The U.S. Court of Appeals for the Eleventh Circuit upheld a trial judge's order allowing jurors to hear about a “litigation investment” company that provided medical care to a woman who slipped at a Publix store—and who ultimately lost at trial.

The panel agreed that letting in evidence about the funding arrangement did not violate Georgia's collateral source rule, because it was intended to show the doctors provided by ML Healthcare Services may have given biased testimony and inflated the cost of the care the plaintiff received.

Normally, evidence that a plaintiff received money or services from another source is not admissible, because any reduction of an award to account for such compensation improperly rewards the defendant.

But in this case, the trial judge said the defense could use the evidence of the payments to the doctors to attack the credibility of their opinions and the reasonableness of the plaintiff's medical bills.

“First, the evidence was relevant,” said the opinion authored by Judge Julie Carnes with the concurrence of Judges Gerald Tjoflat and Anne Conway of Florida's Middle District Court, sitting by designation.

“The fact that the evidence also implicates the collateral source rule does not render it irrelevant” for the purposes of impeaching a witness, the panel found.

In any case, she noted, the agreement plaintiff Robin Houston signed with ML Healthcare stipulated that she would be liable for any money the company paid of her behalf if her litigation was unsuccessful or an award was insufficient to cover it.

“The jury presumably understood that plaintiff's bills were still due in full, and that any damages award should therefore not be reduced as a result of ML Healthcare's payments,” Carnes wrote.

Plaintiffs attorney Keith Fryer of Fryer Shuster & Lester said the ruling could open the door for similar defense tactics in any case where a plaintiff has relied on such funding for care.

“Can the collateral source rule be gotten around in every case by alleging bias on the part of the physicians?” asked Fryer, who represented Houston with Atlanta solo Bruce Berger. “Taken to its logical conclusion, it looks like the exception may swallow the rule.”

Fryer noted that some of the state's premier physicians and practices may realize a fraction of their revenues by working with such companies.

“How many cases does a doctor have to have taken from a medical funding company to demonstrate evidence of bias?” asked Fryer. “Two? Five? Or is it in every case?”

Fryer said he and Berger had asked the appeals court to certify the question to the Georgia Supreme Court but were rebuffed.

“The federal court has now rendered a decision interpreting Georgia law that the Georgia Supreme Court may later say was wrong,” Fryer said.

Robert P. Marcovitch of Weinberg Wheeler Hudgins Gunn & Dial handled the appeal for Publix; he could not comment.

Publix also was represented by Gene Major and Richard Brown of Fain, Major & Brennan. Brown pointed to a defense pleading asserting that “financial relationships drive the medical opinions and treatments in this case.”

“As explained in the response, the financial bias created by these medical funding arrangements is real and substantial,” Brown said.

ML Healthcare, which was brought into the case as an interested party, was represented by a group of Robbins Ross Alloy Belinfante Littlefield attorneys led by Jason Alloy, who was unavailable.

The underlying case began in 2012 when Houston slipped on liquid at a McDonough Publix and hurt her neck and shoulder, suffering injuries she claimed required surgery.

Publix had the case removed to U.S. District Court for the Northern District of Georgia, and lawyers learned that she had received care through ML Healthcare during discovery.

As described in Carnes' opinion, the company pays a discounted rate to health care providers for services to “injured people with viable tort claims who lack medical insurance.” The services are provided with the proviso that the company will be paid the full amount for the services from any settlement or judgment.

“Nonetheless, a plaintiff who recovers insufficient damages to pay back ML Healthcare may be unable or unwilling to repay her debt, meaning that, absent a recovery by the plaintiff in such cases, ML Healthcare will be out not only for its investment, but also any hoped-for profit.”

“According to defendants,” Carnes said, “this arrangement creates the risk of bias on the part of doctors who receive referrals from ML Healthcare and who subsequently testify on behalf of the plaintiffs they have treated pursuant to those referrals. This is so, defendant contends, because if a doctor did not provide a favorable causation analysis—which is necessary to win a tort action—ML Healthcare likely would find other doctors who would.”

Over ML Healthcare's objections, Judge Thomas Thrash Jr. allowed evidence of the arrangement to be presented to the jury “for the limited purpose of showing bias on the part of the doctors who testified in this case.”

The jury returned a defense verdict in 2015, and Thrash later awarded Publix nearly $140,000 in attorney fees.

Houston appealed Thrash's ruling on the collateral source rule and another one denying spoliation sanctions related the Publix's failure to preserve all but an hour of surveillance video of the floor section where the accident occurred, although that hour did include the accident itself.

The appeals court upheld Thrash on both points.

Regarding the funding company, Carnes wrote that the potential for any prejudice that may have resulted from the evidence “could have easily been mitigated by an explanation that plaintiff remained personally liable to ML Healthcare for the full value of the medical care provided by her treating doctors. And, indeed, plaintiff's counsel advised the jury of this fact during his opening statement.”

In any case, she noted, the jury never even reached the damages issue “because it determined that defendant was not liable for plaintiff's injuries in the first place.”

Regarding the spoliation issue, she said, there was no evidence that the video had been intentionally destroyed “in a manner inconsistent with [Publix's] normal video retention policies,” and was not the sort of evidence that “clearly would have resolved a crucial issue in the case.”