In recent years, there have been several key developments in the law concerning the amount a plaintiff may recover for past medical expenses in Texas personal injury cases and the discovery that may be conducted in this regard. At the outset, it is important to understand that, to recover past medical expenses, a plaintiff must prove the past medical expenses were medically necessary due to the injury that is the subject of the litigation. In addition, the plaintiff must prove the reasonable value of those past medical expenses.
The “reasonable value” cannot exceed the amount actually paid or incurred by or on behalf of the plaintiff, meaning the amount the plaintiff’s provider has a legal right to be paid.[1] Thus, if a provider bills an insured patient at chargemaster rates but, pursuant to its contract with the patient’s insurer, is only entitled to receive payment at a reduced, negotiated rate, then the patient can only recover the reduced amount from the tortfeasor because that is the amount “actually paid or incurred.”[2]
Regardless of what a practitioner or facility charges, the plaintiff is only entitled to recover the reasonable value of the goods and services. Texas courts have pointed out that a provider’s billed charges are not presumed to be reasonable. In fact, there is often a major disconnect between the amounts providers charge and the amounts they actually expect to receive.
“Health care providers set charges they maintain are reasonable while agreeing to reimbursement at much lower rates determined by insurers to be reasonable, resulting in great disparities between amounts billed and payments accepted.”[3] “Commentators lament the increasingly arbitrary nature of chargemaster prices, noting that, over time, they have lost any direct connection to costs or to the amount the hospital actually expects to receive in exchange for its goods and services.”[4]
The reasonable value should generally be the fair market value of the services provided. Fair market value usually means a price arrived at through arm’s length negotiations between a willing buyer and a willing seller, with both being well informed and neither under undue pressure to buy or sell. In the context of healthcare, the best evidence of fair market value may be found in the negotiated rates of provider contracts with health plans. For this reason, negotiated rates paid by private insurance and government programs are within the scope of discovery.[5]
“[W]hile certainly not dispositive, the negotiated rates the providers charged to private insurers and public payors for the medical services and devices provided . . . are at least relevant to whether the chargemaster rates the providers billed . . . for the same services and devices are reasonable.”[6]
The K & L Auto Crushers Court approved of discovery related to:
- the amounts the providers charged insurance companies, federal insurance programs, and in-network healthcare providers for the services, materials, devices, and equipment billed to the plaintiff as of the plaintiff’s date of treatment;
- the amounts the providers paid for the devices and equipment billed to the plaintiff; and
- the providers’ chargemaster (full) rates for the devices and equipment billed to the plaintiff and how the providers determined those rates. [7]
The Court pointed out that, even if the plaintiff is legally bound to pay the providers an unreasonable amount for their services, the tortfeasor’s liability to the plaintiff is still limited to the reasonable amount.[8] A tortfeasor is “responsible only for losses caused by their tortious conduct—that is, losses that are the ‘necessary and usual result of the tortious act.’”[9] “If a claimant agrees or is required to pay a medical provider more than a reasonable amount, the difference between the amount paid and the reasonable amount is not a ‘necessary and usual result of the tortious act,’ but of the claimant’s or provider’s conduct.”[10]
Generally, discovery should be limited to rates for the same services as provided to the plaintiff on the same date.[11] “Trial courts can, and should, curtail disproportionate requests on a case-by-case basis,” but “proportionality limits must be reasonable.”[12] Further, when treatment is provided under letters of protection, healthcare providers forfeit a degree of the protection afforded to disinterested third parties who are subjected to third-party discovery.[13] Objections concerning confidentiality and trade secrets are not a basis for denying discovery; rather, a trial court may enter an “appropriate protective order” to address any confidentiality concerns.[14]
In summary, a plaintiff can recover medical expenses from a tortfeasor only if the amount charged was reasonable at the time and place that the service was provided. Regardless of what a practitioner or facility charges, the plaintiff is only entitled to recover the reasonable value of the goods and services, and a provider’s billed charges are not presumed to be the reasonable value. The negotiated rates paid by private insurance and government programs are relevant to determining the reasonable value of services and are within the scope of discovery. Discovery should generally be limited to rates for the same services as provided to the plaintiff on the same date.
[1] See Tex. Civ. Prac. & Rem. Code § 41.0105; In re K & L Auto Crushers, LLC, 627 S.W.3d 239, 249 (Tex. 2011) (citing Haygood v. De Escabedo, 356 S.W.3d 390, 391 (Tex. 2011)).
[2] In re K & L Auto Crushers, LLC, 627 S.W.3d at 249 (citing Haygood, 356 S.W.3d at 396-97).
[3] Haygood, 356 S.W.3d at 391.
[4] In re N. Cypress Med. Ctr. Op. Co., 559 S.W.3d 128, 132 (Tex. 2018).
[5] See In re N. Cypress Med. Ctr. Op. Co., 559 S.W.3d 128; In re K & L Auto Crushers, LLC, 627 S.W.3d 239.
[6] In re K & L Auto Crushers, LLC, 627 S.W.3d at 251.
[7] See In re K & L Auto Crushers, LLC, 627 S.W.3d at 246.
[8] Id. at 250.
[9] Id.
[10] Id. at 250 – 51.
[11] In re K & L Auto Crushers, LLC, 627 S.W.3d 239.
[12] Id. at 255 (holding that an outright denial of all the narrowed requests at issue went beyond the court’s discretion).
[13] See Id. at 254.
[14] See Id. at 256.
