Hey, Hey, My, My, Virtual Litigation Will Never Die

In this “turntable” session the panel will lead a group discussion on a variety of litigation topics affecting our respective industries.  Can you “Imagine” a world without virtual litigation . . or is that “Love Here to Stay?”   The panel will also discuss medical lien financing, (did somebody “Call for a Doctor?”),  and “Crazy” legislation affecting longstanding tort reform and other legal principles.

Is Virtual Litigation Here to Stay? Signs Point to Yes!

When the Covid-19 pandemic began in March of 2020 and we were sent home from our offices, most of us also believed everything would be back to normal within a few months. However, those few months quickly turned into a year and we now find ourselves in November of 2021, more than a year and a half later, and still feeling the effects of the pandemic. Many of us have still not returned to the office and none of us have “returned to normal.”

This session will begin with a roundtable discussion regarding the pros and cons of virtual litigation and where we find ourselves as legal and litigation professionals as we reach the end of 2021. Sub-topics of this portion of the session will include:

  1. Virtual Mediation: The practice of law is always evolving, but the pandemic took us by surprise. Courts immediately came to a standstill, but what was to happen with ongoing litigation and cases generally? What forum would parties have to resolve their disputes?  Enter Virtual Mediation. Although there may have been some resistance and uncertainty at the beginning of the pandemic, Zoom and other online mediations are now a reality. Many of us didn’t even know what Zoom was prior to the pandemic, but we certainly know now. What have your experiences with Virtual Mediations been like?  Have the mediations been effective?  What have been some of the biggest impediments to the process?  What do you like most about it?  Have the cost savings outweighed the negative aspects?  Do the pros and cons change depending upon which “hat” you are wearing (attorney/claims professional/client)?  Will Virtual Mediation be the preferred method going forward?
  2. Virtual Depositions, Trials, and Other Proceedings: Adjournments and continuances cannot last forever. Just like with Virtual Mediation, attorneys, clients and claims professionals were almost immediately forced to shift and develop new ways to address cases and meet deadlines. Again, enter Zoom or other online processes. By now, we have all deposed witnesses or been deposed electronically, conducted many types of other proceedings virtually, and many have tried entire cases remotely. What are the benefits of virtual proceedings?  What are the negative impacts?  Is it truly harder to access credibility of a witness virtually?  Do we lose the impact of a good witness or exhibit when presented virtually?  Do the cost savings outweigh the negative impacts?  Does this change depend upon the “routineness” of the proceeding?  What types of proceedings are made easier by virtual appearance?  Is technology (WIFI issues, environmental disruptions) truly a concern?  Are virtual proceedings here to stay?
  3. Return to Work or Work from Home? Open for Business as New-Normal:  As we reached the end of summer, many employers developed plans to bring their employees back to an in-person work environment. However, because most spent the better part of a year working remotely, this has been met with quite a bit of resistance. The job market is also a very competitive place, so implementing new policies has not only been difficult, but dangerous. Many companies have been forced to risk losing valuable employees in exchange for implementing return-to-work policies. How has this affected your business and workforce?  Do you allow some amount of remote work as a compromise?  How has this affected your other polices, i.e. have you been required to re-write other polices or employee agreements?  What are your expectations for in-person participation (meetings or events)?  Is this affecting legal compliance (time reporting/time approval/confidentially/security policies)?  How does one maintain a safe remote workspace?

Medical Lien Finance Arrangement

The second-part of our session will include a discussion of other litigation “hot topics.”  We will start with a guided discussion on Medical Lien Finance Arrangement, one of the most popular “tort inflation” methods of the Plaintiff bar and, time permitting, discuss some other “inflationary” measures, including recent legislation negatively affecting the defense bar in litigation across the country

Bias in Medical Lien Finance Arrangements and How it Drives Up the Costs of Defense

Plaintiff personal injury attorneys often take advantage of medical lien companies to inflate medical expenses and control the medical care. As part of this scheme, plaintiff attorneys refer their clients to pro-plaintiff doctors who are part of a medical lien “network.”  At the behest of counsel, plaintiffs enter into contracts with medical lien companies to finance this medical treatment. The lien companies then directly pay the medical provider expenses at a deep discount in exchange for a lien against the lawsuit proceeds for the full “billed” amount of medical expenses. Medical lien companies often cast themselves as mere “factoring companies” that purchase accounts receivable at a discount. In addition to creating a large profit for the lien company, in collateral source states, this system allows plaintiff attorneys to inflate damages by claiming the “billed” amount of medical expenses in litigation without reduction for the lien company’s discount.  These schemes also allow plaintiff attorneys to control the medical treatment and utilize plaintiff-oriented doctors who are experienced advocates.  The defense bar should be prepared to identify medical lien arrangements and the bias they create.

There are few published appellate opinions regarding admissibility of these arrangements, though state appellate courts have recently began addressing the issue with more authority. As a result of the lack of appellate court guidance, trial court opinions run the gamut. For example, various judges in the United States District Court for the District of Colorado, applying Colorado state law, have reached different conclusions as to whether a medical lien arrangement qualifies as a collateral source. Compare Romero v. Allstate Fire & Cas. Ins. Co., Civil Action No. 14-cv-01522-NYW, 2015 U.S. Dist. LEXIS 122138, at *9 (D. Colo. Sep. 14, 2015)(holding that “monies paid by [lien company] quality as a collateral source”) with Ortiviz v. Follin, 2017 U.S. Dist. LEXIS 113143, *11 (D. Colo. 2017)(holding that finance arrangement is not a collateral source). Generally, trial courts tend to lean against admitting evidence of these arrangements in light of a lack of direction from higher courts. However, the tides seem to be turning as more courts are allowing defendants to present evidence that a plaintiff received treatment through a medical lien program. See, e.g., Khoury v. Seastrand, 377 P.3d 81, 93-94 (Nev. 2016); Rangel v. Anderson, 202 F. Supp. 3d 1361, 1373 (S.D. Ga. 2016); Houston v. Publix Supermarkets, Inc., 2015 U.S. Dist. LEXIS 102093, 2015 WL 4581541, at *2 (N.D. Ga. July 29, 2015)(holding the “relationship” between the funding company and plaintiff’s physicians was admissible to attack credibility and to determine the reasonable value of medical services provided).

Defense attorneys face difficult obstacles to admitting evidence regarding medical lien finance arrangements. Plaintiff attorneys can point to a myriad of trial court opinions excluding the evidence. As discussed above, trial courts sometimes treat lien arrangements as insurance subject to the collateral source rule even though there is no insurance involved. See, e.g., Romero v. Allstate Fire & Cas. Ins. Co., Civil Action No. 14-cv-01522-NYW, 2015 U.S. Dist. LEXIS 122138, at *9 (D. Colo. Sep. 14, 2015). In addition, courts often hold the evidence is irrelevant or unduly prejudicial. See, e.g., Moore v. Mercer, 4 Cal. App. 5th 424, 445 (2016). We will discuss strategies for responding to these arguments.

It is important to make clear that medical lien arrangements are not insurance because the plaintiff remains liable for the billed amount of medical expenses. Trial courts often apply the law of the forum state regarding admissibility of insurance information and “billed vs. paid” medical expenses or collateral source payments even though there is no insurance involved. See Romero v. Allstate Fire & Cas. Ins. Co., Civil Action No. 14-cv-01522-NYW, 2015 U.S. Dist. LEXIS 122138, at *9 (D. Colo. Sep. 14, 2015). Thus, in states that bar evidence of “billed” medical expenses, trial courts may exclude evidence that the lien company paid a discount. Id. However, medical lien financing arrangements are fundamentally different than insurance because the plaintiff remains responsible for the entire billed medical expenses regardless of the outcome of the litigation. In other words, the plaintiff is not indemnified by a third party (i.e. an insurance company).  See, e.g., Rangel, 202 F. Supp. 3d at 1373; Khoury, 377 P.3d at 94 (Nev. 2016). In states where the collateral source rule bars evidence of the amount paid by insurance, defense counsel seeking to admit evidence of a medical lien financing scheme must establish that the arrangement is not akin to insurance.

In response to the argument that evidence of medical lien financing is irrelevant or prejudicial, the defense may benefit from focusing on the bias the medical lien scheme creates. Courts have repeatedly rejected arguments that a lien company’s payment of a discount is relevant to the reasonableness of the billed medical expenses. See, e.g., Moore, 4 Cal. App. 5th at 445. However, defendants have had more success with the less-common argument that the scheme is evidence of bias. For example, the Nevada Supreme Court in Khoury held that evidence of a medical lien agreement is irrelevant to show the reasonableness of medical expenses but is relevant to show bias. Khoury, 377 P.3d at 94. Likewise, the federal district court in Georgia held “[The lien company’s] involvement in Plaintiff’s treatment is highly relevant to the issue of Plaintiff’s treating physicians’ credibility and potential bias.”  Rangel, 202 F. Supp. 3d at 1373. The Georgia court gave a detailed explanation of the bias a medical lien arrangement creates:

…a medical lien funder is an investor in its client’s lawsuit. If Plaintiff receives a large verdict amount, then [the medical lien company] has a near certain chance of fully and quickly recovering the money it has fronted Plaintiff. On the other hand, if Plaintiff does not recover at trial, [the medical lien company’s] chances of being reimbursed are doubtful at best. Added to this arrangement is the fact that [the medical lien company] referred Plaintiff to many of her treating physicians… These physicians have a patent financial interest in receiving more case referrals from [the medical lien company]. If Plaintiff is awarded a recovery, then [the Medical Lien Company] would arguably be more inclined to refer cases to those physicians in the future. Thus, the physicians have a financial motivation to testify favorably for Plaintiff. Consequently, the jury should consider the relationships between Plaintiff, [the medical lien company], and Plaintiff’s physicians when assessing the credibility of Plaintiff’s physicians’ testimony.

Id. at 202 F. Supp. 3d at 1373-74 (citing Houston v. Publix Supermarkets, Inc., 2015 U.S. Dist. LEXIS 102093, 2015 WL 4581541, at *2 (N.D. Ga. July 29, 2015). The jury should be aware of this bias.

The marketing materials of lien companies, particularly websites, often contain a treasure trove of evidence showing bias. Although these websites are constantly edited in response to ongoing litigation or pressure from defense attorneys, former examples include, “We have a proven track record for helping attorneys build successful cases,”[i]  and, medical lien financing is “best for everyone involved. Except perhaps the people who caused the accident in the first place.”[ii]  Another company formerly advertised in their “attorney” section that “You [the attorney] remain in control of your client’s treatment.”  The financial relationship between the lien company, the doctor, and the attorney creates a strong case for bias.

At the claim phase, claim professionals should be on the lookout for claimants who use medical liens. Even if a claimant’s counsel refuses to divulge information about medical liens, the billing statements may indicate who is paying the bills. It is also possible to spot a medical lien arrangement based on who the claimant treats with. Notorious pro-plaintiff medical providers often work primarily—or even exclusively—with medical lien companies. In addition, medical lien companies usually file UCC liens that are available to the public. Claimants who receive treatment though medical lien companies often overtreat and have inflated medical expenses. Therefore, claim professionals and attorneys should identify cases where the claimant is using a medical lien and factor the lien relationship into the evaluation and litigation of the claim.


[i] https://carepointfinancial.com/

[ii] https://yellow.place/en/well-states-healthcare-castle-rock-co-usa