By Jessica D. Thomas, Esq. – Staff Lien Counsel
On May 5, 2010, the Second District Court of Appeals of Florida decided Ingenix v. Ham, 35 So.2d 949 (May 5, 2010). This case addresses the issue of health insurance carriers’ reimbursement reductions. A health insurance company can pursue litigation for subrogation pursuant to Florida Statute section 768.76, which mandates that they are subject to the pro rata reduction for case cost and attorney’s fees. Alternatively, an insurance company may sue under the policy language for breach of contract and reimbursement from the non-ERISA policy holder. However, the second District in Ham reasoned that if Florida Statute Section 768.76(4) is applicable than it, not the policy, controls. Below is a summary of the facts and procedural background with a summary of the important aspects of the Second District Court of Appeal’s holding.
In 2004, Gerald Ham suffered complications from an elective laparoscopic gastric bypass procedure, which resulted in his death. UnitedHealthcare paid Mr. Ham’s medical bills and asserted a lien for reimbursement from any recovery his estate obtained from the medical malpractice suit. Ham argued that under Florida Statute 768.76(4) UnitedHealthcare was only entitled to reimbursement reduced by a pro rata share of attorney’s fees and costs. The Second District court framed the issue as whether or not Florida Statute Section 768.76 applied in light of the language in the insurance policy providing for full reimbursement.
Florida Statute Section 768.76(4) provides that a collateral source provider that has a right of reimbursement shall be limited to the actual amount of collateral sources recovered minus its pro rata share of attorney’s fees and costs. Ham argued that the attorney’s fees and cost were 47% of the settlement and thus the UnitedHealthcare lien should be reduced by 47% as well. UnitedHealthcare paid almost all of Ham’s medical expenses in the amount of $154,075.46. The total settlement proceeds were $1,150,00.00. Ham sought to reduce UnitedHealthcare’s lien amount to $81,660.00 under Florida Statute Section 768.76(4). UnitedHealthcare argued that under the policy they were entitled to full reimbursement. The trial court ruled in favor of the Ham Estate and UnitedHealthcare appealed.
UnitedHealthcare argued that Florida Statute Section 768.76(4) only applied where the right of reimbursement was not founded on a contract, pursuant to Travelers v. Boyles, 679 So.2d 1188 (Fla. 4th DCA 1996). In Travelers the health insurer argued that it was not seeking reimbursement under the statute but rather under the terms of its policy. The insured’s argument was that Travelers’ claim was barred since the uninsured motorist carrier was not a tortfeasor, as indicated in the policy language. According to the holding in Travelers, where the statute is not implicated, a policy provision may allow for full reimbursement. Travelers however, does not stand for the proposition that a policy provision controls when section Florida Statute Section 768.76(4) is otherwise applicable.
In Ham the Second District Court of Appeals relied on their previous decision in Osler v. Collins, 870 So.2d 65, 67-68 (Fla. 2d DCA 2003). In Osler the court held that where an insurance policy contains a right of reimbursement, Florida Stature Section 768.76(4) applies and requires a reduction of the amount of the insurer’s reimbursement by it’s pro rata share of costs and attorney’s fees.
The Second DCA shows a clear understanding that a right of reimbursement comes with a sharing of the cost to obtain such reimbursement. The Ham decision provides some much needed relief regarding the question of whether a right of reimbursement claim, such as this one is subject to a reduction for a pro-rata share of fees and costs. Ham provides hope for the plaintiffs in such cases who are often left with a net of zero after payment to the lien holder. The end result after the ruling in Ham, is that the contract doesn’t always control the outcome of your claim regarding reductions in reimbursement. Instead there has to be an extensive review of the policy language to reveal if the Florida collateral sources provision, Florida Statute Section 768.76(4) applies.