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The Impact of Crable v. State Farm and Katzman v. Rediron; On The Scope of Discovery That Insurance Carriers Are Entitled To In Regards to Medical Services Provided Based On A Letter Of Protection

Two recent Florida Appellate Court opinions may have a chilling effect on the ability of physicians who treat automobile accident victims to avoid unduly burdensome and harassing discovery requests. In Katzman v Rediron Fabrication, Inc., Case No. 4D11-1290 (FL Dist. 4 Ct. App., Aug. 10, 2011) and Melissa Crable v. State Farm Mutual Automobile Insurance Company, 5:2010cv00402, the insurance industry received two very favorable decisions that allows for a much broader scope of discovery that defense attorneys may now propound upon physicians who rendered medical treatment on an automobile accident victim as a result of a letter of protection.

In Katzman, George Martin and Allison Minjares were injured as a result of an automobile accident and filed suit against the defendant Rediron Fabrication, for the alleged injuries sustained. Plaintiff’s counsel referred both individuals to Scott Katzman, M.D., who agreed to treat both plaintiffs in consideration for an executed letter of protection (hereinafter referred to as an “LOP”). An LOP is an agreement by which the patients agree to reimburse the physician out of the recovery obtained in the case (and in this situation, the recovery would be from the lawsuit).

Dr. Katzman performed percutaneous endoscopic discectomies on both plaintiffs. The controversial outpatient laser spine surgery performed by Dr. Katzman on one of the two plaintiffs took less than forty-five (45) minutes to perform. However, Dr. Katzman billed in excess of $45,000.000 for this very procedure that was allegedly related to injuries sustained in what amounted to be a low speed impact with insignificant property damage. Dr. Katzman billed in excess of $36,000.00 for the surgery performed on the other patient.

State Farm’s counsel provided judicial notice that in 2008, the Center For Medicare and Medicaid Services provided a national non coverage determination in which it found no evidence that this procedure improves the health or reduces the pain level of the patient. State Farm contends that Dr. Katzman generates a great deal and extremely disproportionate amount of his income from performing this questionable procedure. Further, defendant alleged that Dr. Katzman bills much more for performing this procedure on a patient whose case is in litigation as opposed to what he charges for non-litigation patients.

Rediron propounded discovery seeking to learn how many laser discectomy procedures Dr. Katzman had ordered over the previous four years, how much he has earned from performing this procedure in comparison with other procedures, and what he charges for performing this procedure on litigation as opposed to non-litigation cases. Dr. Katzman objected to such discovery requests and filed a motion for protective order arguing that the discovery requests were overbroad and exceeded the financial discovery that is allowed for retained experts pursuant to Elkins v. Syken, 672 So. 2d 517 (Fla. 1996).

“When a party engages in discovery to obtain facts with which to assault the credibility of an opponent’s expert witness it may seek that information from multiple sources including: (1) the expert; (2) the party for whom the expert will testify; (3) the party’s insurance company; or (4) the attorney for the party. In Syken v. Elkins, 644 So.2d 539 (Fla. 3rd DCA 1994), Florida’s Third District Court of Appeal established guidelines for the taking of discovery from an expert medical witness concerning the probability he was biased in favor of the party upon whose behalf he was retained. On appeal, the Florida Supreme Court approved and adopted the Third District’s holding.” Crable at 26.

The court said the decision “strikes a reasonable balance between a party’s need for information concerning an expert witness’s potential bias and the witness’s right to be free from burdensome and intrusive production requests.” Id. at 522. The holding in Elkins was limited to medical experts. The court subsequently enacted Rule 1.280(b)(4)(A)(iii) which extended its decision to all experts. Both the decision and the Rule attempt to balance a party’s need for information against the burden, annoyance and embarrassment production may cause the expert witness. They also speak to the courts’ concerns that in the absence of reasonable limits, qualified experts may be unwilling to participate in the judicial process and discovery may become unnecessarily and unduly expensive.

Following Elkins, the Florida Supreme Court addressed the limits of expert witness discovery propounded to a party. In Allstate Insurance Co. v. Boecher, 733 So.2d 993 (Fla.1999), the issue was whether Elkins and Rule 1.280 precluded a party from obtaining from its opponent, discovery concerning the extent of the opponent’s relationship with an expert witness. The court held that the concerns it discussed in Elkins are not present when a party is asked about the extent of its relationship with an expert and the amount of money the party has paid the expert over time. Id. at 997. The court concluded that the guidelines it adopted in Elkins and incorporated into Rule 1.280(b)(4) did not apply. Id. at 999. In reaching its decision, the court observed:

The information sought here would reveal how often the expert testified on Allstate’s behalf and how much money the expert made from its relationship with Allstate. The information sought in this case does not just lead to the discovery of admissible information. The information requested is directly relevant to a party’s efforts to demonstrate to the jury the witness’s bias.

*4 The more extensive the financial relationship between a party and a witness, the more it is likely that the witness has a vested interest in that financially beneficial relationship continuing. A jury is entitled to know the extent of the financial connection between the party and the witness, and the cumulative amount a party has paid an expert during their relationship. Id.

Next, Florida courts dealt with the scope of discovery from an insurance company that is providing a defense for its insured. In Springer v. West, 769 So.2d 1068 (Fla. 5th DCA 2000), the plaintiff asked the defendant in interrogatories about the relationship between the defendant’s insurance carrier and the defense’ trial expert. In a 2–1 decision, Florida’s Fifth District Court of Appeal found the holding in Boecher applied even though the insurance company was not a party to the lawsuit. Id. at 1069. The majority said:

Where an insurer provides a defense for its insured and is acting as the insured’s agent, the insurer’s relationship to an expert is discoverable from the insured. To hold otherwise would render Boecher meaningless in all but a small class of cases. Similarly, a defendant may question a plaintiff about any relationship between his or her attorney and the plaintiff’s trial expert. In both cases, the information sought is relevant to the witness’s bias and will enhance the truth-seeking function and fairness of the trial, as intended by Boecher. [citation omitted .] Id.

In a concurring opinion, Judge Harris opined:

Since the defendant relies on his or her insurer and insurer-appointed lawyer to employ necessary witnesses, it is the relationship between those parties and the experts, which is critical to the question of bias on the part of the witness. The same is true for the plaintiff. And it is counsel, and not the parties, who prepare the answers to such interrogatories and the information sought is not that difficult for them to obtain. Id. at 1070.

Judge Griffin dissented because in her view, a plaintiff seeking this information should attempt to subpoena it directly from the insurance company. She also felt the information would be inadmissible at trial because the relationship between the expert and the insurance company could not be disclosed without revealing that the defendant had insurance.

The following year a court more directly addressed the scope of discovery from counsel. In Morgan, Colling & Gilbert, P.A. v. Pope, 798 So.2d 1 (Fla. 2nd DCA 2001), the defense sought to discover from the plaintiff’s law firm the extent of its financial relationship with two experts the firm retained on behalf of the plaintiff. The Second District denied the petition for writ of certiorari and then said in dicta that:

Even if we were to consider that irreparable harm had been shown and decided to consider the petition on its merits [citation omitted], we would hold that the order under review does not depart from the essential requirements of the law. Recently, the Fifth District, in dicta, has suggested that “a defendant may question a plaintiff about any relationship between his or her attorney and the plaintiff’s expert.” Springer v. West, 769 So.2d 1068, 1069 (Fla. 5th DCA 2000). This conclusion is a natural and logical extension of the requirement that defendant insurance companies disclose their financial relationships with their chosen expert witnesses. Thus, rather than departing from the essential requirements of the law, the circuit court’s order conforms to the trend insuring fairness in the jury trial process by permitting discovery of a financial relationship between a witness and a party representative. Id. at 3.

*5 Most recently, in Katzman v. Rediron Fabrication, Inc., 2011 WL 3477093 (Fla.App. 4 Dist.), the court was confronted with the scope of permissible discovery from what it termed a “hybrid” witness. In this case, the plaintiff’s lawyer referred his client to Dr. Katzman in anticipation of litigation. Dr. Katzman both treated the plaintiff thus making him a fact witness and the doctor was expected to testify at trial concerning the permanency of the plaintiff’s injuries and need for future medical care thus making him an expert witness. Dr. Katzman provided these services pursuant to a letter of protection agreement whereby he would be paid out of the proceeds of the lawsuit. Consequently, he had a financial stake in the outcome of the litigation. Dr. Katzman performed what the appellate court described as “an allegedly controversial outpatient surgical procedure” and the defense “believes that a large portion of Katzman’s income is generated by recommending this procedure for patients referred to him in litigation cases and that he charges more for the procedure in litigation cases than in non-litigation cases.” Id. at 1. The Fourth District Court of Appeal said:

Generally, financial bias discovery from such a hybrid expert should not exceed that permitted under Elkins and rule 1.280(b)(4)(A). Discovery that exceeds these limits should be presumed burdensome and harassing for the cogent reasons discussed in Elkins. For similar reasons, the privacy interests of hybrid experts are weighty and should be protected within reasonable limits. [footnote omitted] Id. at 3.

The Katzman Court determined that Dr. Katzman must provide the amounts he has collected from attorneys based on an LOP on an annual bases in 2007, 2008, 2009 and 2010, and how much he collected under LOP’s executed for which he performed the percutaneous endoscopic discectomy. Further, in the majority opinion the Court states, in this case, the discovery that is sought is not relevant merely to show that the witness may be biased based on an ongoing financial relationship with a party or lawyer. We agree that Elkins discovery should generally provide sufficient discovery into such financial bias. The discovery here is relevant to a discrete issue, whether the expert has recommended an allegedly unnecessary procedure with greater frequency in litigation cases, and whether the expert, as a treating physician, allegedly overcharged for the medical services at issue in the lawsuit. The limited intrusion into the financial affairs of the doctor in this case is justified by the need to discover case-specific information relevant to substantive issues in the litigation, i.e., the reasonableness of the cost and necessity of the procedure. In our view, it meets the requirement of “unusual and compelling circumstances.”

In the Crable case, at issue was the relationship existing between the law firm of Morgan & Morgan and Dr. Ara Deukmedjian, (Spine Surgeon) owner of the Deuk Spine Institute. State Farm propounded extensive discovery on Morgan & Morgan seeking to procure an abundance of information detailing the relationship between the law firm and Dr. Deukmedjian. State Farm alleged that Dr. Deukmedjian had a financially lucrative relationship with Morgan & Morgan. Based on documents received pursuant to Court Order, in another pending case in the same Circuit, State Farm learned that within the last four years, Morgan & Morgan has referred approximately 176 clients to Deuk Spine for independent medical examinations and that during the past three years, Morgan & Morgan has paid Deuk Spine approximately $2,955,786.74. A large portion of the amount of money paid by Morgan & Morgan to Dr. Deukmedjian was in relation to the percutaneous endoscopic discectomy procedure performed by the Spine Surgeon.

During argument State Farm stated its belief that there is a $10 million relationship between Morgan & Morgan and Deuk Spine and that Deuk Spine “became an active, knowing, interested party with respect to this litigation[.]” (Tr. at 11). State Farm also expressed its belief “that when we get this information from Morgan & Morgan with the invoices from Deuk Spine—and certainly, your Honor, the patient information should be redacted—but it should be somehow numbered so that it matches up with the patient—the vendor check history—that will show that in those invoices there is a large predominance of these patients that have this procedure [the percutaneous discectomy procedure performed by Dr. Deukmedjian on plaintiff]. So we’re going to look at Dr. Deukmedjian’s testimony that says 5 percent of all patients, and then we look at the patients that are also clients of Morgan & Morgan and I am betting that it is 80 to 90 percent of those patients that have one of these procedures performed by Dr.Deukmedjian. This is certainly relevant information for a number of reasons.” (Tr. at 18.) (Please see majority opinion in Crable).

The Crable Court, agreed with State Farm and ordered Morgan & Morgan to provide a vendor check history of all payments made by the law firm to Dr. Deukmedjian in regards to the 176 cases identified in another case in the very same Circuit. Further, Morgan & Morgan was forced to adhere to a number of broadly tailored discovery requests issued by State Farm that will help illustrate that the physician was provided detailed updates concerning the status of cases by Morgan & Morgan paralegals and attorneys. State Farm also contends that Dr. Deukmedjian was provided detailed information pertaining to the amount of insurance coverage available that the attorneys at Morgan & Morgan were seeking prior to evaluation and/or treating a patient.

As a Clearwater automobile accident and motorcycle accident injury attorney, this case has tremendous implications on all physicians who accept letters of protection from a patient and/or attorney in order to provide medical services and the attorneys or law firms who have financial relationships with such physicians. The scope of discovery permitted by the Court in Katzman and Grable potentially opens a Pandora’s box to insurance defense attorneys who will now seek to avail themselves of every opportunity to pry into the relationships between law firms and the physicians who render medical treatment to automobile accident and motorcycle accident victims under a letter of protection. The insurance carriers will attempt to portray the medical procedures were performed for pecuniary gain as opposed to meritorious reasons.

-Matthew A. Dolman, Esq.

Matthew A. Dolman in a Clearwater based Personal Injury Attorney and Civil Trial Attorney who limits his practice to first and third party insurance claims relating to an auto accident, motorcycle accident, traumatic brain injury, catastrophic injury, spine injury, insurance carrier bad faith, and wrongful death.

Dolman Law Group is a Clearwater based personal injury and civil trial law firm with satellite offices in Bradenton and Melbourne. The attorneys at Dolman Law Group represent plaintiffs only and do not nor will they represent insurance carriers. Dolman Law Group actively litigates personal injury lawsuits in the following counties; Pinellas, Pasco, Hillsborough, Polk, Manatee and Sarasota.

For more information on Dolman Law Group, and the rights afforded to personal injury victims in the State of Florida, please call Dolman Law at: (727) 451-6900 or email matt@dolmanlaw.com