As previously discussed in our 9-part blog series on the 7 Things You Need to Know about Section 18.001 Affidavits, affidavits submitted under Section 18.001 are an exception to the general hearsay rule that would otherwise require plaintiffs to provide expert testimony to establish the reasonableness and necessity of the services and charges provided. Given that the issue of whether services and charges are reasonable and necessary is typically a subject requiring a witness to meet the threshold requirements for experts under Texas Rule of Evidence 702, it is perhaps unsurprising that the question of WHO is permitted to execute an 18.001 affidavit is a hotly contested issue.
Section 18.001(c) of the Texas Civil Practice and Remedies Code provides that affidavits must be made by:
(A) the person who provided the service; or
(B) the person in charge of records showing the service provided and charge made.
In interpreting this provision, disputes have arisen over whether Section 18.001 permits a person who is neither the service provider nor the custodian of records for the service provider to execute a valid 18.001 Affidavit.
Two appellate courts have directly considered this question in the context of affidavits executed by factoring companies and determined that such companies, as assignees of the service providers from whom accounts receivable have been purchased, "stand ... in the shoes of [their] assignor[s]," and therefore can properly execute an 18.001 affidavit averring to the reasonableness and necessity of the services provided and the charges made.1
The Texas Supreme Court has recently weighed in on this debate. Specifically, on June 15, 2018, the Court issued an opinion holding that 18.001 affidavits executed by the subrogation agents for the health insurance carriers that had paid the plaintiff's medical expenses were proper. In explaining this decision, the Court pointed not only to the plain language of the statute, which does not explicitly require such affidavits to be made by health care providers or their employees, but also to the realities of the current health care system. The Court noted that:
Health care costs today are complex, and the price of a particular provider's services may depend on many factors, including geography, experience, location, government payment methods, and the desire to make profit ...[and is further complicated by the development of] a two-tier pricing system: (1) the "list price," which serves as a starting point for negotiations, similar to the sticker price one might find when purchasing a vehicle; and (2) the "actual price," which is what private insurers, Medicaid and Medicare, and other groups actually pay after negotiations.
With these issues in mind, the Court concluded that, "with national and regional bases on which to compare prices actually paid, insurance agents are generally well-suited to determine the reasonableness of medical expenses." 2
While this opinion certainly throws a wrench in attempts to challenge 18.001 affidavit executed by persons other than the service provider or the employees of the service provider - at least in the context of affidavits executed by insurance agents - it also may serve to persuade Texas courts that billing experts rather than medical doctors are better qualified by their knowledge, skill, experience, etc. to challenge or controvert the reasonableness of medical charges reflected in these affidavits. After all, even the Texas Supreme Court acknowledges that given the complexity of today's health care system, "it is not uncommon or surprising that a given medical provider may have no basis for knowing what is a 'reasonable fee' for a specific service."3
Although the publication status remains pending, the Texas Supreme Court's opinion in Gunn v. McCoy has significant implications for the way parties pursue and challenge affidavits submitted under Section 18.001.
1. Amigos Meat Distribs., L.P. v. Guzman, 526 S.W. 3d 511 (Tex. App. - Houston [1st Dist.] 2017, pet. denied); Katy Springs & Mfg. v. Favalora, 476 S.W. 3d 579, 601, n. 4 (Tex. App. - Houston [14th Dist.] 2015, pet. denied).
2. Gunn v. McCoy, No. 16-0125, 2018 Tex. Lexis 560, 2018 WL 3014984, at *49-56 (Tex. June 15, 2018)(publication pending).
3. Id. at 53.