2017 Mass. App. Div. 195

February 3, 2017 - December 18, 2017

Appellate Division Southern District

Court Below: District Court, Plymouth Division

Present: Hand, P.J., Kirkman & Finigan, JJ.

Brian P. McNiff for the plaintiff.

Jason J. Mellon for the defendant.

FINIGAN, J. The defendant, Vermont Mutual Insurance Group ("Vermont Mutual"), appeals from the decision of the trial judge to exclude at trial any evidence regarding "usual and customary" charges for medical services based upon data collected by a third party while allowing testimony by the plaintiff, Patriot All Pro Physical Therapy Centers, Inc. ("Patriot"), regarding how Patriot determines the reasonableness of such charges in this action for personal injury protection ("PIP") benefits. The appeal comes before us on the record of the proceedings pursuant to Dist./Mun. Cts. R. A. D. A. 8C. For the reasons set forth below, we affirm the decision of the trial judge.

The action arose from an automobile crash that occurred on October 11, 2011, resulting in injuries to Brittany Waugh ("Waugh"). At the time of the collision, Waugh was covered by an insurance policy issued by Vermont Mutual that contained PIP benefits. Waugh sought and received physical therapy from Patriot stemming from injuries caused by the accident. After treating Waugh for a period of two months, Patriot submitted a bill to Vermont Mutual in the amount of $2,845.00. Vermont Mutual conducted a review of the bill and after determining $2,099.11 to be a "fair and reasonable" amount for the services provided, paid this amount to Patriot. [Note 1] Patriot then filed an action to collect the balance of $745.89, together with costs and attorney's fees.

After a series of court dates to address discovery and other matters not relevant to this appeal, the parties prepared for trial. Anticipating that Vermont Mutual would seek to introduce evidence at trial regarding "usual and customary charges" for the services provided to Waugh by offering data provided by a third-party vendor, Patriot filed a motion in limine to exclude such testimony. Vermont Mutual opposed Patriot's motion in limine, and the court heard argument on the issue on the morning of the trial.

The evidence Vermont Mutual sought to offer at trial consisted of medical billing records compiled by Fair Health, Inc., a nonprofit organization ("Fair Health"). Patriot objected to the Fair Health data on several grounds: the data was provided by medical

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insurers, as opposed to medical providers, and therefore was not relevant to the matters at issue in the case, and even if it were relevant, it constituted hearsay and did not fall within an exception to the hearsay rule.

Vermont Mutual's argument for admissibility was twofold: the database was relevant and was admissible as an exception to the hearsay rule, as statements of fact published for persons in a particular occupation pursuant to G.L. c. 233, § 79B and/or as business records pursuant to G.L. c. 233, § 78. To further its argument, Vermont Mutual offered to present live testimony from an employee of Fair Health to describe how the database was compiled. The trial judge excluded the Fair Health data, expressing concern that the proffered evidence was essentially hearsay evidence from unknown providers charged for similar services and not relevant to the question of whether Patriot's charges were reasonable. After a trial with testimony from one witness, the principal of Patriot, the jury returned a verdict in favor of Patriot for the amount sought. The trial judge denied Vermont Mutual's motion for a new trial, and this appeal followed.

Uncontested by the parties is that Fair Health is an entity born out of an investigation by the attorney general of New York concerning potential conflicts of interest with a health care charge database owned by an insurance company affiliate. In response to that concern, Fair Health was established as an independent, nonprofit entity responsible for collecting medical billing data from around the country. That data is then compiled into a database and sorted by zip code. Insurance companies, and to some extent, the public, can then access the database in an effort to determine what constitutes a reasonable charge for a particular treatment in a given area. In this case, Vermont Mutual paid Patriot's claim at the eightieth percentile of the benchmark value the Fair Health database determined for the services provided by Patriot. Vermont Mutual defended its payment at the eightieth percentile of the benchmark figure as "usual and customary" within the industry.

What is contested is the relevancy of the Fair Health data to whether the charges for the services Patriot rendered to Waugh were reasonable. Rule 401 of the Massachusetts Guide to Evidence (2017) provides that evidence is relevant if (a) it has a tendency to make a fact more or less probable than it would without the evidence, and (b) the fact is of consequence in determining the action. Rule 403 further provides that "[t]he court may exclude relevant evidence if its probative value is substantially outweighed by a danger of . . . confusing the issues [or] misleading the jury."

In excluding the proffered evidence, the trial judge was clearly troubled by the anonymous nature of the data that ultimately make up the Fair Health database. Whether evidence is relevant and whether its probative value is substantially outweighed by its prejudicial effect are matters entrusted to the trial judge's broad discretion and are not disturbed absent palpable error. Commonwealth v. Marrero, 427 Mass. 65, 67-68 (1998).

Our review of the judge's decision is limited to whether the decision to exclude the evidence amounted to an abuse of discretion. Tosti v. Ayik, 394 Mass. 482, 490 (1985). In such cases, an appellate court may not disturb a judge's ruling "simply because [it] might have reached a different result; the standard of review is not substituted judgment." Cruz v. Commonwealth, 461 Mass. 664, 670 (2012), quoting Bucchiere v. New England Tel & Tel. Co., 396 Mass. 639, 641 (1986).

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There is ample evidence in the record to support trial judge's determination that the Fair Health data was not relevant to the question of whether Patriot's charges were reasonable under G.L. c. 90, § 34M, or alternatively, if marginally relevant, had the potential to mislead or confuse the jury. See Tosti, supra at 490, quoting Green v. Richmond, 369 Mass. 47, 60 (1975) ("If it is possible that the probative value of the evidence is outweighed by its prejudicial effect, the question of admissibility is 'determined in the sound discretion of the judge.'"). The data was collected from insurers around the country, narrowed by zip code, or "geo zip" (a term apparently coined by Fair Health), to an area that included Patriot's place of business. Vermont Mutual paid the claim at the eightieth percentile, a figure it described as the "industry standard" but not a figure agreed to by Patriot. As stated by the trial judge, the Fair Health data was "raw data" drawn from the bills of unidentified providers. While the trial judge agreed with Vermont Mutual that it would be impractical to summons in the various providers on a $745 claim, he was unpersuaded that the Fair Heath data was an admissible substitute for such testimony. We see no error in that decision.

The decision of the trial court to exclude the Fair Heath data is affirmed, and the appeal of the trial court's denial of Vermont Mutual's motion for a new trial is denied. [Note 2]


[Note 1] The so-called PIP statute, G.L. c. 90, § 34M, obligates an insurer to pay reasonable expenses submitted for necessary medical care of injuries sustained in an automobile accident.

[Note 2] In light of our ruling upholding the trial judge's decision to exclude the Fair Health data on relevancy grounds, we do not reach the issue of whether the Fair Health data would be admissible as an exception to the hearsay rule, as statements of fact published for persons in a particular occupation pursuant to G.L. c. 233, § 79B or as business records pursuant to G.L. c. 233, § 78.