cards for extracontractual liability in Georgia, the risks presented by settlement demands should be evaluated in light of these current trends.

If you have any questions or would like more information, please contact Jessica Samford at [email protected].

“Lien On Me, When You’re Insured …”*

Posted on: May 11th, 2018

*Apologies to Bill Withers.

By: Zach Moura

On May 8, 2018, the Court of Appeal, Second District, upheld a trial court’s decision that an insured plaintiff who chooses to receive treatment from providers who are outside of his private health insurance plan is not prohibited by Howell v. Hamilton Meats & Provisions Inc. (2011) 52 Cal.4th 541, from introducing the full charged amount of his medical bills into evidence for the purpose of determining his economic damages in Pebley v. Santa Clara Organics, LLC (May 8, 2018, No. B277893) ___Cal.App.5th___ [2018 Cal. App. LEXIS 409.)

Pebley was injured in a motor vehicle accident caused by an employee of defendant Santa Clara Organics, LLC (Santa Clara).  Pebley initially sought treatment through his medical insurance carrier, Kaiser Permanente (Kaiser). Then, after filing a personal injury action against defendants, Pebley obtained care from a specialist outside the Kaiser network. While Pebley testified he was referred to the doctor by “members of his men’s group”, defendants drew the court’s attention to an internet article co-written by one of Pebley’s attorneys, noting that while “[t]ypically, medical liens in personal injury cases have been used where the plaintiff is uninsured” (or the carrier will not authorize recommended medical care), the attorney authors proposed that insured plaintiffs use the lien form of medical treatment to allow them “to sidestep the insurance company and the impact of Howell, Corenbaum and Obamacare” because treating on a lien basis increases the “settlement value” of personal injury cases. And indeed, Pebley’s post-Kaiser medical treatment was provided on that basis.

The trial court granted plaintiff’s motions in limine to exclude: evidence that Pebley was insured through Kaiser; arguments concerning Pebley’s decision not to seek medical treatment through his insurance; evidence of the amounts an insurance company may pay, or what a medical provider may accept, for medical services; and evidence that Pebley obtained most of his medical treatment on a lien basis. The trial court denied defendants’ motion in limine to exclude evidence of unpaid bills from health care providers under Howell.

The Court of Appeal held that Pebley was to be considered uninsured (or non-insured) for purposes of proving the amount of his damages for past and future medical expenses.  The consequence of that, under Bermudez v. Ciolek (2015) 237 Cal.App.4th 1311, 1336, was that Pebley could instead rely on an expert to “competently testify that the amount incurred and billed is the reasonable value of the service rendered”, and “the defendant may then test the expert’s opinion through cross-examination and present his or her own expert opinion testimony that the reasonable value of the service is lower”, leaving the jury to “best decide the reasonable value” of the medical services.

Defendants presented expert testimony that the reasonable and customary value of the services provided by the various medical facilities was substantially less than the amounts actually billed, and defendants’ medical expert opined that 95% of private pay patients would pay approximately 50% of the treating professionals’ bills. The jury rejected this expert evidence and awarded Pebley the billed amounts.

The Pebley decision will likely lead to an increase in the prevalence of insured plaintiffs seeking treatment outside their insurance networks on a lien basis.

If you have questions or would like more information, please contact Zach Moura at [email protected].