There is an ever-growing industry of experts offering to provide services in personal injury and casualty litigation based on evaluation of property damages and medical charges taken from analysis programs and/or statistical data. These opinions are often derived from big data gathered from various insurance companies. This fact creates major questions and problems for litigants and attorneys in establishing an evidentiary foundation to admit these opinions into evidence.
Underlying facts of case:
Verci v. High is a personal injury case wherein plaintiff asserted that she was injured as a result of the negligence of the defendants. The majority of plaintiff’s medical charges arose from her treatment with Dr. Kube and related entities. The major issue of contention in the case was the reasonable value of the medical services provided by Dr. Kube.[i]
Plaintiff claimed over $1 million in charges for her medical care and treatment. Approximately $800,000.00 arose from her treatment with Dr. Kube and related medical entities.[ii]
The Tazewell County, Illinois trial court entered an Order prohibiting the defendants from cross-examining Dr. Kube and associated medical entities about the cash value advertised for the medical care they provided. The trial court allowed the defendants’ billing expert to testify regarding her opinion about the reasonable care of the medical services provided by Kube.[iii]
Defendants presented an expert to testify that the usual, customary and reasonable total for the charges incurred were approximately $148,118.00. The expert determined that the charges submitted by Dr. Kube were 547% higher than cash prices that Kube’s entities had advertised on line.[iv]
Defendants’ expert testified that she relied upon three databases in determining the reasonable value of the medical services provided, including the (1) FAIR health, (2) Optum, which utilizes FAIR health data and (3) American Health Directory. FAIR was the primary database that she used.[v]
Defendants’ expert did not make any effort to obtain information from individual medical providers or outpatient centers to determine the value of their charges.[vi]
FAIR Health obtains all of its data from charges received by insurance companies that have been charged by medical providers. FAIR then categorizes the charges geographically and creates a range of the charges.[vii]
Defendant’s expert assumed that Optum and FAIR correctly performed their data/statistical analysis. She did not review the raw data that Optum or FAIR obtained. She did review their statistical analysis.[viii]
The certified questions that the court issued were:
(1)“Did the trial court err in denying defendants’ right to cross-examine Dr. Kube and his associated medical entities with prices advertised by Dr. Kube and the same associated medical entities as prices that represent the reasonable value for the services rendered[?]”
(2)“Did the trial court err in allowing defendants’ billing expert, Rebecca Reier, to testify over plaintiff’s objection when the defendants’ expert relies upon geographically zipcoded information collected by national databases rather than personally obtained medical billing comparisons[?]”[ix]
Appellate Court Ruling
Admissibility of Advertised Cash Prices:
The Appellate Court determined that the trial court erred in prohibiting the defendants from cross-examining plaintiff’s treating physician, Dr. Kube, about the cash prices that his medical entities advertised for their services. The court found that the range of fees could be charged for services plaintiff received was admissible and not barred under the collateral source rule. Hence, the defendants should have been allowed to cross-examine Kube regarding the advertised cash prices.[x]
Admissibility of Reier’s Testimony:
The Appellate court noted that defendants’ expert relied primarily on the FAIR health database. They also noted that the information contained therein is no evidence of what other area providers charge for the services plaintiff received because the data therein came from unknown numbers of insurance companies rather than healthcare providers. Additionally, the databases were used to determine reimbursement rates rather than the reasonableness of provider charges. Additionally, the data in the database was incomplete.
The court further emphasized that the FAIR database does not include information for amounts charged to uninsured individuals hence it was not a true representation of what medical providers charge. Likewise, defendants’ expert could not identify any medical providers whose charges were included in the FAIR health database nor could she state whether any specific provider’s charges were included in the database. The Appellate court emphasized that expert witnesses are not allowed to testify that providers’ medical charges are unreasonable based upon reimbursement rates as those are irrelevant and violate the collateral source rule.[xi]
Practical Effect of Case
The major problems with the opinions from the expert in this case were that they were based on unverifiable information that did not come from the entities that would actually provide the service being examined. Also, the data examined (reimbursement rate) could not be used to determine a reasonable charge for the treatment. Likewise, the data did not include all types of charges, such as charges to uninsured patients.
Whereas, the evidence of the cash charges from Dr. Kube was admissible because it was verifiable and from a geographic source that provides the type of care at issue. The key to admissibility of such an opinion is whether the data from which the opinion is based can be verified. Is it from a source that actually provides the services being evaluated (for instance, a carpenter vs a warranty company)? Does it include all charges available for that service (for instance reduced rates for members versus nonmembers)?
I have seen expert witnesses presenting opinions based on big data and information taken from various data bases and computer programs in many different scenarios. These have included lost earning capacity, cost of repairing property damaged by water/fire, value of personal property damaged by fire and future medical specials, to name a few.
I have always believed that it is truly difficult to establish a proper foundation to admit opinions based on this big data into evidence at trial. I believe this case provides an excellent road map to contest opinions that are based on this such data. Of course, the trial judge will have wide discretion regarding the admission of such opinions. At a minimum, this case provides a good basis to attack any such opinion during the discovery and trial phase of litigation.
Attorneys and claims professionals presenting opinions based on this type of data should carefully scrutinize their expert witness and whether they can provide the basic testimony to convince the trial court that the underlying information is sufficiently reliable to admit the opinion into evidence. If it is not, then you need to build up the opinion/ witness or, get a new witness.
Attorneys and claims professionals opposing such opinions should closely review any and all computer programs, data sources and investigation performed by the expert to find any basis to criticize and discredit the opinions as based on unverifiable or inapplicable data. If justified, you may be able to exclude or limit such testimony via a Motion in Limine.
[i] Verci v. High et.al., 2019 IL App (3d) 190106-B;
[ii] Id. at par. 4;
[iii] Id. at par. 2;
[iv] Id. at par. 5;
[v] Id. at par. 6;
[vi] Id. at par. 10;
[vii] Id. at par. 7;
[viii] Id. at par. 9;
[ix] Id. at par. 13;
[x] Id. at par. 25;
[xi] Id. at par. 32;
Recent Illinois Case law sets avenue for plaintiff’s attorneys to limit the use of protected health information obtained through litigation of personal injury claims via HIPAA.
Protective orders and protected health information:
In this newsletter, we will be discussing the recent Illinois Appellate Case Haage v. Zavala and Protective orders entered in personal injury cases pursuant to the Health Insurance Portability and Accountability Act of 1966 (herein HIPAA) and the rules promogulated pursuant to that Act.
All people have a right to privacy regarding their medical treatment and health; however, some of these protections and privileges are waived when a personal injury plaintiff seeks compensation for bodily injury. The extent to which these protections are waived is often a contentious subject during the litigation of personal injury claims.
Plaintiff’s attorneys often seek to restrict how far back in time the defense can obtain medical records for the plaintiff’s medical care. Likewise, they often try to prevent the defense from obtaining records for treatment that the plaintiff deems irrelevant. The defense, on the other hand, often seeks to have as much access as possible to plaintiff’s pre accident medical care to evaluate the existence of pre-existing conditions and the plaintiff’s activity level before the accident, in comparison to after the accident.
It is common practice in personal injury cases for the parties and courts to enter a Protective Order controlling the disclosure of protected health information by medical providers and to whom the protected information may be disclosed to by the parties during the litigation. We have been seeing plaintiff’s attorneys recently push to limit the ability for liability insurers and defense counsel to retain medical records and documents described as protected health information (herein PHI) under the HIPAA laws after the close of litigation. Plaintiffs are doing this by pushing the courts to require that parties either destroy or return the PHI within a time frame of the close of the case, usually 60 days.
Underlying facts of case:
This issue was addressed in the recent Illinois Appellate Court Case Haage v. Zavala[i]. The Haage case arose from two personal injury automobile accident cases. The plaintiffs in Haage proposed that the protective orders “(1) prohibited the parties and any other persons or entities from using or disclosing PHI for any purpose other than the litigation for which it was requested and (2) required the return or destruction of the PHI within 60 days after the conclusion of the litigation.”[ii] State Farm Insurance petitioned to intervene in the case and proposed the use of a protective order that did not include return and destroy provisions.[iii] The trial court approved the plaintiff’s proposed order and stated that any individual or entry receiving the order must comply with its provisions.[iv]
State Farm asserted they were exempt from the protective orders and that the entry of the same as proposed would prevent them with complying with their obligations under the Illinois Insurance Code.[v] Likewise, they asserted that such restrictions in the use of PHI would interfere with State Farm’s rights to use that information for claims administration, detection/investigation of fraud, underwriting, rate making and guaranty fund functions, reinsurance and excess loss insurance and research including actuarial, medical, scientific and public policy.[vi]
Court’s analysis of the applicable law and ruling:
The Haage court provided a great discussion of some of the basic concepts of the HIPAA laws and regulations. For instance, the Privacy Rule as adopted in the Code of Federal Regulations prohibits the disclosure of an individual’s PHI by a “covered entity” or “business associate” unless that individual has consented to the same or the disclosure is permitted under the rules.[vii] PHI is defined as “individually identifiable health information”.[viii]
Qualified protective orders under the Privacy Rule are an order from the court or a stipulation by the parties to the legal action that (1) prohibits those “parties from using or disclosing the [PHI] for any purpose other than the litigation or proceeding for which such information was requested” and (2) mandates that the PHI be returned “to the covered entity or destruction of the” PHI and any copies thereof at the close of the legal action.[ix]
The court noted that the HIPAA laws and regulations created a floor of privacy protections for an individual’s medical information. Further, these laws pre-empt any contrary State provisions unless those contrary provisions are more stringent than the HIPAA Privacy Rule.[x] Additionally, the court noted that State Farm did not qualify as a “covered entity” under the HIPAA laws.[xi]
The question for the court then became “whether a ‘non-covered entity’ that receives PHI from a covered entity in response to a HIPAA qualified protective order is bound to comply with any of the order’s restrictions regarding the use of and disclosure of PHI.”[xii] The court found that, since State Farm is an entity that is wanting to obtain PHI (obviously to investigate the underlying bodily injury claim), it must “abide by the terms of the HIPAA qualified protective orders entered by the court.” Meaning that State Farm must comply with the use and disclosure requirements set forth in the order entered by the court if they want to access the PHI.[xiii]
The Haage court did not find that State Farm’s arguments that they were required to use and disclose PHI under the Illinois Insurance Codes and regulations to be convincing.[xiv] The court noted that State Farm’s preferred order that did not include return or destroy provisions at the close of litigation would lower the floor of the privacy protections that the Privacy Rule for HIPAA provided. Hence, the court considered State Farm’s position that they should be able to use and retain PHI outside litigation would be an obstacle to accomplishing HIPAA’s purposes and objectives.[xv] The Appellate court in Haage affirmed the trial court’s approval of the Plaintiff’s proposed HIPAA order with destroy/return provisions and that State Farm must abide by those provisions.[xvi]
Practical Effect of Case:
This case could be taken up to the Illinois Supreme Court, but this has not been determined at the time of this writing. There is no doubt that plaintiff’s attorneys will utilize this case to push for language tracking the Privacy Rule within protective orders, which is more restrictive than many insurance companies and defendants would prefer. Trial court judges will be more likely to approve an order with return and destroy provisions in light of the precedent set in Haage case.
Failure to comply with return and destroy provisions could open defendants, counsel and insurers up to potential lawsuits or sanctions for noncompliance with court orders. Defendants, insurers and defense attorneys must carefully review any proposed HIPAA protective order prior to entry of the same. The defense should push for the entry of an order that does not contain such return and destroy provisions. If an agreed order is entered that does not require the return/destruction of PHI, then the concerns regarding return/destruction should be avoided. In practice I have often pushed for language in protective orders stating that PHI can be “maintained and destroyed pursuant to in place file retention policies for law firms and insurers.”
Defense attorneys must consult with their client and claims representatives regarding dissemination of PHI if the defense cannot convince the plaintiff to enter an order that does not include return and destroy provisions. Obviously, defense counsel has to advise the defendant and insurer of the facts of the case, which inevitably includes information about the plaintiff’s health in a personal injury case. This is made more difficult by the fact that PHI has a very general definition, PHI is defined as “individually identifiable health information” transmitted or maintained via electronic media or other medium.[xvii]
The defense should consider alternative methods for providing this information to their clients and insurers that do not include transmission of actual medical records. Potential avenues would include providing summaries of medical records excluding as much identifying information as possible or secure cloud storage where the records are not downloaded or transferred. Alternatively, if PHI must be transferred to other persons or entities during litigation, a plan should be implemented for the return/destruction of the PHI at the close of litigation.
[i] Haage v. Zavala, et. al., 2020 IL App (2d) 190499;
[ii] Haage at ¶ 2;
[iii] Haage at ¶23;
[iv] Haage at ¶3;
[v] Haage at ¶ 2;
[vi] Haage at ¶21;
[vii] Haage at ¶ 8;
[viii] Haage at ¶ 8 citing 45 C.F.R. § 160.103(2018)
[ix] Haage at ¶ 9, citing 45 C.F.R. 164.512 (2018);
[x] Haage at ¶10;
[xi] Haage at ¶40;
[xii] Haage at ¶44;
[xiii] Haage at ¶44 & 49;
[xiv] Haage at ¶60;
[xv] Haage at ¶ 63;
[xvi] Haage at ¶3 and 72;
[xvii] 45 C.F.R. §160.103 (2020).
This trial revolved around a car collision personal injury claim occurring in Sangamon County Illinois. Jason G. Schutte represented the defendant. We admitted fault and proceeded to trial on the issue of damages. Plaintiff complained of numerous injuries to his neck, back and lower extremities. The defense pointed out numerous gaps in plaintiff's post accident medical treatment, that his complaints changed in type and location during his post accident treatment and that plaintiff suffered from extensive degenerative conditions that existed before the accident.
Plaintiff's demanded $15,000.00 to settle the case before the trial. Plaintiff requested an award from the jury of just over $18,000.00. The defense recommended that the jury enter a verdict awarding slightly under $4000.00 to settle the case. The jury returned a verdict of $7592.00 which did not award all of plaintiff's claimed medical bills.
This lawsuit revolved around a personal injury dog bite claim occurring at a residential property in Crawford County, Illinois. Jason Schutte represented and defended the landlord who owned the property where the bite occurred. Plaintiff was visiting a tenant who rented the property and owned the dog in question. Plaintiff was bitten by the tenant's dog upon entering the residence.
Plaintiff filed suit against the landlord asserting causes of action for negligence and violation of the Illinois Animal Control Act. Jason obtained summary judgment in favor of his client on both causes of action.