Source: https://escobedocardenas.com/cle-papers/update-on-paid-or-incurred-and-expedited-trials/
Timestamp: 2019-08-22 03:22:09
Document Index: 601900554

Matched Legal Cases: ['§ 41', '§ 41', '§ 41', '§ 41', '§ 41', '§ 18', '§ 18', '§ 18', '§ 18', '§ 18', '§ 18', '§ 18', '§ 18', '§41', '§41', '§41', '§41', '§ 41', '§ 41']

Update On Paid Or Incurred And Expedited Trials
January 14th, 2015 by mpc_admin | Type: Standard Comments are off for this post
UPDATE ON PAID OR INCURRED AND
Escobedo & Cardenas, L.L.P.
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Section 41.0105 of the Texas Civil Practice & Remedies Code became effective September 1, 2003. As drafted, the section appears fairly innocuous but has been the subject of heated debate from the moment it was enacted. Section 41.0105 reads as follows:
Evidence Relating to Amount of Economic Damages
TEX. CIV. PRAC. & REM. CODE SEC. 41.0105.
This paper will discuss the interpretation of § 41.0105, often referred to as the “paid or incurred” statute, by various Texas courts including the Texas Supreme Court’s decision in Haygood v. de Escabedo, 356 S.W.3d 390 (Tex. 2011). Lastly, this paper will discuss the numerous unresolved issues that have and may arise as a result of the Haygood opinion.
B. Texas Courts of Appeals’ Decisions
1. Mills v. Fletcher
In Mills v. Fletcher, 229 S.W.3d 765 (Tex. App. – San Antonio 2007, no pet.) the San Antonio Court of Appeals held that “41.0105 limits a plaintiff from recovering medical or healthcare expenses that have been adjusted or ‘written off’”. The Court explained the rationale for its holding as follows:
Here, the statute uses the word “incurred” twice: “recovery of medical or health care expenses incurred is limited to the amount actually paid or incurred by or on behalf of the claimant.” TEX. CIV. PRAC. & REM. CODE SECTION 41.0105 (Vernon Supp. 2006) (emphasis added). In referring to “incurred” the second time, the Legislature chose to modify “incurred” with the word “actually.” As such, “incurred” must mean something different than “actually incurred.” And, the word “actually” modifying “incurred,” as well as the phrase “[i]n addition to any other limitation under law, “shows an intent by the
Legislature to limit expenses simply “incurred.” Thus, in construing this statute, we believe that “medical or healthcare expenses incurred” refers to the “big circle” of medical or healthcare expenses incurred at the time of the initial visit with the healthcare provider, while, as applied to the facts presented here, “actually incurred” refers to the “smaller circle” of expenses incurred after an adjustment of the healthcare provider’s bill.
The San Antonio Court of Appeals recognized that its holding “clearly…violated the collateral source rule”. However, the Court concluded that the legislature had the power to abolish the common law collateral source rule and, given the plain language of the statute, concluded that the legislature had intended to abolish the rule. Id. at 769, note 3.
2. Gore v. Faye
The Amarillo Court of Appeals dealt with the paid or incurred statute in Gore v. Faye, 253 S.W.3d 785 (Tex. App. – Amarillo 2008, no pet.). Plaintiff Faye’s private health insurance paid for some medical bills resulting from an automobile incident. At trial, Faye introduced affidavits proving up her medical expenses which were redacted to conceal adjustments made pursuant to an agreement between the health care provider and the health insurance carrier. Defendant Gore objected to the redactions but the trial overruled Gore’s objections. Through an offer of proof, Defendant Gore introduced the unredacted affidavits. The jury returned a verdict that awarded Plaintiff Faye a lesser amount than that presented in the redacted affidavits; therefore, the trial court decided that it was not reasonable to apply the offset that was the basis of Defendant Gore’s offer of proof.
On appeal, Defendant Gore did not contest the trial court’s refusal to apply the offset after the verdict. Rather, Gore argued that the trial court had abused its discretion by disallowing the evidence of the adjusted medicals. The Amarillo Court of Appeals disagreed with Gore and held that it was within the trial court’s discretion to disallow the adjusted medical bills based upon the common law collateral source rule which prohibits a party from mentioning that the other party has insurance. Id. at 790 (citing Taylor v. Am. Fabritech, Inc., 132 S.W.3d 613, 625 (Tex. App. – Houston [14th Dist.] 2004, pet. denied) ( held that trial court had not abused its discretion in applying Section 41.0105 post-verdict)
3. Irving Holdings Inc. v. Brown
The specific issue in the case of Irving Holdings Inc. v. Brown, 274 S.W.3d 926 (Tex.App. – Dallas 2009, pet. denied) was the timing of the application of the “paid or incurred” statute vs. the comparative responsibility statute (TEX CIV. PRAC. & REM. CODE section 33.012(a)). In a trial involving a motor vehicle incident, plaintiff Brown submitted affidavits to the jury showing total medical bills of $89,000. Outside the presence of the jury, it was established that Brown’s workers compensation insurance paid $45,428.95 and the defendant argued that this was the amount “actually incurred” pursuant to section 41.0105. The jury awarded Brown $89,000 for his past medical expenses but also found Brown was 50% comparatively responsible for the incident. After the verdict, the trial court first applied section 33.012(a) and reduced the plaintiff’s damages by 50% which resulted in damages of $44,500. Then, the trial court determined that since this amount was less than the medical expenses actually incurred ($45,428.95), section 41.0105 did not apply and plaintiff was awarded $44,500.
On appeal, the defendant argued that the trial court had erred in failing to reduce the $89,000 to the amount actually incurred before reducing plaintiff’s recovery by the 50% comparative negligence. The Dallas Court of Appeals rejected the defendant’s argument and held that § 41.0105 is to be applied after all other calculations limiting or reducing the amount of recoverable damages because § 41.0105 limits a plaintiff’s recovery but not damages. Id. at 933.
4. Matbon, Inc. v. Gries
The Eastland Court of Appeals was presented with the issue of a trial court allowing a plaintiff to introduce unadjusted medical bills in Matbon v. Gries, 288 S.W.3D 471 (Tex. App. – Eastland 2009, no pet.). The Eastland Court cited the Mills opinion and concluded the trial court had erred by not reducing the plaintiff’s damage award for past medical expenses by the amount that had been adjusted and subsequently written off by the health care providers. Id. at 481-82. Unlike the Mills decision, the Eastland Court of Appeals held that § 41.0105 did not require the admission of collateral source evidence before the jury; rather, the trial court could consider the evidence post-verdict. Id. See also Goryews v. Murphy Exploration & Prod. Co., 2007 WL 2274400 (S.D. Tex. 2007) (held that trial court should apply § 41.0105 post verdict).
C. Haygood v. de Escabedo
The Texas Supreme Court weighed in on the paid or incurred issue in the case of Haygood v. de Escabedo, 356 S.W.3d 390 (Tex. 2011). Haygood and de Escabedo were involved in a motor vehicle incident and Haygood sued de Escabedo. Haygood’s medical providers accepted payment from Medicare and wrote off a substantial portion of the bills. Haygood filed a motion to exclude evidence of the payments by Medicare and the fact that part of the bills had been written off. The trial court granted Haygood’s motion and the jury returned a verdict awarding Haygood the full amount of his part medical expenses.
The Texas Supreme Court agreed with de Escabedo and, therefore, held that the evidence admitted by the trial court was legally insufficient to support the verdict. In essence, the Court held that recovery of past medical expenses is limited to what a health care provider has been paid or has a legal right to be paid under law or contract. Because a claimant is not entitled to recover medical expenses that a health care provider is not entitled to be paid, evidence of such charges is irrelevant to the issue of damages. Relating to the collateral source rule, the Court held that it still applies but “that the common-law collateral source rule does not allow recovery as damages of medical expenses a health care provider is not entitled to charge.” Id. at 396. Since the rule still applies, the jury should not be told that the expenses are covered in whole in part by insurance. Id. The jury should also not be told that the health care provider adjusted its charges because of insurance. Id.
D. Unresolved Issues After the Haygood Decision
Categories of Past Medical Expenses
Given the Texas Supreme Court’s focus on what a health care provider has been paid or has a legal right to be paid under law or contract, the parties will have to determine in which category (the paid category or the legal right to be paid category) the past medical expenses in a given case fall under. Further complicating this analysis is the fact that each case will have its own unique set of facts relating to past medical expenses. Numerous factors will have an effect on this analysis including: whether the applicable insurance is private or governmental (Medicare, Medicaid, workers’compensation); whether balance billing is allowed (determined by the type of insurance) and whether the past medical bills have been completely or partially paid. The following are the categories:
Paid Bills – Governmental Insurance
This category does not present any problems; the bills have been paid by Medicare, Medicaid or workers’ compensation and there is no balance billing. Therefore, we know the actual amount of past medical expenses. The facts of the Haygood case fall within this category.
Unpaid Bills – Governmental Insurance
Here, the health care provider has not been paid; therefore, plaintiff may need to determine the amount that the provider has a legal right to be paid under law or contract. Some form of discovery will be needed from the health care provider relating to any reimbursement agreement it has with the governmental insurance carrier. See Section I(D)(4) infra for discussion of the situation where Plaintiff chooses not to submit bills to the insurance carrier.
Paid Bills – Private Insurance
Initially, it would appear that this category would not present a problem because we can easily determine the amount that the health care provider has been paid. The problem arises due to the fact that health care providers are allowed to balance bill in the context of private insurance. If the health care provider seeks to obtain the amount which was not paid by the private insurance carrier, the amount actually incurred may be the entire amount that the provider is owed. Under these circumstances, the health care provider has a legal right to recover the entire amount. Of course, the “unpaid” portion must be proven up in some manner in order to recover that portion. See Section I(E) infra for discussion of affidavits to prove up the expenses.
Unpaid Bills – Private Insurance
Once again, the health care provider has not been paid; therefore, plaintiff may need to determine the amount that the provider has a legal right to be paid under law or contract. Some form of discovery will be needed from the health care provider relating to any reimbursement agreement he has with the private insurance carrier and the unpaid amount must be properly proven up. See also Section I(E)(4) infra for discussion of the situation where Plaintiff chooses not to submit bills to the insurance carrier.
Unpaid Bills – No Insurance
Every so often, plaintiff’s counsel will be presented with a case where the plaintiff has no private insurance and does not qualify for any governmental insurance. This can happen when the claimant is an illegal alien or a transient. At first blush, it would seem that this category does not present any problems; the health care provider has not been paid and there is no insurance carrier. Therefore, there is no need to determine what agreement the provider has with the carrier. Plaintiffs will argue the amount “actually incurred” is the full amount billed by the doctor because he has a “legal right” to be paid that amount. See infra Big Bird Tree Serv. v. Gallegos, No. 05-10-00923-CV, 2012 WL 966063 (Tex. App. – Dallas March 22, 2012, no pet. h.) (discussion of paid or incurred where bills written off by an indigent charity program). However, in some cases, Defendants are arguing that they should be allowed to submit evidence on the reasonable reimbursement rates as if Plaintiff was insured. See Section I(D)(6) infra.
Does paid or incurred apply to future medical expenses?
No Texas court has tackled whether the paid or incurred statute applies to future medical expenses. However, given the wording used in the statute, it would appear that the answer is that it does not. Section 41.0105 uses past tense language for both the words “paid” and “incurred”. Under the Texas Supreme Court’s opinion in Haygood, it can be argued that future medical expenses have not been incurred because no healthcare provider has a legal right to recover for those services. The reason for this is because the services have not yet been provided.
The Defendant would need to introduce expert testimony regarding what a third-party insurance carrier would pay for future medical services. Such testimony might be objectionable as speculative. Furthermore, recall that Haygood left intact the collateral source rule, so the jury should not be told the expenses are covered by insurance. See Section I(C) supra.
How do you apply Haygood to letters of protection?
Letters of protection (LOP) are sometimes used by attorneys in personal injury litigation to guarantee payment to healthcare providers from the proceeds of any future recovery. See, e.g., Sealift v. Satterly, 2003 Tex. App. LEXIS 6054, No. 14-03-00051-CV, 2003 WL 21664672, at *3 n.2 (Tex. App.–Houston [14th Dist.] July 17, 2003, no pet.) (mem. opinion). Can plaintiff’s counsel use a letter of protection to recover the full amount of past medical expenses in light of Haygood? The honest answer is we do not know until we get some direction from the courts. However, given the fact that letters of protection are enforceable contracts, it appears that plaintiff’s counsel could argue that the full “protected” amount is incurred because the doctor has a legal right to recover it.
Obviously, this strategy will be questioned by defense counsel and the uncertainty behind this issue will only complicate cases further. If the plaintiff has health insurance but chooses to use a LOP, the plaintiff’s or his counsel’s motive may be questioned. Defense counsel might choose to depose the doctor about the LOP and inquire about the past relationship between the lawyer and the doctor. Does the doctor have other LOPs with this attorney? Who drafted the LOP? Is a standard LOP used in each case? Has the doctor ever reduced the amount in a LOP before? If so, what was the amount of the reduction? Is there a standard reduction in each case? What would the reimbursement amount have been had the plaintiff submitted the bills to his insurance carrier? Does the non-submission of the bills violate any agreements between the medical provider and the insurance carrier? Further, if the case merits it, defense counsel might have to consider hiring an expert to testify on what the reasonable reimbursement rate would have been had the plaintiff submitted the bills to his insurance provider. Once again, given the Haygood language on the collateral source rule, this may be problematic.
Is Plaintiff’s Failure to Submit Claims to Insurance Admissible?
Many of the same issues discussed supra relating to LOPs will arise in cases where the plaintiff or the healthcare provider does not submit the bills to the applicable insurance. If the healthcare provider fails to timely submit bills to health insurance, the healthcare provider “may not recover from the patient any amount that the patient would have been entitled to receive as payment or reimbursement under a health benefit plan.” TEX. CIV. PRAC. & REM. CODE SEC. 146.003(a). It is unclear whether a defendant in a civil case can argue that a violation of Chapter 46 should benefit him. Clearly, Chapter 46 was intended to benefit patients.
Another issue is does the failure of a plaintiff to submit past medical expenses to available insurance amount to a failure to mitigate damages? Once again, there will be no definitive answer to this question until there is some case law on the issue. When faced with this issue, Plaintiff’s counsel might argue that plaintiff does not have a contractual obligation to use his insurance. Plaintiff’s counsel should also object that it would violate the collateral source rule recognized in the Haygood decision. The failure to mitigate damages is a question for the jury. COMM. ON PATTERN JURY CHARGES, STATE BAR OF TEX., TEXAS PATTERN JURY CHARGES PJC 80.9 (2006). As you see, these issues will not be resolved without extended litigation.
How Do You Apply Haygood to Medical Factoring Companies?
A medical factoring company will purchase a healthcare provider’s accounts receivables as a way to expedite payment of the patient’s outstanding bills. The bills will be purchased by the medical factoring company at a discounted rate, but it will take an assignment of the bills at the full rate. Plaintiff’s counsel will then argue that full, billed amount was “paid or incurred” and should be submitted to the jury.
Once again, if the plaintiff has health insurance, the reason for using a medical factoring company can be called to question by defense counsel. Recently, a federal district court allowed discovery into the arrangements between plaintiff’s counsel and a medical factoring company. See Galaviz v. C.R. England, infra.
Can Defendant Submit Evidence as Reasonable Reimbursement Rates When Plaintiff is Uninsured?
The Texas Supreme Court in Haygood spoke on the billing practices of healthcare providers:
Charges for health care, once based on the provider’s costs and profit margin, have more recently been driven by government regulation and negotiations with private insurers. A two-tiered structure has evolved: “list” or “full” rates sometimes charged to uninsured patients but frequently uncollected, and reimbursement rates for patients covered by government and private insurance…. Although reimbursement rates have been determined to be reasonable under Medicare or other programs, or have been reached by agreements between willing providers and willing insurers, providers nevertheless maintain that list rates are also reasonable.
Haygood, 356 S.W.3d at 393-94.
While no Texas appellate court has written on this issue, the author is aware of this defensive strategy being tested in our trial courts. Given the Texas Supreme Court’s negative discussion of “list” rates being reasonable, it is not a stretch to argue that this argument will eventually find its way to Texas’ appellate courts.
E. CPRC 18.001/18.002 Affidavits
Section 18.001(b) of the Texas Civil Practice & Remedies Code provides that an affidavit stating that the amount a person charged was reasonable and that the service provided was necessary is sufficient evidence to support a finding of fact to that effect. TEX CIV. PRAC. & REM. CODE § 18.001(b) Section 18.002 sets out the specific form for said affidavit. TEX CIV. PRAC. & REM. CODE § 18.002.
The problem is that under Haygood, a § 18.002 affidavit may constitute no evidence relating to plaintiff’s past medical expenses because the affidavit does not address the paid or incurred issue. Lawyers throughout the state are attempting to address this problem by adding language to the affidavit reflecting the amount which have been paid and the amounts that the health care provider is owed (ie. has a legal right to recover). The problem with the solution to the problem is that by adding language to the affidavit it no longer complies with § 18.002. As a result, defense counsel can move to strike the affidavits and/or object on grounds of hearsay.
The Task Force for Rules in Expedited Actions recognized this problem; in its Final Report to the Supreme Court of Texas, the Task Force stated:
The affidavit currently provided for in § 18.001 is insufficient to prove up medical expenses in light of Haygood. Thus, the task force drafted an affidavit to allow medical expenses to be proven up without live testimony. The Task Force suggests that this new medical records affidavit be placed not in the Rules of Civil Procedure, but in Texas Rules of Evidence Rule 902 [Exhibit E], which sets forth the general business records affidavit.
See Task Force for Rules in Expedited Actions – Final Report to the Supreme Court of Texas.
On February 12, 2013, those rules were adopted by the Texas Supreme Court. Rather than changing TEX CIV. PRAC. & REM. CODE § 18.001(b), the Supreme Court amended TEX.R.EV. 902 and provided us with an affidavit that complies with the Haygood decision. See Medical Expenses Affidavit Attached Hereto as Exhibit “A”. Although the Supreme Court Order specifically references “expedited actions” in its title, the order’s language makes it clear that the new affidavit applies to all cases, no matter when filed.
Also in 2013, changes to TEX CIV. PRAC. & REM. CODE §§ 18.001 and 18.002, including the form of the affidavit, were passed to address the paid or incurred issue. See amended § 18.002 attached hereto as Exhibit “B”. Pursuant to this amendment, the affidavit and records are not filed with the court; rather the affidavits are served on opponent.
F. Post Haygood Cases
Cavazos v. Pay and Save, Inc., 357 S.W.3d 86 (Tex.App. – Amarillo, 2011, no pet. h.)
The issue in Cavazos was the application of the percentage of fault reduction against the plaintiff in cases involving the paid or incurred statute. In a pre-Haygood opinion, the Dallas Court of Appeals had held that §41.0105 is to be applied after all other calculations limiting or reducing the amount of recoverable damages because §41.0105 limits a plaintiff’s recovery but not damages. See Irving Holdings Inc. v. Brown, 274 S.W.3d 926, 931 (Tex. App. – Dallas 2009, pet. denied). In Cavazos, the Amarillo Court of Appeals disagreed with Irving Holdings. It noted that in Haygood the Texas Supreme Court had agreed that §41.0105 is a limitation on recovery but also held that only evidence of recoverable medical expenses is admissible at trial. Therefore, the court in Cavazos held that it logically follows that any calculation of what was paid or incurred precedes any reduction for plaintiff’s percentage of responsibility.
Big Bird Tree Serv. v. Gallegos, 365 S.W.3d 173 (Tex. App. – Dallas 2012, pet. denied)
In this case, the plaintiff submitted affidavits from UT Southwestern and Parkland hospitals proving up past medical expenses. In an offer of proof outside the presence of the jury, the defendant called record custodians for both hospitals who testified that the plaintiff had qualified for an indigent charity program and would only be required to pay small co-pays. Both custodians further testified that plaintiff would have to pay the expenses if he recovered them at trial. The issue was whether the trial court erred in awarding medical expenses that were not actually incurred when it included the full amounts of the past medical expenses in the judgment. In a very fact specific opinion, the Dallas Court of Appeals held that §41.0105 does not preclude recovery under the facts of this case. The Court reasoned that based upon Haygood and the collateral source rule “allowing a negligent tortfeasor to avoid liability for medical expenses born by a charity program designed to benefit indigent patients, not only results in a windfall to the tortfeasor, it rewards the tortfeasor for injuring an indigent.”
Henderson v. Spann, 367 S.W.3d 301 (Tex. App. – Amarillo March 27, 2012, pet. denied)
In yet another post-Haygood opinion, the Amarillo Court of Appeals addressed the issue whether the trial court can “fix” the admission of inadmissible unadjusted medical bills at the judgment stage. The Court of Appeals answered this question with an emphatic “no”. First, the appellate court found that the admission of plaintiff’s unadjusted medical bills and the exclusion of defendant’s proffered adjusted medical bills was an abuse of discretion because the unadjusted bills were irrelevant and inadmissible. The Court then held that despite the fact that the trial court reduced the jury’s award of past medical expenses to reflect the adjustments and write-offs, the trial court’s evidentiary ruling was reversible error. The court noted:
As a result of the trial court’s evidentiary rulings, the judgment, even as adjusted, is based on what amounts to no evidence, and the post-verdict adjustment itself serves as a deprivation of the constitutional right to trial by jury.
Prabhakar v. Fritzgerald, 2012 Tex. App. LEXIS 7154 (Tex. App. – Dallas, Aug. 24, 2012, no writ)
In an appeal from a jury verdict in a medical malpractice lawsuit, Fritzgerald cross-appealed arguing that the trial court erred by reducing the jury’s award for past medical expenses. At trial, the parties stipulated to the jury that the amount of Fritzgerald’s medical bills was $1,280,041.32. The jury awarded $1,280,000 for past medical expenses but the Court reduced those damages by $347,391. The reduction was based upon a signed Rule 11 agreement which set out that $347,391 of the past medical expenses had been written off. Fritzgerald acknowledged that the parties signed the agreement and stipulated to the actual amount paid; however, Fritzgerald argued that the agreement was irrelevant because the stipulation was not read to the jury and the only evidence offered at trial was the larger amount ($1,280,000). The Dallas Court of Appeals disagreed with Fritzgerald and held that under Haygood, the trial court was required to reduce Fritzgerald’s recovery pursuant to section 41.0105 if the court had the necessary information to do so and concluded that the trial court had the necessary information based upon the Rule 11 agreement.
Galaviz v. C.R. England, Inc., 2012 U.S. Dist. LEXIS 53866 (W.D. Tex. Apr. 17, 2012)
The federal district court was faced with motions to quash and for protective orders from plaintiff Galaviz and non-party movant Key Health Medical Solutions (“Key Health”). Key Health was described as a medical factoring company, which purchased the medical accounts receivable for Galaviz from his medical providers. Plaintiff objected to providing Defendant with the amounts initially charged by the healthcare provider, the amounts paid by Key Health to the provider and the amounts not being requested by Key Health after it purchased the accounts receivable (ie. written off). Plaintiff argued that allowing Defendant to discover this information based upon TEX. CIV. PRAC. & REM. CODE ANN. § 41.0105 would be erroneous. Defendant countered that it had not asserted that § 41.0105 was applicable; rather, Defendant argued that Plaintiff and Key Health cannot block Defendant from discovering healthcare billing information that allows defendants to explore whether the amount paid for healthcare services were reasonable and necessary. The district court agreed with the Defendant and denied the motions to quash and for protection.
In Re Jarvis, 2013 Tex. App. LEXIS 11281 (Tex. App. – Houston [14th Dist.] 2013, no writ)
Jarvis filed a petition for mandamus requesting that trial court be compelled to vacate his order ordering discovery of certain medical records and insurance contracts. Relating to the insurance contracts, the trial court ordered that defendant was entitled to discovery of the managed care contracts between Blue Cross Blue Shield (“BCBS”) and the plaintiff’s medical providers to determine “the existence of any agreement or contract with BCBS relating to services provided to Plaintiff which affected the ability or right of the [medical providers] to seek payments from Plaintiff for their services.” The Houston Court of Appeals agreed with the trial court and held that defendant “is entitled to discovery of the insurance contracts between BCBS and Jarvis’ healthcare providers to aid in determining whether the providers are required to accept payments of less than the amounts billed.”
VIA Metropolitan Transit Authority v. Barraza, 2013 Tex. App., LEXIS 14609 (Tex. App. – San Antonio, 2013, pet denied).
After a jury trial and verdict and judgment in favor of the plaintiffs, Defendant VIA Metropolitan Transit Authority (“VIA”) appealed arguing in part that the evidence was insufficient to support the award of medical expenses because plaintiffs failed to establish the amount of medical expense actually paid or incurred. The San Antonio Court of Appeals affirmed the trial court and held that “[a]s a limitation on the admission of evidence, a trial objection based on section 41.0105 to unadjusted medical care expense evidence is required, as for all other objections to the admissibility of evidence.” Since VIA failed to object to the unadjusted medical expense evidence at trial, the court of appeal found it had waived that argument.
Huston v. United Parcel Service, Inc., 2014 Tex. App. LEXIS 4567 (Tex. App. – Houston [1st Dist.] April 29, 2014, pet. filed)
On appeal, Huston alleged that the trial court erroneously limited the evidence of her past medical expenses to the amounts that a third-party company paid to several of Huston’s medical providers for their accounts receivables. The trial court agreed with UPS and ruled that the evidence of those bills of medical providers who had sold their accounts receivable to A/R Net should be limited to the amount that A/R Net paid those providers for the receivables and should not be the gross bill amounts. The parties then stipulated, subject to Huston’s objection, that the total amount Huston’s medical providers had been paid or were entitled to be paid was $206,146.62. The court held: “Assuming, without deciding, that the trial court erroneously limited the evidence to the amounts that the medical providers had the right to be paid instead of allowing evidence of the full amount of medical expenses billed to Huston, we agree with UPS that, in this case, such an error is harmless.” Given the fact that the jury awarded Huston only $50,000 in damages for past medical expenses, less than twenty-five percent of the stipulated amount which was presented as evidence, Huston did not demonstrate that, had she been allowed to present the full amount of the medical expenses for which she was billed, the jury would have awarded her that amount or any amount greater than the $50,000 that it did award.
Adley v. Privett, 2014 Tex. App. LEXIS 7447 (Tex. App – Dallas, July 9, 2014, no pet. h.)
Privett filed a personal injury suit against Adley after his motorcycle collided with the car driven by Adley. On appeal, Adley complained that the trial court reversibly erred in admitting certain medical bills into evidence and that the evidence was legally insufficient to support the jury’s award of past medical expenses. At trial, Privett introduced, over Adley’s objections, three bills to support his claim for past medical expenses: (1) an unadjusted bill from Parkland Hospital containing $27,454.21 in unpaid charges; (2) an invoice from PHI Air Medical for $12,983 with “Adjustments” of $12,983 and a notation “Writeoff to Collections” that resulted in a zero balance; and (3) a “Patient Receipt” from Lake Pointe Orthopaedics Association listing $10,866.51 in charges, various adjustments for payments and writeoffs, and a balance of $991.21 “SENT TO Barlow Collections,” leaving a balance of zero. Citing Haygood, the court noted that the burden is on the claimant to produce evidence from which the jury may reasonably infer the amount of reasonable medical expenses. The court held that at least two of the medical bills submitted did not establish the amounts charged by the providers were actually paid or incurred by Privett in compliance with Haygood. The unadjusted hospital bill showed only what Privett was billed and the PHI bill provided no evidence of the amount actually paid or incurred by or on behalf of Privett. The Lake Pointe bill contained writeoffs that arguably established the amount actually incurred but the bill also contained charges for unrecoverable amounts as well as insurance payments and write-offs in violation of the collateral source rule. The admission of bills containing charges that were not recoverable probably caused the rendition of an improper judgment because, as a consequence of the trial court’s evidentiary rulings, there was no evidence of past medical expenses. The judgment of the trial court was reversed and the case was remanded for a new trial.
Metropolitan Transit Auth. v. McChristian, (Tex. App. – Houston [14th Dist.] 2014, no pet. h.)
Plaintiff was awarded $22,650 for past medical expenses. The trial court entered a judgment consistent with the jury’s verdict. Defendant objected at trial and on appeal arguing that the trial court had erroneously admitted plaintiff’s medical bills into evidence without requiring evidence that the bills were “actually paid or incurred.” The appellate court noted that the Supreme Court’s opinion in “Haygood does not squarely address the nature of the showing necessary to establish that particular medical expenses are among those the ‘provider has a legal right to be paid’”. The appellate court noted that “at a minimum … information necessary to establish whether adjustments or write-offs have occurred – and thus necessary to establish admissibility under section 41.0105 – can come from stipulations; the face of medical bills and records themselves; affidavits; testimony; or some combination of these sources.” Here, medical records were admitted into evidence that stated plaintiff was “uninsured” and identified his financial status as “self pay”. At trial, the plaintiff testified that the bills were his responsibility and had not been paid yet. The appellate court concluded that the admission of the medical records complied with section 41.0105. “The difficulty highlighted in Haygood does not arise in this case given the uninsured status reflected in McChristian’s medical records; bills showing no adjustments…; and McChristian’s testimony that the bills are his responsibility and remain unpaid.”
The paid or incurred statute and its interpretation by the Texas Supreme Court in Haygood will result in additional discovery and motion practice in the recovery of past medical expenses. Numerous issues remain and, no doubt, other issues will be raised as trial courts and appellate courts attempt to apply the statute and the Texas Supreme Court’s holding.
Expedited Trials and the New Dismissal Rule
The Texas Supreme Court approved new and amended rules on expedited jury trials and a new rule on a motion to dismiss that is similar to a Federal Rule 12(b)(6) motion. The supreme court accomplished this by (1) creating new Texas Rule of Civil Procedure 169; (2) amending Texas Rules of Civil Procedure 47 and 190; and (3) creating new Texas Rule of Civil Procedure 91a.
T.R.C.P. 47
For all claims filed on or after March 1, 2013, Rule 47 requires the petition to specifically state the amount of damages that are being sought. Rule 47 states that every original pleading which sets forth a claim for relief, whether an original petition, counterclaim, cross-claim, or third party claim, shall state that the party seeks:
Only monetary relief of $100,000 or less, including damages of any kind, penalties, costs, expenses, pre-judgment interest, and attorney fees; (2) monetary relief of $100,000 or less and non-monetary relief; (3) monetary relief over $100,000 but not more than $200,000; (4) monetary relief over $200,000 but not more than $1,000,000; or (5) monetary relief over $1,000,000.
Tex.R.Civ.P. 47(c)
The new rule excludes cases governed by the Family Code. Id. Further, failure to comply with Rule 47(c) results in the offending party being unable to conduct discovery until the pleading is amended to comply with the rule. Tex.R.Civ.P. 47. The information required by new Rule 47(c) is also required in Section 4 of the CIVIL CASE INFORMATION SHEET that was attached to the Texas Supreme Court’s Final Approval of Rules for Dismissals and Expedited Actions. See Misc. Docket No. 13-9022 (Appendix A).
Cases Subject to Expedited Process & Exceptions to the Rule
The comment to the new rule states that a “suit in which the original petition contains the statement in paragraph (c)(1) is governed by the expedited actions process.” Tex.R.Civ.P. 47 cmt. In other words, if the original petition states that “only monetary relief of $100,000 or less, including damages of any kind, penalties, costs, expenses, pre-judgment interest, and attorney fees” is being sought by all claimants, then that suit is governed by the “expedited actions program”. Id.; See also Tex.R.Civ.P. 169(a)(1). This does not apply to suits governed by the Family Code, the Property Code, the Tax Code, or Chapter 74 of the Civil Practice & Remedies Code (healthcare liability). Tex.R.Civ. P. 47 cmt.; See also Tex.R.Civ. P. 169(a)(2).
It should be noted that the new rules do not allow the Defendant to challenge the amount of damages pled by the Plaintiff.
T.R.C.P. 169
Rule 169(a) merely repeats Rule 47’s statements relating to cases which fall within the expedited actions process (ie. seeking only monetary relief of $100,000 or less) and which cases the expedited process does not apply to even though the appropriate monetary relief ($100,000 or less) is sought. Comment 2 to the Rule makes it clear that the expedited actions process is mandatory for all cases which fall within the Rule 169(a)(1) definition. Tex.R.Civ.P. 169 cmt. 2.
A claimant’s recovery in an expedited action is limited to $100,000, excluding post-judgment interest. Tex.R.Civ. P. 169(b). If a jury were to award the claimant an amount in excess of $100,000, the claimant could not recover a judgment in excess of $100,000, not including post-judgment interest. Id.; See also Tex.R.Civ.P. 169 cmt. 4. Comment 4 to the new rule states that this limitation does not apply to a counter-claimant seeking relief other than that allowed under Rule 169(a)(1) (ie. relief in excess of $100,000). Tex.R.Civ. P. 169 cmt. 4. The effect of this is that the cap of $100,000 does not apply to a counter-claimant in the same suit seeking relief in excess of $100,000.
2. Removal from the Process
Rule 169(c) provides two different procedures by which a suit can be removed from the expedited actions process. First, the suit can be removed on motion and a showing of good cause by any party. Tex.R.Civ. P. 169(c)(1)(A). Second, the suit can be removed if any claimant, other than a counter-claimant, files a pleading that seeks relief in excess of $100,000. Tex.R.Civ. P. 169(c)(1)(B). There are some time constraints; a pleading (original, amended or supplemental) that removes a suit from the expedited actions process may not be filed without leave of court unless it is filed before the earlier of 30 days after the discovery period is closed or 30 days before the trial date. Tex.R.Civ. P. 169(c)(2).
The rule provides that leave to amend “may be granted only if good cause for filing the pleading outweighs any prejudice to an opposing party.” Id. Comment 3 to Rule 169 sets out the factors that the trial court should consider in determining whether to remove the case from the process; these include:
Whether the damages sought by multiple claimants against the same defendant exceed in the aggregate the relief allowed under Rule 169(a)(1);
Whether a defendant has filed a compulsory counterclaim in good faith that seeks relief other than that allowed under Rule 169(a)(1);
The number of parties and witnesses;
The complexity of the legal and factual issues; and
Tex.R.Civ. P. 169 cmt. 3. These factors are not exhaustive. Id.
Once a suit is removed from the expedited actions process, the trial court must reopen discovery under Rule 190.2(c). Tex.R.Civ. P. 169(c)(3). New Rule 190.2(c) provides that once the discovery period reopens, the discovery must be completed within the limitations provided in Rules 190.3 (Level 2) or 190.4 (Level 3), whichever is applicable. See Tex.R.Civ. P. 190.2(c). Further, pursuant to Rule 190.2(c), any person who was previously deposed may be redeposed and, on motion of any party, the court should continue the trial date if necessary to complete discovery. Id.
If the motion is based on the limited discovery permitted by the process, seek to have the Court modify the discovery control plan before filing the motion to remove.
If the motion is based on the trial limitations, be prepared to demonstrate why an extension from 8 to 12 hours per side would not resolve the “good cause” basis for the removal. If the additional 4 hours would resolve the “good cause” basis, seek that extension before filing the motion to remove.
It is possible that the “good cause” could arise after the filing of a Motion to Equalize Trial Time (See paragraph 4 below). As Rule 169 does not restrict the filing of a Motion to Remove during trial, be prepared to file the motion during trial in the appropriate circumstance.
There is no limit on the number of times a motion to remove can be filed. As circumstances change or additional proof supporting the discharge is obtained, consider filing an amended motion as necessary.
Discovery for expedited actions is governed by Rule 190.2. See Tex.R.Civ. P. 169(d). See infra Section I.D.
Not surprisingly, the largest impact of the new rules on expedited trials will be on the trial process. First, on any party’s request, the court must set the case for a trial setting that is within 90 days after the discovery period provided for in Rule 190.2(b)(1) ends. Tex.R.Civ.P. 169(d)(2). The court may continue the case only twice, not to exceed a total of 60 days. Id. The new rules do not prevent the trial judge from rescheduling the trial should her docket require it.
As for the trial itself, each “side” is allowed no more than eight hours to complete jury selection, opening statements, presentation of evidence, examination and cross examination of witnesses, and closing arguments. Tex.R.Civ.P. 169(d)(3). Time spent on objections, bench conferences, bills of exception, and challenges for cause to a juror are not included in the limit. Tex.R.Civ.P. 169(d)(3)(B). On motion and a showing of good cause by any party, the court may extend the time limit to no more than twelve hours per side. The factors that the trial court should consider in deciding to extend the time limit are the same good cause factors used to determine whether to remove the case from the expedited process. Tex.R.Civ.P. 169 cmt. 3; See infra I.C(2).
The term “side” has the same definition set out in Tex.R.Civ.P 233. Tex.R.Civ.P. 169(d)(3)(A). Rule 233 states that the term “side” is not synonymous with “party,” “litigant,” or “person”. Tex.R.Civ.P. 233. Pursuant to the Rule, “side” means one or more litigants who have common interests on the matters with which the jury is concerned. Id.
Impact on ADR
New Rule 169 provides that unless the parties have agreed not to engage in alternative dispute resolution (ADR), the trial court may refer the case to an ADR procedure. Tex.R.Civ.P. 169(d)(4)(A). The court can only refer the case to ADR once and the procedure is subject to the following limitations:
It cannot exceed a half-day in duration, excluding scheduling time;
It cannot exceed the total cost of twice the amount of the applicable civil filing fees; and
Pursuant to the Rule, the court must consider objections to the referral unless prohibited by statute. Tex.R.Civ.P. 169(d)(4)(B). The comments do not touch on this subsection, therefore, it is not clear which statutes the Rule is referring. Lastly, the parties may agree to engage in ADR other than that provided for in the Rule. Tex.R.Civ.P. 169(d)(4)(C).
Impact on Expert Testimony
Pretrial motions challenging an expert’s qualifications or reliability of his opinions are not allowed. Tex.R.Civ.P. 169(d)(5). This rule provides that a “party may only challenge the admissibility of expert testimony as an objection to summary judgment evidence under Rule 166a or during the trial on the merits.” Id. This limitation does not apply if the party sponsoring the expert witness requests a different procedure (ie. a pretrial motion and hearing). Id. Lastly, this limitation does not apply to a motion to strike the expert for late designation. Id.
T.R.C.P. 190.2 & 190.5 – Discovery Control Plans for Expedited Actions
Rules 190.2 and 190.5 were amended to specifically apply to the expedited actions process. Amended Rule 190.2 is known as the Level 1 Discovery Control Plan and now applies to expedited actions unless the parties agree that Rules 190.3 (Level 2) should apply or the court orders a discovery control plan under 190.4 (Level 3). Tex.R.Civ. P. 190.2(a). Section (b) of Rule 190.2 provides the limitations that will apply.
Under the new Level 1 discovery control plan, discovery closes 180 days after the date the first request for discovery of any kind is served on a party. Tex. R. Civ. P. 190.2(b)(1).
The total time for depositions under the new Level 1 discovery control plan is six hours. Tex. R. Civ. P. 190.2(b)(2). The parties can agree to expand this limit up to 10 hours in total. Id.
The number of Interrogatories any party may serve on any other party is 15. Tex. R. Civ. P. 190.2(b)(3). Under the new rules, the parties are also limited to 15 Requests for Admissions and 15 Requests for Production. Tex. R. Civ. P. 190.2(b)(4)-(5).
Parties under a Level 1 discovery control plan can now request “disclosure of all documents, electronic information, and tangible items that the disclosing party has in its possession, custody, or control and may use to support its claims or defenses.” Tex. R. Civ. P. 190.2(b)(6). This “Rule 190.2(b)(6) Request for Disclosure,” can be sent in addition to the traditional “Rule 194.2 Request for Disclosure.” See Tex. R. Civ. P. 190.2(b)(6).
The New Dismissal Rule – T.R.C.P. 91a
New Rule 91a provides that “a party may move to dismiss a cause of action on the grounds that it has no basis in law or fact.” Tex.R.Civ. P. 91a.1. The rule provides that a “cause of action has no basis in law if the allegations, taken as true, together with inferences reasonably drawn from them, do not entitle the claimant to the relief sought.” Id. Rule 91a.1 further provides that a “cause of action has no basis in fact if no reasonable person could believe the facts pleaded. Id.
Cases brought under the Family Code are excluded from application to the rule. Tex.R.Civ.P. 91a.1. Further, cases governed by Chapter 14 of the Texas Civil Practice & Remedies Code (Inmate Litigation) are also excluded. Id.
Timing of Motion, Response and Hearing
A motion to dismiss under the Rule must be filed within 60 days after the first pleading containing the challenged cause of action is served on the movant and filed at least 21 days before the motion is heard. Tex.R.Civ.P. 91a.3. Any response to the motion must be filed no later than 7 days before the date of the hearing. Tex.R.Civ.P. 91a.4. The motion must be granted or denied within 45 days after the motion is filed. Tex.R.Civ.P. 91a.3.
Effect of Nonsuit or Amendment of Challenged Pleading
The rule provides that a “court may not rule on a motion to dismiss if, at least 7 days before the date of the hearing, the respondent files a nonsuit of the challenged cause of action, or the movant files a withdrawal of the motion.” Tex.R.Civ.P. 91a.5. If the respondent amends the challenged cause of action at least 7 days prior to the hearing date, the movant may, before the date of the hearing, file a withdrawal of the motion to dismiss or an amended motion directed to the amended cause of action. Id. If the movant files an amended motion to dismiss pursuant to this rule, the time periods provided in this rule restart. Id.
The court must rule on a motion to dismiss unless it has been withdrawn or the cause of action has been nonsuited. Id.
Hearing on the Motion
Each party is entitled to at least 14 days notice of the hearing on the motion to dismiss. Tex.R.Civ.P. 91a.6. The court may conduct an oral hearing on the motion but is not required to do so. Id. No evidence will be considered in ruling on the motion; the motion will be decided based solely on the pleading of the cause of action, together with any “pleading exhibits permitted by Rule 59.” Id.
Rule 59 provides that “[n]otes, accounts, bonds, mortgages, records, and all other written instruments, constituting, in whole or in part, the claim sue on, or the matter set up in defense, may be made part of the pleadings by…being attached being attached or filed and referred to… or by copying the same in the body of the pleading…” Tex.R.Civ.P. 59.
Award of Costs and Attorney Fees
The rule states that the trial court is required to award the prevailing party on the motion all costs and reasonable and necessary attorney fees incurred with respect to the challenged cause of action. Tex.R.Civ.P. 91a.7. The court must consider evidence regarding the costs and fees in determining the award. Id.
Cases by or against a governmental entity or a public official are excluded from this section of the rule. Id.
Effect on Venue and Personal Jurisdiction
Section 8 of the new Rule sets out that the “rule is not an exception to the pleading requirements of Rules 86 and 120a.” Tex.R.Civ.P. 91a.8. Rule 86 requires that an objection to venue must be made “prior to or concurrently with any other plea, pleading or motion except a special appearance motion provided for in Rule 120a.” Tex.R.Civ.P. 86(1). The pleading requirement of Rule 120a states that a “special appearance shall be made by sworn motion filed prior to motion to transfer venue or any other plea, pleading or motion…” Tex.R.Civ.P. 120a(1). New Rule 91a.8 provides that a party filing a motion to dismiss or obtaining a ruling on it, does not waive a special appearance or a motion to transfer venue. Tex.R.Civ.P. 91a.8. However, by filing a motion to dismiss, a party does submit to the court’s jurisdiction in proceeding on the motion and is bound by the court’s ruling, including an award of costs and attorney fees against that party. Id.
New Dismissal Rule Cumulative
Lastly, Rule 91a.9 makes it clear that this new dismissal rule is in addition to, and does not supersede or affect other procedures that authorize dismissal. Tex.R.Civ.P. 91a.9.
It remains to be seen whether expedited trials will promote prompt, efficient and cost-effective resolutions to civil lawsuits. There are numerous reasons why lawyers for plaintiffs and defendants may decide to opt out of the expedited trials process. Further, pleading out of the process is a fairly simple process for both plaintiffs and defendants. Perhaps, the expedited trials process goes the way of the seldom used Offer of Settlement under Rule 167.
The new dismissal rule may have the effect of requiring parties to be more careful in adding causes of action to their pleadings. However, the true effect of the rule also remains to be seen. Potential movants may be hesitant to act given the possibility of having to pay costs and attorney fees should they lose.
New Rule 902(10)(c), Texas Rules of Evidence:
(10)Business Records Accompanied by Affidavit
(c) Medical expenses affidavit. A party may make prima facie proof of medical expenses by
affidavit that substantially complies with the following form:
Before me, the undersigned authority, personally appeared _________________, who, being by me
My name is _______________. I am of sound mind and capable of making this affidavit, and
personally acquainted with the facts herein stated.
I am a custodian of records for _______________. Attached to this affidavit are records that
provide an itemized statement of the service and the charge for the service that _____________ provided to _____________ on _____________. The attached records are a part of this affidavit.
The attached records are kept by ______________ in the regular course of business, and it was
the regular course of business of ______________ for an employee or representative of _____________, with knowledge of the service provided, to make the record or to transmit information to be included in the record. The records were made in the regular course of business at or near the time or reasonably
soon after the time the service was provided. The records are the original or a duplicate of the
The services provided were necessary and the amount charged for the services was
reasonable at the time and place that the services were provided.
The total amount paid for the services was $____ and the amount currently unpaid but
which ______________ has a right to be paid after any adjustments or credits is $ ______ .
SWORN TO AND SUBSCRIBED before me on the ________day of ______, _______.
Notary’s printed name: ________________ My commission expires: _____
Comment to 2013 Change: Rule 902(10)(c) is added to provide a form affidavit for proof
of medical expenses. The affidavit is intended to comport with Section 41.0105 of
the Civil Practice and Remedies Code, which allows evidence of only those medical
expenses that have been paid or will be paid, after any required credits or adjustments. See Haygood v. Escabedo, 356 S.W.3d 390 (Tex. 2011).
John Doe ) IN THE _______
(Name of Plaintiff) ) COURT IN AND FOR
v. ) _________ COUNTY,
John Roe ) TEXAS
(Name of Defendant) )
Before me, the undersigned authority, personally appeared __________(NAME OF AFFIANT)__________, who, being by me duly sworn,deposed as follows:
Notary’s printed name:
(b) An affidavit concerning cost and necessity of services by
the person who is in charge of records showing the service provided
and the charge made is sufficient if it follows the following form:
______(NAME OF AFFIANT)______, who, being by me duly sworn, deposed as follows:
The attached records are kept by me in the regular course of business. The information contained in the records was transmitted to me in the regular course of business by __________(PERSON WHO PROVIDED THE SERVICE)__________ or an employee or representative of __________(PERSON WHO PROVIDED THE SERVICE)__________ who had personal knowledge of the information. The records were made at or near the time or reasonably soon after the time that the service was provided. The records are the original or an exact duplicate of the original. The service provided was necessary and the amount charged for the service was reasonable at the time and place that the service was provided.
(b-1) Notwithstanding Subsection (b), an affidavit concerning
proof of medical expenses is sufficient if it substantially complies with the following form:
COUNTY OF _____________________§
__________, who, being by me duly sworn, deposed as follows:
Notary’s printed name:___________
b-2) If a medical bill or other itemized statement attached to
an affidavit under Subsection (b-1) reflects a charge that is not recoverable, the reference to that charge is not admissible.
(c) The form of an affidavit provided by this section is not
exclusive and an affidavit that substantially complies with Section
18.001 is sufficient.
Acts 2013, 83rd
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