No. 12-17-00150-CV __________________________________________________________ 

In the Twelfth Court of Appeals

Tyler, Texas __________________________________________________________ 

Rodney Beasley,

 Appellant

v.

Farmers Texas County Mutual Insurance 

Company,

Appellee __________________________________________________________ 

Appellant’s Reply Brief

_____________________________________________

Gregory D. Smith W. Perry Zively, Jr. 

Nolan Smith CHANDLER, MATHIS & ZIVLEY, P.C.

SMITH LEGAL, PLLC 601 Sawyer St., Suite 600

110 N. College Ave., Suite 1120 Houston, Texas 77007

Tyler, TX 75702 Telephone: (713) 739-7722

 Telephone: (903) 630-7165 Facsimile: (713) 739-0922

Facsimile: (903) 609-3077 pzivley@cmzlaw.net

greg@smithlegaltx.com

 

 Ronald S. Vickery L. Boyd Smith Jr. 

 VICKERY LAW FIRM THE BOYD SMITH LAW FIRM, PLLC

 210 S. Broadway, Suite 230 601 Sawyer St., Suite 600

 Tyler, Texas 75702 Houston, TX 77007

 Telephone: (903) 504-5490 Telephone: (713) 343-8899

 Facsimile: (903) 787-7540 Facsimile: (713) 343-9265

 ron@vickerylawfirm.com bsmith@boydsmithlaw.com

ATTORNEYS FOR APPELLANT

ACCEPTED

12-17-00150-cv

TWELFTH COURT OF APPEALS

TYLER, TEXAS

1/24/2018 11:33 AM

Pam Estes

CLERK

 FILED IN 12th COURT OF APPEALS TYLER, TEXAS 1/24/2018 11:33:43 AM PAM ESTES Clerk
i

Contents

Authorities............................................................................................................................... ii

The Reply Argument.............................................................................................................. 1

1. Farmers misperceives the law of standing and the plea-to-thejurisdiction device. .............................................................................................. 1

2. Farmers mischaracterizes the case and the issues. ........................................... 5

A. Forth does not let Farmers ignore Beasley’s allegation of 

injury, whether for purposes of jurisdiction or the merits.......................... 6

B. The PIP statute required Farmers to compute and pay 

Beasley’s PIP benefit without regard to Blue Cross or its 

actions................................................................................................................ 8

C. Haygood v. De Escabedo does not support Farmers’s attempts 

to take a forbidden regard of Blue Cross....................................................10

D. Farmers’s policy language cannot circumvent the PIP 

statute’s prohibitions. ....................................................................................11

3. “Collateral source” does not mean what Farmers claims, but 

favors Beasley....................................................................................................12

4. Section 41.0105 does not apply, period...........................................................13

Conclusion and Prayer......................................................................................................... 15

Certificate of Service ............................................................................................................ 16

Certificate of Compliance.................................................................................................... 16
ii

Authorities

Cases

Ab-Tex Beverage v. Angelo State Univ., 96 S.W.3d 683

(Tex. App.—Austin 2003, no pet.).......................................................2

Allstate Indemnity Company v. Forth, 204 S.W.3d 795 

(Tex. 2006)...............................................................................................3, 6 - 8

Askenase v. Maddox, 1992 Tex. App. LEXIS 3337 

(Tex. App.—Dallas 1992, no writ) .......................................................2

Casso v. Brand, 776 S.W.2d 551

(Tex. 1989)...............................................................................................5

Haygood v. De Escabedo, 356 S.W.3d 390 

(Tex. 2011)...............................................................................................10 - 13

HealthSouth Med. Ctr. v. Employers Ins. Co., 232 S.W.3d 828 

(Tex. App.—Dallas 2007, pet. denied).................................................2

M. D. Anderson Cancer Ctr. v. Novak, 52 S.W.3d 704

(Tex. 2001) ..............................................................................................3

Mid-Century Ins. Co. v. Kidd, 997 S.W.2d 265 

(Tex. 1999)...............................................................................................11

Mission Consol. Indep. Sch. Dist. v. Garcia, 372 S.W.3d 629 

(Tex. 2012)...............................................................................................3, 4

Nat’l Union Fire Ins. Co. v. Hudson Energy Co., 811 S.W.2d 552

(Tex. 1991)...............................................................................................12

Okland v. Travelocity.com, Inc., 2009 Tex. App. LEXIS 4646 

(Tex. App.—Fort Worth 2009, pet. denied)........................................2

Russell v. Saffold, 225 S.W. 281 

(Tex. Civ. App.—Austin 1920, no writ)...............................................2
iii

Texas Ass’n of Business v. Tex. Air Control Bd., 852 S.W.2d 440 

(Tex. 1993)...............................................................................................2, 7

Tex. Dep’t of Parks & Wildlife v. Miranda, 133 S.W.3d 217

(Tex. 2004)...............................................................................................4

Texas Nat. Res. Conservation Comm’n v. IT-Davy, 74 S.W.3d 849 

(Tex. 2002)...............................................................................................2

Vee Bar, Ltd. v. BP Amoco Corp., 361 S.W.3d 128 

(Tex. App.-El Paso 2011, no pet.) ........................................................3

Weslaco Indep. Sch. Dist. v. Perez, 2013 Tex. App. LEXIS 9259 

(Tex. App.—Corpus Christi 2013, no pet.).........................................2

Statutes

TEX. CIV. PRAC. & REM. CODE § 41.0105 .......................................................10, 13 - 15

TEX. INS. CODE ANN. § 1952.151 ....................................................................12

TEX. INS. CODE ANN. § 1952.155 ....................................................................8 - 11
1

The Reply Argument

Farmers’s positions do not begin to support the trial court’s dismissal order.

1. Farmers misperceives the law of standing and the plea-to-thejurisdiction device.

This case, a dispute over opposing legal interpretations of an insurance policy 

and a statute, presents no arguable basis for the trial court’s grant of dismissal upon a 

jurisdictional plea. Farmers does not claim any immunity from suit. It does not argue 

that the types of claims Beasley raises (i.e., contract breach and statutory violations) fall 

outside the district court’s subject-matter jurisdiction or contend the amount in 

controversy exceeded the jurisdiction limit. In fact, Farmers does not argue any

recognized basis for a jurisdictional plea. Instead, it posits that the courthose should be 

closed to Beasley simply because he has advanced contractual and statutory 

interpretations Farmers opposes. That kind of disagreement does not begin to impugn 

Beasley’s standing or the trial court’s jurisdiction. Just the opposite: it is the hallmark of 

all justiciable controversies.

Farmers has not cited any authority endorsing its odd and circular view of 

standing, under which a bona fide dispute over a contract’s interpretation robs the 

courts of jurisdiction to adjudge that dispute. And try as we might, we have identified 

nothing close to any such authority. Instead, the cases involving successful pleas to the 

jurisdiction all clearly have concerned time-honored grounds negating jurisdiction, 

including: 
2

• sovereign immunity from suit: e.g., Texas Nat. Res. Conservation Comm’n v. ITDavy, 74 S.W.3d 849, 851 (Tex. 2002) (sovereign immunity, which protects the 

state from lawsuits for money damages, barred general contractor from suing the 

TNRCC for breach of construction contract);

• exclusive jurisdiction in another adjudicative body: e.g., HealthSouth Med. Ctr. 

v. Employers Ins. Co., 232 S.W.3d 828 (Tex. App.—Dallas 2007, pet. denied) 

(exclusive jurisdiction over workers’ compensation matter lay in the Division of 

Worker’s Compensation of the Texas Department of Insurance);

• the suit solely seeks relief that the court lacks jurisdiction to award: e.g., 

Askenase v. Maddox, 1992 Tex. App. LEXIS 3337 (Tex. App.—Dallas 1992, no 

writ) (Texas courts would be without jurisdiction of suit solely seeking 

adjudication of title to real property lying in another state);

• failure to exhaust required administrative remedies: e.g., Weslaco Indep. Sch. 

Dist. v. Perez, 2013 Tex. App. LEXIS 9259 (Tex. App.—Corpus Christi 2013, no 

pet.) (plea to jurisdiction granted where Commissioner of Education had sole 

authority and exclusive jurisdiction to make initial determination of educational 

employment matter);

• an amount in controversy beyond the court’s jurisdictional authority: e.g., 

Russell v. Saffold, 225 S.W. 281 (Tex. Civ. App.—Austin 1920, no writ); or 

• failure to allege a particularized injury and a personal stake in the 

controversy: e.g., Texas Ass’n of Business v. Tex. Air Control Bd., 852 S.W.2d 440, 

444 (Tex. 1993); Okland v. Travelocity.com, Inc., 2009 Tex. App. LEXIS 4646, *17 

(Tex. App.—Fort Worth 2009, pet. denied).

Farmers cites no such jurisdictional impediment. It simply argues the merits—a matter 

that can’t be sufficient as a jurisdictional bar. Otherwise, a no-jurisdiction dismissal 

could be granted every time a case appeared to turn on a question of law. That, of 

course, is not the law. See Ab-Tex Beverage v. Angelo State Univ., 96 S.W.3d 683, 686-88 
3

(Tex. App.—Austin 2003, no pet.) (trial court’s dismissal for want of jurisdiction is not 

res judicata of the merits). 

Even Farmers’s own authorities disagree with its approach to jurisdiction. In 

Allstate Indemnity Company v. Forth, the supreme court found dismissal proper, but it 

squarely placed its holding on a recognized impediment to jurisdiction: the plaintiff’s 

failure to allege the kind of particularized injury that is essential to any justiciable 

controversy. 204 S.W.3d 795, 795 (Tex. 2006) (“Because there are no allegations that the 

insured suffered damages ... we conclude that the trial court was correct to dismiss her 

suit.”); id. at 796 (“Forth did not claim that Allstate’s conduct had caused her any damage. 

... Because Forth does not claim that the manner in which Allstate settled her claim caused 

her any injury, we conclude that she does not have standing ...”.) (emphasis added).1

Likewise, in M. D. Anderson Cancer Ctr. v. Novak, the court dismissed the case 

because the plaintiff, having failed to allege an individualized injury, lacked the necessary 

personal stake in the controversy: while the suit accused the cancer center of indulging 

deceptive practices to solicit charitable donations, the plaintiff had no personal stake in 

the controversy, because he could not allege that he had given the center any funds. 52 

S.W.3d 704, 707-08 (Tex. 2001). And both Garcia and Miranda were dismissed on the 

express basis of sovereign immunity. Mission Consol. Indep. Sch. Dist. v. Garcia, 372 S.W.3d 

 1 And in Vee Bar, Ltd. V. BP Amoco Corp., the court found that dismissal had been granted in error. 

361 S.W.3d 128, 131 (Tex. App.—El Paso 2011, no pet.).
4

629, 635 (Tex. 2012); Tex. Dep’t of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 226 (Tex. 

2004). 

Garcia makes clear that its analysis is particular to cases involving sovereignimmunity grounds, and that the merits were relevant to jurisdiction only because those 

merits were essential to determining the threshold sovereign-immunity issue:

In a suit against a governmental employer, the prima facie case 

implicates both the merits of the claim and the court’s jurisdiction 

because of the doctrine of sovereign immunity. Sovereign immunity 

deprives a trial court of jurisdiction over lawsuits in which the state or 

certain governmental units have been sued, unless the state consents to 

suit. As a result, immunity is properly asserted in a plea to the 

jurisdiction. We held in Garcia I that “the TCHRA clearly and 

unambiguously waives immunity” for suits brought against school 

districts under the TCHRA. However, the Legislature has waived 

immunity only for those suits where the plaintiff actually alleges a 

violation of the TCHRA by pleading facts that state a claim 

thereunder. Garcia, 372 S.W.3d at 635-36 (italics in original, other 

emphasis added).

So it was governmental immunity—not any mere claim to being right on the merits—

that supported the government’s jurisdictional plea. The Garcia court underscored this 

when it discussed the prior decision in State v. Lueck, a whistleblower action filed against 

the State and the Texas Department of Transportation (thus implicating immunity). 

In Lueck, as the Garcia court explained, TxDOT argued that Lueck had not 

actually reported a violation of law. Lueck, in response, accused the state of a mere 

merits attack. The supreme court held that the statutory whistleblower elements were 

in the circumstances of that case jurisdictional, but only because those elements were essential 

to determining a jurisdictional immunity issue. See Garcia, 372 S.W.3d at 636-37. Otherwise—
5

if, as in Beasley’s case, there would have been no state actor claiming immunity—the 

merits of Lueck’s action could not have triggered a jurisdictional analysis.

The opinion in Miranda likewise confirms that its jurisdictional analysis is limited 

to sovereign-immunity cases. After the text that Farmers cites, the Miranda court 

stressed that “[this] standard [for sovereign immunity] allows the state in a timely manner 

to extricate itself from litigation if it is truly immune. ... Similar to the purpose of a plea 

to the jurisdiction, which is to defeat a cause of action for which the state has not waived sovereign 

immunity, ... the purpose of summary judgments in Texas is ‘to eliminate patently 

unmeritorious claims and untenable defenses.’” 133 S.W.3d at 228 (emphasis added), 

quoting Casso v. Brand, 776 S.W.2d 551, 556 (Tex. 1989). 

Here, in contrast, there is no immunity issue to transform the parties’ merits 

dispute into a jurisdictional one. And neither party’s pleadings suggests any other 

jurisdictional issue (e.g., a claim of exclusive jurisdiction in another court or of a failure 

to exhaust administrative remedies). 

Because Farmers has no viable jurisdictional attack, the dismissal must be 

reversed.

2. Farmers mischaracterizes the case and the issues.

Beginning in its statement of the case, Farmers contends that Beasley had no 

unreimbursed expenses and “alleged no other damages.” This is not credible. Beasley 

consistently and clearly has alleged actual damages—that he incurred, as provider bills 
6

confirm, $2,662 in reasonable expenses, well in excess of the insurance policy’s $2,500 

PIP benefit, and yet Farmers refused to pay more than about a $1000 portion of that 

benefit. E.g., CR 75 (“Beasley was injured in a motor vehicle accident and submitted a 

PIP claim for medical expenses totaling $2,662.54, exceeding Beasley’s PIP policy limits. 

Farmers accepted coverage ... but refused to pay the full $2,500 in PIP benefits. ... In 

so doing, Farmers breached the insurance contract ... The Texas Insurance Code ... 

defines, in part, [Beasley’s] damages which include the unpaid PIP benefits ...”.); accord

CR 6. This suffices as an allegation of individualized injury and a real, justiciable 

controversy. 

If Farmers wishes to factually dispute whether the $2,662 is a reasonable amount 

for the providers’ services, it can do so—at a merits trial. But Farmers’s current, 

argumentative characterization—in which Farmers wrongly prejudges the case—is a 

straw man and is no basis for a jurisdictional dismissal. It also is wrong on the merits.

A. Forth does not let Farmers ignore Beasley’s allegation of injury, 

whether for purposes of jurisdiction or the merits.

Despite what Farmers claims, Allstate Indemnity Co. v. Forth is not on point. 

Regarding jurisdiction. In Forth, the health-insuranceless Forth owed the full 

amount of her medical charges when Allstate, the PIP insurer, came into the picture. 

Allstate, unaided by any health insurer or anyone else, satisfied this liability. Forth, 204 

S.W.3d at 796. Forth nonetheless sued Allstate, alleging that, in settling her bills, it had 

acted in “an arbitrary and unreasonable manner.” Id. at 795. But Forth never claimed 
7

this caused her any identified damage. And that was the key to the entire case. Forth’s 

failure to even allege a cognizable injury was already recognized in other cases as a type 

of jurisdictional defect. See Texas Ass’n of Business, 852 S.W.2d at 444.

Here, however, Farmers had no dealings with Beasley’s medical providers. 

Farmers did not negotiate, pay, or otherwise settle any medical bills. Beasley accordingly 

has not sued Farmers for any arbitrary or unreasonable provider settlement. Rather, 

Beasley has sued Farmers because it failed to pay him a full contractual benefit. E.g., 

CR 7. 

While Forth demonstrates that standing may be absent, and a jurisdictional plea 

allowed, when a plaintiff fails to even allege injury, it says nothing about the standing 

of a plaintiff such as Beasley, who identifies an injury and seeks its recovery upon 

established legal theories.

The merits. Forth also falls flat as a basis for upending Beasley on the underlying 

merits. Because Forth didn’t involve first-party health insurance or any other specie of 

collateral source, the PIP statute’s barrier to PIP insurers taking regard of collateralsource insurance never came into play. Indeed, it would have been impossible for the 

court in Forth to have invoked the prohibition against giving regard to collateral sources. 

It did not violate the PIP statute’s prohibitions for Allstate to take account of its own

actions—Allstate wasn’t a prohibited collateral source. So the court in Forth never 

mentioned Section 1952.155 or that statute’s phrase “without regard to ... any collateral 

source,” and never mentioned health insurance. Forth thus can’t be “directly on point,” 
8

cf. Farmers’s Brief at 10, or help answer our issue about the effect of health insurer 

discounting on Farmers’s PIP liability.2

Beasley, unlike the plaintiff in Forth, had health insurance, with Blue Cross, which 

discharged Beasley’s liability to his medical providers before Farmers came on the scene. 

Thus, in contrast to the plaintiff in Forth, Beasley has no unreimbursed medical expenses 

because his collateral-source health insurance satisfied all such matters.

Section 1952.155 of the PIP statute—which, again, was not at issue in Forth—

precludes Farmers from taking any regard of Blue Cross or its actions. The legislature 

in its wisdom, through the statutory phrase “without regard to ... any collateral source,” 

mandated this result in all cases where health insurance, or any other collateral source, 

is involved. Consequently, the PIP statute’s requirement that Farmers act “without 

regard to ... any collateral source” both explains the required outcome in our case and 

distinguishes that outcome from the result in Forth.

B. The PIP statute required Farmers to compute and pay Beasley’s 

PIP benefit without regard to Blue Cross or its actions.

Farmers, in its second issue statement, asks whether a provider discount 

negotiated by a collateral-source health insurer “fall[s] under the collateral source rule.” 

 2 Because the PIP statute obligates Farmers to pay reasonable expenses “without regard to” 

whether Blue Cross discounted or indemnified those expenses, TEX. INS. CODE ANN. § 1952.155, the 

merits issue is not what Blue Cross reimbursed or discounted, or what Beasley paid “out of pocket”; 

it is a matter of determining the reasonable amount or value of Beasley’s medical services. The issue 

in Forth, in contrast, was “whether an insured has standing to sue her insurance company for settling 

her medical bills in what the insured considered to be an arbitrary and unreasonable manner.” Forth, 

204 S.W.3d at 795. 
9

Brief at vii. This is the wrong question. Whereas the common-law collateral-source rule 

applies in litigation against third-party tortfeasors, see infra, the issues between Beasley and 

its first-party insurer, Farmers, involve no tortfeasor. These issues are instead controlled 

by a PIP statute that prohibits Farmers from giving regard to Blue Cross or its actions, 

regardless whether those actions amount to writing a check or negotiating a discounted 

payment.

Farmers next, in its statement of facts, suggests the question is whether Beasley 

may “recover a windfall.” Brief at 1. This parrots what could be a good argument in 

another setting—that is, a tort case filed against a negligent third-party. But the question 

of “windfall” has no place in this suit, seeking recovery of Beasley’s contractually 

promised PIP benefits and other statutory relief. 

To now inquire about a possible windfall would defy the purposes underlying 

the PIP statute, which reflects a clear intent to do more than make the plaintiff whole: 

That is why the statute confers its benefits without regard to subrogation, without 

regard to fault, and without regard to collateral sources. TEX. INS. CODE ANN. § 

1952.155. 

Nor is there any reason for Farmers to fret about the disastrous effect of any 

Beasley “windfall”; the PIP statute adequately protects Farmers, by capping mandatory 

PIP coverage at a modest $2,500. The concept of an onerous “windfall” makes little 

sense at this minimal benefit level. 
10

The paid-or-incurred statute and the PIP statute differ in their goals, in their 

mechanisms, and in their effects. But there is nothing improper about this. The 

legislature was perfectly free to protect tortfeasors from unduly onerous medicalexpense awards, via the paid-or-incurred law, while simultaneously affording insureds 

with a minimal set of coverage rights against their first-party auto insurers. 

C. Haygood v. De Escabedo does not support Farmers’s attempts to 

take a forbidden regard of Blue Cross.

Farmers touts Haygood v. De Escabedo as its other primary authority. And yet

Haygood is of no consequence here, for two simple reasons. First, Haygood applied a 

statute (The Civil Practice and Remedies Code’s Chapter 41) that is immaterial to 

Farmers’s first-party contractual duties. And second, Haygood did not apply (and had no 

reason to apply) the PIP statute’s prohibition against giving regard to collateral-source 

insurers.

As Farmers admits, in Haygood, Escabedo invoked Section 41.0105 as the basis 

for excluding evidence of medical expenses other than those “actually paid or [actually] 

incurred. Br. at 16. The Haygood court agreed that Section 41.0105—in the cases to 

which it applies—requires courts to take regard of insurer-discounted charges, to 

prevent windfall recoveries of large medical bills. Haygood v. De Escabedo, 356 S.W.3d 

390, 395 (Tex. 2011). Here, though, the governing PIP statute does the opposite, 

precluding the first-party PIP insurer from taking any regard of the collateral-source 

health insurer’s role, whether it be the health insurer’s provider payments or its 
11

discounting of provider bills. Tex. Ins. Code Ann. § 1952.155(a)(2). To take regard of 

either of these matters—the collateral-source insurer’s provider payments or its 

provider discounts—is to give regard to collateral-source health insurance. The PIP 

statute’s brightline, blanket prohibition facilitates the PIP statute’s goal of providing the 

insured with a prompt, minimal benefit. See Mid-Century Ins. Co. v. Kidd, 997 S.W.2d 265, 

268-69 (Tex. 1999) (“PIP’s limitations ... along with its collateral source rule and nofault features, are designed to simplify and hasten claim resolution and payment”). 

Farmers also notes that in Haygood the common-law collateral-source rule was at 

issue. Brief at 17. That rule, by definition, concerns tortfeasor liability. See Haygood, 356 

S.W.3d at 394-95 (defining the collateral-source rule as precluding “any reduction in a 

tortfeasor’s liability because of benefits received by the plaintiff from someone else”)

(emphasis added). It does not govern first-party claims such as Beasley asserts.

D. Farmers’s policy language cannot circumvent the PIP statute’s 

prohibitions.

Farmers relies heavily on the word “incurred” in its policy’s exclusion, which says

PIP benefits would be confined to “1. Reasonable expenses incurred for necessary 

medical and funeral services.” E.g., Farmers’s Brief at 3-4. Because of this one use of 

the term incurred, Farmers asks this Court to judicially read an “actually paid or [actually] 

incurred” requirement into the insurance policy. That is breathtaking.

If the mere word incurred, wherever used, were already as restrictive as actually paid 

or [actually] incurred, the paid-or-incurred statute would be a nullity and its careful 
12

restriction of tort-suit medical-expense recoveries to amounts actually paid or [actually] 

incurred would be surplusage. That cannot be right.

Farmers’s position also contravenes the rule that insurance-policy exclusions, 

exceptions, and limitations be interpreted in the insured’s favor and against the insurer. 

See Nat’l Union Fire Ins. Co. v. Hudson Energy Co., 811 S.W.2d 552, 555 (Tex. 1991). And 

Farmers’s argument violates the PIP statute’s mandate that PIP benefits cover “all 

reasonable expenses that ... (3) are for: (A) necessary medical ... services.” TEX. INS.

CODE ANN. § 1952.151. It imposes no further requirement that such expenses also be 

incurred in the sense of “actually paid or incurred.”

A proper construction of Farmers’s policy, harmonized with the governing PIP 

statute, is that “reasonable expenses incurred for necessary medical ... services” simply 

identifies which expenses are being referenced—the ones that reflect “necessary 

medical ... services,” as opposed to expenses for services or items that may not have 

been necessary to the insured’s medical care. 

3. “Collateral source” does not mean what Farmers claims, but favors 

Beasley.

As Farmers observes, collateral source is not defined in the PIP statute and, thus, 

should be given its common-law meaning. But Farmers is wrong about what that 

meaning is. Citing Haygood, Farmers contends the term references only the “benefits 

received by the plaintiff,” rather than their source (i.e., the health insurer). Brief at 19, 

20. Farmers misapprehends the supreme court’s language.
13

Citing to the sentence running over from page 394 to page 395 of the Haygood

opinion, Farmers claims: 

[A]s the Court explained in Haygood, it [i.e., the term ‘collateral source’] 

refers to ‘benefits received by the plaintiff,’ [and] ... does not include the 

discounted rates that Blue Cross paid to Beasley’s medical providers. Brief 

at 19, 20 (emphasis in original).

This wordsmithing is central to Farmers’s claim that it can take regard of some Blue 

Cross actions albeit not others. But this is not what the supreme court said. Not by a 

long shot. In the very passage that Farmers credits, the Haygood court actually concluded 

that the term collateral source references the entity sourcing the benefit or discount:

Long a part of the common law of Texas and other jurisdictions, the 

[collateral-source] rule precludes any reduction in a tortfeasor’s liability 

because of benefits received by the plaintiff from someone else – a 

collateral source. 356 S.W.3d at 394-95 (emphasis ours). 

That is, the collateral source is the “someone else, ” in this case, Blue Cross. So, under 

Farmers’s own logic, corrected for the supreme court’s actual intendment, the PIP 

statute’s prohibition upon taking regard of “collateral sources” must prohibit taking any

regard of the health insurer Blue Cross or its actions. Any other result would contradict 

both Haygood and the legislature’s plain statutory language. 

4. Section 41.0105 does not apply, period.

In our principal brief, we argued that the “paid-or-incurred statute,” Section 

41.0105, does not apply. We explained that Chapter 41 is expressly reserved to claims 

for damages and does not control interpretation of insurance contracts. Br. at 11-12. 

We further explained that Section 41.0105 addresses recovery of medical expenses, 
14

whereas Beasley’s claims against Farmers are based on breach of contract, for refusing 

contractually agreed payments. Br. at 14-15. Farmers neither rejoins these arguments 

nor advances any logical argument—good, bad, or mediocre—for why the paid-orincurred statute should apply outside its expressly limited scope. Id. Instead, Farmers 

just lectures the Court on the meaning of “actually paid and incurred”—a phrase 

peculiar to Section 41.0105—and notes that the supreme court, in Haygood,

characterizes the policy underlying Section 41.0105. So? While no one in this case 

disputes what “actually paid and incurred” means, this phrase from an inapplicable 

statute is a red herring. Farmers gets no brownie points for attempting to apply it where 

it doesn’t belong.

To claim that our arguments respecting Section 41.0105 are “off point,” Farmers 

quotes from our second issue statement. But that issue statement clearly raises a 

different and relevant matter, concerning the district court’s failure to acknowledge that 

the legislature immunized Beasley’s DTPA claim from the reach of Chapter 41. The 

issue statement reads:

Among his several claims, Beasley pleaded a DTPA cause of action 

alleging unfair claim-settlement practices. Disposing of the baby with the 

bathwater, the trial court dismissed Beasley’s entire suit on the basis of 

Section 41.0105 of the Texas Civil Practice and Remedies Code. Yet both 

the DTPA and the Code say the Code’s Chapter 41 does not govern 

DTPA claims. Did the trial court err in dismissing Beasley’s DTPA claim? 

The point—that the trial court applied an indiscriminate and overly broad analysis—

stands.
15

Farmers’s final point—an allegation about the result “[i]f Section 41.0105 had 

never been enacted,” Brief at 22—also goes nowhere. The prior law permitted expense 

recoveries exceeding insurers’ contractual discounts. Absent Section 41.0105, that law 

would have remained in effect, even for tort suits.

Conclusion and Prayer

The trial court’s order of dismissal should be reversed and the cause reinstated. 

Of course, Beasley also prays for whatever other relief he may be entitled to receive.

Respectfully submitted, 

/s/ Gregory D. Smith___

Gregory D. Smith

Gregory D. Smith W. Perry Zively, Jr.

State Bar No. 18600600 State Bar No. 22290050

Nolan Smith Chandler, Mathis & Zivley, P.C.

State Bar No. 24075632 601 Sawyer St., Suite 600

SMITH LEGAL, PLLC Houston, Texas 77007

110 N. College Ave., Suite 1120 Telephone: (713) 739-7722

Tyler, Texas 75702 Facsimile: (713) 739-0922

Telephone: (903) 630-7118 pzivley@cmzlaw.net

Facsimile: (903) 609-3077

greg@smithlegaltx.com L. Boyd Smith Jr.

nolan@smithlegaltx.com State Bar No. 18638400

The Boyd Smith Law Firm, PLLC

Ronald S. Vickery 601 Sawyer St., Suite 600

State Bar No. 20574250 Houston, Texas 77007

VICKERY LAW FIRM Telephone: (713) 343-8899

210 S. Broadway, Suite 230 Facsimile: (713) 343-9265

Tyler, Texas 75702 bsmith@boydsmithlaw.com

Telephone: (903) 504-5490

Facsimile: (903) 787-7540

ron@vickerylawfirm.com

COUNSEL FOR APPELLANT
16

Certificate of Service

The foregoing brief has been served via efileTexas.gov, on the persons listed 

below, who are counsel on appeal for Farmer Texas County Mutual Insurance 

Company, on this 24th day of January 2018.

Thomas F. Loose

Kurt M. Wolber

LOCKE LORD LLP

2200 Ross Ave., Suite 2200

Dallas, TX 75201

Telephone: (214) 740-8000

Facsimile: (214) 740-8800

/s/ Gregory D. Smith___

Gregory D. Smith

Certificate of Compliance

1. This response complies with the type-volume limitation of TEX. R. APP. P. 9.4 

because it contains 3754 words, excluding parts of the response exempted by 

TEX. R. APP. P. 9.4(i)(2)(B). 

2. This brief complies with the typeface requirements of TEX. R. APP. P. 9.4(e) 

because it has been prepared in the proportionally spaced typeface using 

Microsoft Word in 14-point Garamond font. 

Dated: January 24, 2018

/s/ Gregory D. Smith_____

Gregory D. Smith