Using controverting affidavits effectively and efficiently remains a constant battle in Texas personal injury cases. The controversy over controverting affidavits was born in 2003 when Section 41.0105 of the Texas Civil Practice & Remedies Code was enacted as part of “tort reform” legislation seeking to limit medical expenses a plaintiff can recover to only those that are “actually paid or incurred.”
The Texas Supreme Court’s decision in Haygood v. De Escabedo held that Section 41.0105 of the Texas Civil Practice and Remedies Code “limits a claimant’s recovery of medical expenses to those which have been or must be paid by or for the claimant.” Haygood v. De Escabedo, 356 S.W.3d 390, 391 (Tex. 2011). Seven years later, lawyers are still struggling to find methods to present and challenge medical expenses in personal injury litigation.
Generally, practitioners rely on affidavits that conform to the format prescribed by the Texas legislature to effectuate the proof requirements. Tex. Civ. Prac. & Rem. Code § 18.002. Plaintiffs serve numerous 18.001 affidavits seeking to establish medical cost and necessity of treatment resulting from an injury at issue in the lawsuit. Defendants typically challenge these affidavits by filing controverting affidavits within 30 days. If left uncontroverted, 18.001 affidavits are sufficient to support a factual finding that the medical care was reasonable and necessary, and plaintiffs can rely solely on the affidavits to establish their damages.
Whether a billing records custodian, who traditionally fills out an 18.001 affidavit, is qualified to provide this information is another issue. Traditionally, a record custodian could sign an 18.001 affidavit to prove the reasonableness and necessity of medical bills. The De Escabedo opinion undermines the continued viability of these prescribed affidavits. If the standard for the collectability of past medical expenses is based on what a health care provider has been paid or has a legal right to be paid, a record custodian may not be competent to testify as to what a health care provider has a legal right to be paid. Record custodians rarely have the knowledge concerning agreements between health care providers and health insurers. It may now be necessary for a personal injury plaintiff to obtain discovery from the health insurer to determine what amounts would have been paid if the bill had been properly submitted.
Moreover, some reductions and write-offs, for instance, charitable or discretionary write-offs, do not fall under § 41.0105. See Big Bird Tree Serv. v. Gallegos, 365 S.W.3d 173 (Tex. App.—Dallas 2012, no pet.). Such discretionary reductions are often readjusted after the plaintiff’s litigation is concluded. This is particularly true when a medical provider learns that the plaintiff obtained a recovery in litigation. The plaintiff is no longer indigent and re-adjustments are made in order to recover the full amount of the billed medical expenses.
After De Escabedo, plaintiffs steered away from submitting medical expenses to health care insurance companies and relied on medical providers who accepted letters of protection. With letters of protection in place, medical providers then could charge higher than normal rates for treatment. The full unadjusted amounts would then be presented to the jury, since there was no paid or incurred amount.
A new decision by the Supreme Court of Texas in In re: North Cypress Medical Center Operating Co., Ltd., calls the issue of write-offs and contract rates into question and will likely lead to discovery of the contracts and pay schedules between medical providers and health care insurance companies.
The Court held that a party contesting the reasonableness of medical expenses is entitled to discovery of contracts with health care insurance companies regarding negotiated reimbursement rates the health care insurance companies accepted for the same services at issue in the lawsuit; Medicare and Medicaid reimbursement rates for those services; and annual Medicare cost reports submitted by the health care insurance companies for the previous five years. Although the Court’s holding pertained to discovery of reimbursements from health care insurance companies in the context of a disputed hospital lien, the Court directly addressed relevance of the disputed information under Texas Rule of Evidence 401 in a manner that should open the door for potential admission of the health care insurance company contracts and reimbursement rates in personal injury litigation when defendants are controverting the affidavits filed by plaintiffs. This calls into question previous rulings by Appellate Courts allowing unadjusted medical bills into evidence. See Henderson v. Spann, No. 07-11-00133-CV, 367 S.W.3d 301 (Tex. App.—Amarillo 2012, writ denied); Big Bird, 365 S.W.3d at 173; Huston v. United Parcel Serv., Inc., 434 S.W.3d 630, 633-43 (Tex. App. 2014), review denied (Sept. 19, 2014).
The North Cypress decision illustrates the Texas Supreme Court’s continued struggle with the intricacies of how medical expenses are projected and presented to juries. While this recent ruling provides new guidance, there appears to be no clarity in sight.
Meloney Perry is the founding partner of the Dallas office of Perry Law P.C. Her practice focuses on insurance bad-faith, coverage and class action litigation in multiple jurisdictions including Colorado, New Mexico and Texas. For more information about the firm, visit www.mperrylaw.com.