IS THE QAADIR RULING A LANDMARK CASE?
The recent landmark ruling in Abdul Qaadir v. Figueroa, 67 Cal. App. 5th 790 (Cal. Ct. App. 2021) has changed the way that we trial lawyers now try cases and frankly how we practice law in accident litigation in California. A quick review of the opinion itself tells you that this decision was seismic in its reach on the issue of medical billing in California since amicus curiae briefs were filed on behalf of the defense for the California Medical Association, the California Dental Association, the Civil Justice Association, the Association of the Southern California Defense Counsel and The Trucking Industry Defense Association (TIDA). Even a premier defense law firm, right after the ruling was published, published its’ own article about how the Qaadir decision was a “blow” to defendants rights established in the Howell v. Hamilton Meats case handled by that same firm in 2011. I will endeavor to explain how Qaadir has clarified the issue of medical billing and has not in any way eroded but is consistent with the reasoning in the Howell case decided over a decade ago.
QAADIR ALLOWS REASONABLE VALUE OF PAID BILLS BUT NOT THE SOURCE OF THE PAYOR?
Lawyers practicing in California personal injury litigation are often confronted with the confounding question: “My client has insurance, but they need to treat on a lien, what do I do?” You can replace the word “insurance” in the question with Medicare, Medi-Cal, Veterans Administration, worker’s compensation or any other third-party payor source, and the question remains the same. The Qaadir ruling answers those questions and clarifies how insurance and third-party payors can be handled from the very beginning of the litigation through verdict. In short, insurance and other third-party payor rates may be relevant at trial to the overall determination of the reasonable value of the medical services from a market analysis point of view, but whether a particular plaintiff is insured or has a particular third-party payor coverage available is not relevant or admissible for the jury to consider under Qaadir. Specifically, Qaadir held that the defense may not introduce evidence of Plaintiff’s medical insurance for the purposes of a mitigation of damages argument, meaning the defense cannot claim that Plaintiff had insurance and should have used it to mitigate or lower the costs of his or her medical care instead of the higher value liens. The Court of Appeals specifically affirmed the trial court on that particular point.
At trial, we admitted evidence of Mr. Qaadir’s medical bills, some of which were paid by his worker’s compensation carrier, some of which were paid by his wife’s health insurer, but most of which were placed on medical liens. The trial court correctly admitted the amounts of the bills that were paid by the health insurance carrier and worker’s compensation carrier as reasonable under the Howell case, but did not permit the mitigation argument. In this way, Qaadir is consistent with and does not erode the reasoning in the Howell case, because a paid medical bill is deemed reasonable if it is paid, even under Qaadir. With respect to the medical bills on the liens, which were the more substantial damages claims in the case, the trial court required the admission of the liens for each medical service to establish that the bill was either paid or incurred, also consistent with the reasoning in Howell. From a more general view, Qaadir is consistent with Howell in that it allowed the amounts paid by insurance as reasonable and the reasonable value of the liened amounts without allowing the crossover issue of mitigation—that Plaintiff should have used his insurance rather than treating on a lien to lower the cost of care. That argument by the way was rejected by the Court out of hand mostly because a person injured by a third-party tortfeasor has no independent duty to mitigate the costs of care that the tortfeasor may have to pay, while saddling the health insurance industry with health care costs that were not anticipated or underwritten to insure the health of the insured. This reasoning make sense in that a health insurer has no ability to foresee how a potential health insured patient may be injured or to what degree in an accident when they can only underwrite a person’s health history. And that battle between the health insurers and liability insurers was on display on appeal as the various lobby associations filed amicus curiae briefs in support of their respective positions.
HOW IS “REASONABLE VALUE” ESTABLISHED POST QAADIR: “MEMBERSHIP HAS ITS PRIVILEGES”?
Qaadir did two things: (1) the court admitted paid bills as reasonable and customary under Howelll; and (2) the court permitted the parties to present a market analysis of the reasonable and customary value of the liened medical care, including market cost figures for Medicare, Medi-Cal, Workers’ Compensation, etc. to argue to the jury that the reasonable and customary value of services claimed is actually lower than the liened amounts. The court permitted medical billings experts for both sides to present: (1) the billed amount as foundation for the analysis; (2) a multi-faceted market analysis on the reasonable and customary value of each service. Plaintiff’s analysis was based on the background, training and experience of Dr. Morris, our expert, along with higher percentiles of well-known databases, such as Fairhealth.org. The defense was permitted to offer a market analysis based on prevailing rates for health insurance, Medicare, Medi-Cal, worker’s compensation and a few other data sources, without discussing whether Plaintiff had any of those coverages. Interestingly, on cross-examination, the defense expert, Griff Stelzner, admitted that the insurance and Medicare rates would only apply if someone had those coverages and admitted that those “network” prices are much lower than standard charges because the doctors and providers are members of the “network” and receive business (more patients) from the health insurer in return for lower rates, like membership benefits ones might receive using American Express. The Court of Appeal in its decision cited to that reference and apparently enjoyed that analogy. The Court was clear that cross-examination into the limitations of the particular “network” was proper but cautioned not to open the door on the actual coverages, if any, carried by the Plaintiff. Interestingly, the defense expert could not point to any database of what amounts were actually paid on a liened bill, so that was excluded from their analysis.
WHAT ARE SOME PRACTICAL TIPS ON ADMITTING MEDICAL BILLING UNDER QAADIR?
First, any bill that is paid by a third-party payor source should be admitted as reasonable under Howell. The reasonable and customary value of a bill on a lien can be established through a multi-faceted market analysis to establish that either: (1) the amount of the bill itself is also the reasonable and customary value; or (2) that the amount lower than the bills is the reasonable and customary value of the service based on the expert’s experience and market analysis. Remember the reasonable and customary value cannot be higher than the bill as stated under Howell. Lastly, the lien itself needs to be admitted into evidence to establish that the service was “incurred” under Qaadir. Remember also that the admission of the lien alone only establishes that the doctor or provider agreed to accept a lien for their services, it does not automatically mean that the attorney made the referral to the doctor or provider for the service.
WHAT ARE SOME PRACTICAL TIPS ON COUNTERING THE DEFENSE ANALYSIS?
First, every defense expert has to admit that their analysis begins with the actual bill itself, which was actually generated by the provider based on their own internal guidelines and services. Next, the defense expert will have to agree that lower rates that are integral to the market analysis of insurance and Medicare rates are not relevant to the market for a personal injury lien, and are much lower than the higher percentiles provided in the acceptable databases. Lastly, you can point out that insurance rates are based on rates set by the insurer for providers who are “in-network” and receive other network business from the insurer, different from a lien.
I hope that this outline has helped. Remember, I am just the trial lawyer that tried this case, and this article is only my opinion on what the facts are and what the ruling means, it is not the law itself and it is not legal advice. Every lawyer and non-lawyer for that matter, needs to review the law and arrive at their own independent understanding of the case and obtain legal advice accordingly. We routinely try catastrophic injury and death cases, such as Qaadir. Please contact me with further questions or comments.