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Inflated Charges, CPRC § 41.0105, and § 18.001

As discussed in our previous multi-part blog series, § 18.001 affidavits are a valuable tool in a Plaintiffs arsenal. A proper § 18.001 affidavit, in the absence of a proper controverting affidavit, is sufficient evidence to support a finding of fact by the jury that the medical services and charges were both reasonable and necessary and may preclude a party from offering controverting expert testimony at trial. For these reasons, it is important to know when an § 18.001 affidavit is proper.

Under § 18.001(c), a proper affidavit must be made by the person who provided the service or the person in charge of records showing the service provided and charges made. But what if, the affidavits executed by someone who is neither a person who provided the service or a records custodian of the service provider? What if instead, the person executing the affidavit is an employee of a factoring company that has purchased the bills at a greatly reduced price? What if the affidavit reflects the inflated charges rather than the amount paid by the factoring company?

Two appellate courts - the 14th Court of Appeals and the 1st Court of Appeals - have determined that execution of an § 18.001 affidavit by an employee of a factoring company for the total amount charged rather than the amount paid is no problem. Thus, in practice, CPRC § 41.0105 and § 18.001 seem to be at odds.

A factoring company executing an affidavit meets § 18.001 requirements. § 41.0105 can limit the recovery of medical bills sought from factoring companies executing § 18.001 affidavits. However, there has been little case law guidance as to resolve the § 18.001 factoring company issues.

The Texas Supreme Court has not yet addressed this issue, but it may in the near future. A Petition for review has been filed in connection with the Amigos Meat Distributors v. Guzman case. In this case, Guzman, an employee of Amigos, was injured on the job and was awarded $287,809.94 in past medical expenses. Prior to trial, Guzman assigned his medical providers the right to recover medical expenses from Amigos. The medical providers then sold his account to HMRF, a factoring company, at a significant discount.

Amigos appealed and challenged, among other things, that the validity of the jury's award on the ground that it violated § 41.0105. Amigos contended that the expenses are inflated charges because the providers only paid $76,335.60 for medical care provided. The 1st Court of Appeals of Houston ruled that there was no abuse of discretion by admitting Guzman's medical billing records because the claimant remained liable for the total billed. The appellate court reasoned that Guzman was still on the hook for his full expenses; therefore, the amount billed by the healthcare providers rather than the amount paid by HMRF was paid/incurred amount.

A petition for review was filed on September 22, 2017, and, if the Texas Supreme Court chooses to issue a grant, the issues to be addressed will include: whether § 41.0105 permits Guzman to be awarded inflated charges fixed by HMRF, who required medical providers to accept a lesser amount as payment-in-full and promising that Guzman's duty to repay HMRF was entirely dependent on winning the underlying lawsuit.

Hopefully, in the near future, the Texas Supreme Court will provide much needed guidance on this apparent conflict between § 18.001 affidavit and § 41.0105.


See The Bassett Firm, Blog archives for from November 2016 to March 2017

(http://thebassettfirm.com/blog/)

Amigos Meat Distributors, L.P. v. Guzman, 2017 WL 1953345 (Tex. App.-Houston [1st Dist.] 2017, pet. filed), reh'g overruled (Aug. 8, 2017); Katy Springs & Mfg. v. Favalora, 476 S.W. 3d 579, 601, n. 4 (Tex. App. - Houston [14thDist.] 2015, pet. denied).

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