Court Opinion

ID: 4656773
Source: CourtListenerOpinion
Date Created: 2021-02-02 21:03:26.074651+00
Date Added: 2024-06-11T08:01:02.637820
License: Public Domain

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                                 Appellate Court                             Date: 2021.02.02
                                                                             13:23:39 -06'00'

                      Verci v. High, 2019 IL App (3d) 190106

Appellate Court       DAWN VERCI, Plaintiff-Appellee, v. MICHAEL HIGH and
Caption               INTERNATIONAL UNION OF OPERATING ENGINEERS,
                      LOCAL NO. 649, Defendants-Appellants.

District & No.        Third District
                      No. 3-19-0106

Filed                 December 18, 2019
Modified upon
denial of rehearing   January 23, 2020

Decision Under        Appeal from the Circuit Court of Tazewell County, No. 11-L-129; the
Review                Hon. Michael D. Risinger, Judge, presiding.

Judgment              Certified questions answered; cause remanded.

Counsel on            Jo T. Wetherill, of Quinn, Johnston, Henderson, Pretorius & Cerulo,
Appeal                of Peoria, for appellants.

                      Todd A. Strong, of Strong Law Offices, of Peoria, for appellee.

Panel                 JUSTICE LYTTON delivered the judgment of the court, with opinion.
                      Justices Holdridge and O’Brien concurred in the judgment and
                      opinion.
                                              OPINION

¶1        In March 2014, plaintiff Dawn Verci filed negligence claims against defendants Michael
     High and International Union of Operating Engineers, Local No. 649. Plaintiff claims that as
     a result of defendants’ negligence, she was injured and required to undergo medical treatment
     costing in excess of $1 million. A majority of plaintiff’s medical charges are from Dr. Richard
     Kube of the Prairie Spine and Pain Institute and the Prairie Surgicenter. The reasonable value
     of the medical services provided by Kube is a major issue of contention.
¶2        In January 2019, the trial court entered an order (1) prohibiting defendants from cross-
     examining Kube or his associated medical entities regarding their own cash advertised pricing
     at trial and (2) allowing defendants’ billing expert, Rebecca Reier, to testify at trial regarding
     her opinions on the reasonable value of Kube’s medical services. Soon thereafter, the parties
     filed a joint petition for interlocutory appeal. The trial court granted the petition and certified
     two questions challenging the court’s order. We answer both certified questions in the
     affirmative and remand for further proceedings.

¶3                                        I. BACKGROUND
¶4       On March 14, 2012, plaintiff filed her first amended complaint, alleging negligence against
     each defendant. Plaintiff claims that, as a result of defendants’ negligence, she was physically
     injured, required to undergo medical treatment, and incurred over $1 million in charges for her
     treatment. Approximately $800,000 of plaintiff’s alleged medical expenses arise out of
     treatment plaintiff received from Dr. Richard Kube at the Prairie Spine and Pain Institute and
     the Prairie Surgicenter. Both entities are owned and operated by Kube.
¶5       In discovery, defendants disclosed the identity of an expert, Rebecca Reier, to present
     testimony regarding the reasonable value of plaintiff’s medical services. Reier prepared a
     report, which was provided to plaintiff. In her report, Reier reviewed Kube’s total charges of
     $810,937.04, and concluded that “the Usual, Customary and Reasonable total charges for the
     same geographic area for the same services are approximately $148,118.00.” (Emphasis in
     original.) One of the bases for Reier’s conclusion was the cash prices advertised by Prairie
     Spine and Pain Institute and Prairie Surgicenter on Healthcare.com. Reier determined that the
     charges submitted to plaintiff by Kube are more than 547% higher than the prices advertised
     online by both entities for the same procedures. Sources Reier used in determining the usual,
     reasonable, and customary charges for the medical services plaintiff received include “Fair
     Health Data Systems,” “Optum National Fee Analyzer 2012-2016—Fair Health Database,”
     and “The American Hospital Directory CMA and Fair Health Database.” According to Reier’s
     report, “Fair Health collects charge data from private insurer and health plan administrators
     across the country.” Plaintiff filed a motion and later a supplemental motion to bar Reier’s
     testimony.
¶6       Reier was deposed in 2018. She explained that in determining the reasonable value of
     medical services, she relied on three databases: (1) FAIR Health, (2) Optum, which also uses
     FAIR Health data, and (3) American Hospital Directory. She identified FAIR Health as “[t]he
     primary database” she used.
¶7       Reier explained that FAIR Health receives all of its data from insurance companies.
     Insurance companies report the charges they receive from medical providers to FAIR Health,

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       and FAIR Health separates the data geographically. FAIR Health then identifies a range of
       charges, from the 5th to 95th percentile. Outliers are eliminated, so if a provider charges a very
       different rate than others, that rate is not included in the database because it is “not considered
       statistically significant by FAIR Health.” Reier determined that a reasonable charge would be
       at the 75th percentile, which means “75 percent of all the providers in this geographic area
       charge this amount or less.” She chose the 75th percentile because it is her “peer group’s choice
       among, like, your planners as well as practitioners and practice managers. It seems to be the
       fairest way to identify what everybody in the neighborhood is charging.”
¶8          In the FAIR Health database, providers are identified by geographical area. FAIR Health
       does not identify providers by name. Reier did not reach out to providers in the geographic
       area to determine what they charge. She relied exclusively on the data from FAIR Health. With
       respect to FAIR Health’s methodology, Reier stated, “[W]e have to bring in the Fair Health
       attorneys, because they will be glad to explain in detail methodology since none of us are
       statisticians.” She later stated, “I have their, their standard protocol which I can provide. And
       as I have said, if there is a question about their protocol, their data analysis, um, the attorneys
       are more than willing to come and speak.”
¶9          Reier also relied on data from Optum. Optum takes the FAIR Health data and separates it
       into smaller geographical areas. Reier did not look at the actual data that Optum collected.
       Reier assumes that Optum and FAIR Health correctly performed their statistical analyses. She
       has not seen the raw data used by Optum or FAIR Heath but sees the results of their statistical
       analyses, which is what she uses in her medical billing analyses.
¶ 10        According to Reier, FAIR Health is the largest collector of data. Reier did not identify how
       many insurance companies report their charges to FAIR Health, nor did she state what
       percentage of insurers provide data to FAIR Health. There are other databases like FAIR
       Health, but Reier does not use them “because they’re not big enough[,] and the bigger the
       better.” Reier’s opinions are based on the information from FAIR Health that was contained in
       its own database or passed on to Optum. Reier agreed that she relies on the data accumulated
       by FAIR Health but does not have direct access to the actual data that FAIR Health uses. She
       did not make any effort to contact individual medical providers or outpatient centers to
       determine what they charge.
¶ 11        Reier believes that the cash price a medical provider offers to patients has some bearing on
       the reasonable value of the service provided. She does not think a provider would offer a cash
       price that would cause him or her to lose money. She would not expect the cash price for a
       service to be six-and-a-half times less than a charged price.
¶ 12        Kube also provided deposition testimony. He testified that the cash price of a procedure
       “represents or illustrates what I think would be a fair reimbursement for my services under that
       [cash] model and everything that it entails.” He believes that he has advertised cash prices for
       surgical procedures for the past two or three years.
¶ 13        On January 25, 2019, the trial court entered an order stating:
                    “1. Defendant will not be allowed to cross-examine Dr. Kube or his associated
                medical entities with regard to their own cash advertised pricing at trial.
                    2. Rebecca Reier, defendant’s billing expert, will be allowed to testify at trial
                regarding her opinions on the reasonable value of the medical services at issue in the

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               litigation. Plaintiff is allowed to cross-examine Reier with regard to the data she relies
               on as the basis for her opinions.”
       The parties filed a joint petition for appeal, pursuant to Illinois Supreme Court Rule 308 (eff.
       July 1, 2017). The trial court granted the petition and certified the following questions for
       review:
                    (1) “Did the Trial Court err in denying the 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 defendant’s expert relies upon
               geographically zip coded information collected by national databases rather than
               personally obtained medical billing comparisons[?]”

¶ 14                                             II. ANALYSIS
¶ 15       The scope of review in an interlocutory appeal brought under Rule 308 is limited to the
       certified questions. Spears v. Association of Illinois Electric Cooperatives, 2013 IL App (4th)
       120289, ¶ 15. Certified questions are reviewed de novo. Id.
¶ 16       An injured plaintiff is entitled to recover reasonable medical expenses. Klesowitch v. Smith,
       2016 IL App (1st) 150414, ¶ 44. In order to recover such expenses, the plaintiff must prove
       (1) that she has paid or become liable to pay a specific amount and (2) that the charges were
       reasonable for services of that nature. Barreto v. City of Waukegan, 133 Ill. App. 3d 119, 130
       (1985).
¶ 17       Illinois follows the collateral source rule. Boden v. Crawford, 196 Ill. App. 3d 71, 76
       (1990). “Under the collateral source rule, benefits received by the injured party from a source
       wholly independent of, and collateral to, the tortfeasor will not diminish damages otherwise
       recoverable from the tortfeasor.” Wilson v. The Hoffman Group, Inc., 131 Ill. 2d 308, 320
       (1989). The purpose of the rule is to prevent jurors from learning anything about collateral
       income that could influence their decision. Boden, 196 Ill. App. 3d at 76.
¶ 18       The collateral source rule has both evidentiary and substantive components. Wills v. Foster,
       229 Ill. 2d 393, 400 (2008). As a rule of evidence, it prevents defendants from introducing any
       evidence that all or part of a plaintiff’s losses have been covered by insurance. Id. As a
       substantive rule, it bars a defendant from reducing the plaintiff’s award by the amount the
       plaintiff received from a collateral source. Id.
¶ 19       Illinois and most other states follow the reasonable value approach to the collateral source
       rule. See id. at 407-13. “Courts applying this approach hold that the plaintiff is entitled to
       recover the reasonable value of medical services and do not distinguish between whether a
       plaintiff has private insurance or is covered by a government program.” Id. at 407. “The vast
       majority of courts to employ a reasonable-value approach hold that the plaintiff may seek to
       recover the amount originally billed by the medical provider.” Id. at 410. Under the reasonable-
       value approach, the plaintiff may place the entire billed amount into evidence, provided that
       the plaintiff also establishes the bill’s reasonableness. Id. at 414.
¶ 20       When a bill has not yet been paid, the plaintiff “can establish reasonableness by introducing
       the testimony of a person having knowledge of the services rendered and the usual and

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       customary charges for such services.” Arthur v. Catour, 216 Ill. 2d 72, 82 (2005). When a
       witness is shown to possess the requisite knowledge, the reasonableness requirement necessary
       for admission of the bill is satisfied if the witness testifies that the bill is fair and reasonable.
       Id.
¶ 21       After the plaintiff presents testimony that a bill is reasonable, the defendants can still
       challenge it. “[D]efendants are free to cross-examine any witnesses that a plaintiff might call
       to establish reasonableness, and the defense is also free to call its own witnesses to testify that
       the billed amounts do not reflect the reasonable value of the services.” Wills, 229 Ill. 2d at 418;
       see also Baker v. Hutson, 333 Ill. App. 3d 486, 494 (2002) (“The defendant may rebut the
       prima facie reasonableness of a medical expense by presenting proper evidence casting
       suspicion upon the transaction.”). However, defendants cannot introduce evidence that the
       plaintiff’s bills were settled for an amount less than the billed amount because to do so would
       undermine the collateral source rule. Wills, 229 Ill. 2d at 418.

¶ 22                             A. Admissibility of Advertised Cash Prices
¶ 23       “ ‘Relevant evidence’ means evidence having any tendency to make the existence of any
       fact that is of consequence to the determination of the action more probable or less probable
       than it would be without the evidence.” Ill. R. Evid. 401 (eff. Jan. 1, 2011). “All relevant
       evidence is admissible, except as otherwise provided by law.” Ill. R. Evid. 402 (eff. Jan. 1,
       2011). “Evidence which is not relevant is not admissible.” Id.
¶ 24       Defendants may introduce any relevant evidence of the reasonable value of medical
       services that is not barred by the collateral source rule. See Wills, 229 Ill. 2d at 418; Melo v.
       Allstate Insurance Co., 800 F. Supp. 2d 596, 602 (D. Vt. 2011). Such evidence includes
       “testimony about the range of charges the provider has for the same services.” Weston v.
       AKHappytime, LLC, 445 P.3d 1015, 1028 (Alaska 2019); see also Melo, 800 F. Supp. 2d at
       602 (relevant evidence of the reasonable value of medical services includes “evidence as to
       what the provider usually charges for the services provided”); Law v. Griffith, 930 N.E.2d 126,
       135 (Mass. 2010) (a party wishing to challenge the reasonableness of a medical bill may “elicit
       evidence concerning the provider’s stated charges”). Such evidence does not undermine the
       collateral source rule because it does “not touch in any manner on whether, or in what amount,
       collateral third parties (whether a private insurance company, Medicare, or Medicaid) had paid
       for the medical treatment the plaintiff received.” Law, 930 N.E.2d at 135-36.
¶ 25       Here, the trial court refused to allow defendants to cross examine Kube about the cash
       prices that the medical entities he owns and operates advertise for their services. This was error
       because the range of fees Kube charges for the services plaintiff received is admissible and not
       barred by the collateral source rule. See Weston, 445 P.3d at 1028; Melo, 800 F. Supp. 2d at
       602; Law, 930 N.E.2d at 135-36. Thus, we answer the first certified question in the affirmative,
       finding that the trial court erred in prohibiting testimony about Kube’s advertised cash prices.

¶ 26                              B. Admissibility of Reier’s Testimony
¶ 27       Defendants are free “to offer their own evidence pertaining to the reasonableness of the
       charges.” Arthur, 216 Ill. 2d at 83. Defendants may call their own witnesses to testify that the
       billed amounts do not reflect the reasonable value of the services. Wills, 229 Ill. 2d at 418.
       Defendants may also present testimony about what other providers in the area charge for the
       same services. See Weston, 445 P.3d at 1028; Melo, 800 F. Supp. 2d at 602.

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¶ 28        Reier prepared a report and provided deposition testimony allegedly purporting to establish
       what other providers in the area charge for the services Kube provided plaintiff. Reier stated
       that her opinions were based primarily on data from the FAIR Health database.
¶ 29        However, the information contained in the FAIR Health database is not evidence of what
       other area providers charge for the services plaintiff received because (1) the data comes from
       an unknown number of insurance companies, not health care providers, (2) the database is used
       to determine reimbursement rates, not the reasonableness of provider charges, and (3) the data
       contained in the database is incomplete. Thus, the information Reier relied on does not
       establish what other providers in the area charge.
¶ 30        The FAIR Health database does not establish what medical providers charge for various
       procedures because the information contained in the FAIR Health database comes from
       insurance companies, not medical providers. Medical providers are prohibited from submitting
       data to FAIR Health. See FAQs, FAIRHealth.org, https://www.fairhealth.org/faqs (last visited
       Dec. 9, 2019) [https://perma.cc/6AYH-5XBJ]. As a result, charges submitted to uninsured
       patients are not included in the FAIR Health database. This is problematic because uninsured
       patients are often billed higher amounts than insured patients. See George A. Nation III,
       Healthcare and the Balance-Billing Problem: The Solution Is the Common Law of Contracts
       and Strengthening the Free Market for Healthcare, 61 Vill. L. Rev. 153, 153-54 (2016);
       Tamara R. Coley, Extreme Pricing of Hospital Care for the Uninsured: New Jersey’s Response
       and the Likely Results, 34 Seton Hall Legis. J. 275, 307 (2010). Physicians charge uninsured
       patients, on average, more than twice what they charge insurers. Johanna Catherine Maclean
       et al., Health Insurance Expansions and Providers’ Behaviors: Evidence from Substance-Use-
       Disorder Treatment Providers, 61 J.L. & Econ. 279, 286 (2018). Because the FAIR Health
       database does not include amounts charged to uninsured patients, it is not a true representation
       of what medical providers charge. Furthermore, Reier could not identify any medical providers
       whose charges were included in the FAIR Health database, nor could she state whether a
       specific provider’s charges were included in the database because the database does not contain
       that information.
¶ 31        Not all insurance companies provide information to FAIR Health. Only those insurance
       companies that choose to report data to FAIR Health are included in the database. Reier
       testified that the FAIR Health database is the largest of its kind. However, she could not testify
       about the number of insurers that provide information to FAIR Health. She also provided no
       information as to what percentage of insurers submit their data to FAIR Health. Because it is
       unknown how many insurers were included in the database at the time of plaintiff’s treatment,
       or at any given point, the FAIR Health data does not constitute proof of the fair and reasonable
       charges for the services plaintiff received. See N.E. Physical Therapy Plus, Inc. v. Liberty
       Mutual Insurance Co., 995 N.E.2d 57, 63 (Mass. 2013) (finding predecessor database to FAIR
       Health could not be relied on to establish reasonableness of medical charges, in part, because
       “it relie[d] on the voluntary submission of data on medical costs from the limited universe of
       insurance companies who choose to participate in the program”).
¶ 32        The FAIR Health database is most commonly used “by private health insurers to calculate
       the ‘usual and customary’ fee for specific procedures and inform the amounts that they will be
       willing to pay to out-of-network providers.” UnitedHealthcare Services, Inc. v. Asprinio, 16
       N.Y.S.3d 139, 145 (2015). Data from FAIR Health is used to set reimbursement rates. See New
       Jersey Healthcare Coalition v. New Jersey Department of Banking & Insurance, 111 A.3d

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       716, 724 (N.J. Super. Ct. App. Div. 2015). Reimbursement rates are not relevant to show
       whether a medical charge is reasonable. See Gerlach v. Cove Apartments, LLC, 446 P.3d 624,
       633 (Wash. Ct. App. 2019); see also State v. Campbell, 438 P.3d 448, 457 n.14 (Or. Ct. App.
       2019) (reasonable value of medical charges not ordinarily proved through evidence of
       reimbursement rates); Leitinger v. Van Buren Management, Inc., 720 N.W.2d 152, 157-58
       (Wis. Ct. App. 2006) (reimbursement rates are not evidence of the reasonable value of medical
       services for purposes of determining damages in a tort claim). An expert witness should not be
       allowed to testify that a provider’s medical charges are unreasonable based on reimbursement
       rates. See Gerlach, 446 P.3d at 633. Testimony about reimbursement rates is not only irrelevant
       but also violates the collateral source rule. See Campbell, 438 P.3d at 457 n.14.
¶ 33        Finally, the data contained in the FAIR Health database is incomplete. It does not include
       all charges billed by providers but only those charges submitted to insurers, which then report
       them to FAIR Health. Additionally, as explained by Reier, if a charge is an “outlier,” meaning
       it is higher or lower than other charges submitted for the same procedure, it is excluded from
       the database. Because not all medical charges are included in the database, the database does
       not provide a complete picture of provider charges.
¶ 34        Here, Reier stated that the primary source for her opinions on the reasonable value of
       plaintiff’s medical services was the FAIR Health database. The data does not come from
       providers but comes from an unknown number of insurance companies and is used to set
       reimbursement rates, not to determine the reasonableness of medical charges. Moreover, the
       data is incomplete. For these reasons, we answer the second certified question in the
       affirmative, finding that the trial court erred in allowing Reier to testify regarding the
       reasonable value of the medical services plaintiff received.

¶ 35                                   III. CONCLUSION
¶ 36      We answer the certified questions in the affirmative and remand the cause for further
       proceedings.

¶ 37      Certified questions answered; cause remanded.

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