Businesses, insurers target ‘phantom' health costs


TALLAHASSEE, Fla. – A Florida House panel Wednesday heard two hours of testimony about how health-care costs and a spate of court rulings have affected insurance premiums, though it also drew criticism for focusing on the wants of insurers and other businesses.

The House Civil Justice Subcommittee heard testimony from insurance-industry and business representatives about “phantom” medical damages and how so-called letters of protection are being used.

Cary Silverman, an attorney representing the American Tort Reform Association, told lawmakers that Florida should not allow juries to consider what health-care providers bill for services when considering damages in lawsuits.

Instead, he wants juries to see the amounts that hospitals and doctors agree to accept from insurance companies to settle bills.

“The difference between those amounts are what some people refer to as phantom damages,” he said, noting that larger amounts appear on initial invoices but are not paid. “It was just an amount that existed nowhere but on paper.”

The testimony came as insurers and business groups try to build support for legislation that could limit lawsuits during the annual session that starts March 5.

But Melody Page, who is with the Florida Medical Rights Association, criticized subcommittee Chairman Bob Rommel, R-Naples, for assembling speakers dominated by business interests.

“I’m truly astonished that this hearing took place without a speaker on the agenda to discuss how recommendations here today affect citizens and victims of this state,” said Page, who wants the Legislature to eliminate a law that bans adult children and parents of adult children from suing for medical negligence.

“Everyone on this panel represents insurance regulators, big corporations and those hired to protect them,” she said.

Rommel downplayed the criticism after the meeting.

“We were addressing a problem.,” he told The News Service of Florida, adding that lawmakers have heard from constituents about rising insurance and health-care costs, “so we are trying to gather information to see if we have to do something in the future.”

Along with phantom costs, lawmakers heard about the increasing use of letters of protection, also an issue when people are privately insured. The letters are issued by law firms and contain what Silverman described as phantom costs.

Lauren McBride, an attorney in Publix Super Markets’ risk management program, told lawmakers that the letters are becoming an increasing problem and are a reason why it costs the company 65 percent more to settle claims litigated in Florida than in any of the other states where the chain operates.

McBride said in 2018 the company spent $60 million defending and settling liability claims.

“It’s not exaggeration when I tell all of you that the single most impactful factor in that spend is letters of protection,” she said.

The letters of protection, she said, contain inflated health care costs. She told committee members that juries can use those inflated health care costs to determine other costs, such as plaintiffs’ future pain and suffering and loss of future earning capacity.

“Those numbers can be difficult to quantify for a jury,” she said. “So medical damages are often used as a multiplier to determine the overall award.”