SC03-1245 - Albert Goble v. Mark E. Frohman

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State: Florida

Docket No: SC03-1245

Case Date: 04/28/2005

Preview:Supreme Court of Florida
____________ No. SC03-1245 ____________ ALBERT GOBLE, Petitioner, vs. MARK E. FROHMAN, Respondent.

[April 28, 2005]

PER CURIAM. We have for review Goble v. Frohman, 848 So. 2d 406 (Fla. 2d DCA 2003), in which the Second District Court of Appeal certified the following question as one of great public importance: UNDER SECTION 768.76, FLORIDA STATUTES (1999), IS IT APPROPRIATE TO SETOFF AGAINST THE DAMAGES PORTION OF AN AWARD THE AMOUNTS OF REASONABLE AND NECESSARY MEDICAL BILLS THAT WERE WRITTEN OFF BY MEDICAL PROVIDERS PURSUANT TO THEIR CONTRACTS WITH A HEALTH MAINTENANCE ORGANIZATION?

Id. at 410. We have jurisdiction under article V, section 3(b)(4) of the Florida Constitution. For the reasons stated below, we answer the certified question in the affirmative. We approve the district court's decision affirming the trial court's setoff under section 768.76 of contractual discounts negotiated by the plaintiff's HMO and written off by the plaintiff's medical providers. BACKGROUND Albert Goble was severely injured when Mark Frohman's vehicle hit Goble's motorcycle. Goble's injuries required extensive medical treatment, for which Goble's medical providers billed him $574,554.31. However, Goble was a member of Aetna U.S. Healthcare, an HMO. Pursuant to the preexisting fee schedules in contracts between Aetna and the medical providers, Aetna paid and the medical providers accepted just $145,970.76 for the medical services rendered to Goble. Under the medical providers' contracts with Aetna, the providers have no right to seek reimbursement from Goble or from any third party for the contractual "discount" of over $400,000, the difference between the amounts billed and the amounts paid. Aetna has a right of subrogation; however, Aetna's subrogation right is limited to the sum of $145,970.76 that Aetna paid under the contracts. Goble sued Frohman, and the jury awarded Goble $574,554.31 for past medical expenses, reflecting the amount Goble's medical providers had billed. Frohman filed a posttrial motion to reduce this award by the amount of the

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contractual discounts. The trial court granted Frohman's motion for setoff under section 768.76, Florida Statutes (1999). On appeal, the Second District Court of Appeal affirmed the trial court's order of setoff. Goble v. Frohman, 848 So. 2d 406, 410 (Fla. 2d DCA 2003). The district court held that contractual discounts off medical bills are "collateral sources" subject to setoff under section 768.76. The district court reasoned that "collateral sources" are defined by the statute as "payments made" on the claimant's behalf, and that the dictionary definition of "payment" is not limited to the actual remitting of cash but includes any act that discharges a debt or obligation. Goble, 848 So. 2d at 409. In this case, the contractual discounts discharged Goble's obligation to his medical providers; therefore, the discounts are "payments made" on Goble's behalf and so are "collateral sources" under section 768.76. Id. The district court also reasoned that permitting a setoff for contractual discounts is consistent with the Legislature's intent to reduce "the litigation costs that arise when insurers are required to pay damages beyond what the injured party actually incurred." Id. at 410. The alternative, forcing an insurer to pay for damages that have not been incurred, would result in a windfall to the injured party. Id. The allowance of a windfall would undermine the legislative purpose of controlling liability insurance rates because "insurers will be sure to pass the cost for these phantom damages on to Floridians." Id.

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DISCUSSION We agree with the conclusion reached by the Second District Court of Appeal. Section 768.76 provides in relevant part: (1) In any action to which this part applies in which liability is admitted or is determined by the trier of fact and in which damages are awarded to compensate the claimant for losses sustained, the court shall reduce the amount of such award by the total of all amounts which have been paid for the benefit of the claimant, or which are otherwise available to the claimant, from all collateral sources; however, there shall be no reduction for collateral sources for which a subrogation or reimbursement right exists. . . . (2) For purposes of this section: (a) "Collateral sources" means any payments made to the claimant, or made on the claimant's behalf, by or pursuant to: .... 3. Any contract or agreement of any group, organization, partnership, or corporation to provide, pay for, or reimburse the costs of hospital, medical, dental, or other health care services.

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