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7 Things You Need to Know about §18.001 Affidavits - Part 7

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Last time we discussed what happens after both Affidavits and Controverting Affidavits have been served. This week, we'll discuss a 6th thing to know about 18.001 - Factoring Companies and the exception under 18.001 Affidavits.

#6 - I got an affidavit from who? Factoring Companies are an exception to the rule under 18.001(c)(2)

Section 18.001 provides that affidavits must be made by (1) the person who provided the service or (2) the records custodian of the service provider. So, what happens if someone who is neither executes an affidavit under 18.001? Specifically, what if you receive medical bills with an affidavit executed by an employee of a factoring company rather than the health care provider or the health care provider's custodian of records?

As defined by the 14th Court of Appeals, "[f]actoring is a process by which a business sells to another business (the "factor"), at a discount, its right to collect money before the money is paid." Put another way, factoring occurs when a company "sells accounts receivable to get quick cash."

You would think that an affidavit executed by a factoring company would be insufficient under Section 18.001; however, one appellate court has expressly created a loophole for such affidavits.

According to the 14th Court of Appeals, factoring companies are the assignees of the health care providers from whom accounts receivable are purchased; therefore, factoring companies "stand ... in the shoes of [their] assignor[s]." In the Favalora case, the 14th Court of Appeals reasoned that not only did the factoring company step into the shoes of the health care provider, but also the contract between the factoring company and the health care provider specifically transferred custodianship of the patient's records to the factoring company. Therefore, the 14th Court of Appeals concluded an affidavit executed by the custodian of records for the factoring company, rather than the health care provider, still meets the requirements under 18.001.

From a defense perspective, this reasoning has a distinctly negative aspect in that it allows a person who clearly has no personal knowledge as to the reasonableness or necessity of services nevertheless to swear to the jury via affidavit that the charges incurred were reasonable and the services provided were necessary.

Since no other appellate courts have addressed factoring companies in the context of 18.001 affidavits yet, we'll have to wait and see how other jurisdictions choose to respond.

Check back with us next blog for a discussion of 18.001 affidavits and the Federal courts.


Katy Springs & Mfg. v. Favalora, 476 S.W. 3d 579, 601, n. 4 (Tex. App. - Houston [14th Dist.] 2015, pet. denied).

Black's Law Dictionary, thelawdictionary.org/factoring-accounts-receivable/ (last visited Aug. 17, 2016).

Gunn v. McCoy, 489 S.W. 3d 75, 108 (Tex. App. - Houston [14th Dist.] 2016, pet. filed); Favalora, 476 S.W. 3d at 605.

Favalora, 476 S.W. 3d at 604.

Id. at 605.

Id.

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