Paid or Incurred Medical Expenses

Paid or Incurred Medical Expenses

When it comes to personal injury cases or Texas car accident claims, there are several categories of damages that a victim can seek in an insurance claim. When proving a claim for personal injury damages relating to medical bills, the first thing you must do is get a copy of the medical bill from the medical provider. On the bill, you will find a few important items: (1) the total amount of the billed charges, (2) a listing of any payments that have been made, (3) a listing of any write-offs or adjustments, and (4) the total balance owed. What you will not find is that the Texas Supreme Court holds that a personal injury claimant may only make a claim for medical bills that have actually been “paid or incurred,” which means that if you do not owe a portion of a medical bill, you cannot make a claim for that portion of the bill because it is not owed. Understanding the basis of this legal framework, its progression through the courts, the types of claims it can possibly affect as well as the relationship between plaintiffs and insurance companies can help you better navigate the legal system with the right personal injury attorney.

Payment Recovery

Many clients expect that since the accident was clearly not their fault, they should just get the money. Although that is quite often how it works, you have to “prove up” your damages, either during the claims process with the insurance company or by introducing admissible evidence of damages in court once a case has been filed.
Under a densely worded Texas law passed in 2003, victims seeking payments for losses after injury due to someone’s negligence face a challenge: the murky concept of only “paid and incurred medical expenses” being admissible at trial. But what are paid and incurred medical expenses, and how does that apply to you?
The answer begins with a review of the 2003 law in question: Texas Civil Practice & Remedies CODE §41.0105. It held that, in an injury lawsuit, plaintiffs’ or claimants’ recovery or payments for medical care costs “is limited to the amount actually paid or incurred by or on behalf of the claimant.” The trouble is, that can fail to take into account the often vast difference between a hospital’s full rate and its actual, discounted rate.

Legal Precedent

In many cases, there are two different costs for medical care: there is the list price and the price that the medical provider accepts as full and final payment for the bill. While it can come up in a number of different situations, the typical situation involves health insurance. One of the benefits of your health insurance is that the insurance company has negotiated reduced rates with various medical providers.
Before the 2003 law, injured people got the benefit of their insurance. When the jury was asked to award medical expenses, that usually meant awarding the entire $10,000.00. But then the law was passed, and because it was worded so poorly, there was a great debate about what it meant. Finally, the Supreme Court issued a case in July of 2011 clarifying the meaning. That case was Haygood v. de Escabedo, 356 S.W.3d 390, 392.
It involved Aaron Haygood suing Margarita Escabedo for injuries he suffered in a car crash. His health care providers billed $110,069.12 for their services, though that was adjusted to $27,739.43 due to a Medicare agreement. In 2011, the Texas Supreme Court put out its opinion in the case of Haygood v. de Escabedo, 356 S.W.3d 390, 392 (Tex. 2011). The Escobedo case, in short, holds that a personal injury claimant may only make a claim for medical bills that have actually been “paid or incurred”. This means that if you do not owe a portion of a medical bill, you cannot make a claim for that portion of the bill because it is not owed. Where this really becomes complicated is when health insurance, Medicare, or Medicaid is involved.

Reasonableness of Charges

Since those rulings, cases brought before courts of appeals have addressed the 2003 law’s ambiguity, caused by errors in its wording. It is believed that the Haygood v. de Escabedo ruling on the paid and incurred medical expenses law will spur additional motions and discovery in recovering past medical expenses, via claims made in appellate courts. When dealing with the ‘paid or incurred’ amounts in a Texas personal injury claim, another common issue arises when there is a dispute as to the reasonableness of a medical bill. Common personal injury claims that may be affected include requests for out of pocket expenses, medical bills, destroyed or damaged personal property, pain and suffering and mental anguish.

  • Medical Expenses

    Medical expenses are the most common costs you have as the result of a personal injury. The plaintiff may recover actual medical costs incurred because of the accident. You may also be owed the costs of any future expenses that may be incurred because of the accident.

  • Physical Pain and Suffering

    If you suffered a serious injury, you may be compensated for any future pain and suffering you might experience due to the negligent conduct of the person or company responsible. The treating physician’s testimony and records are powerful evidence for your case.

  • Mental Anguish

    Although you may have suffered anger, embarrassment, fear and disappointment, mental anguish is a subjective term. Your attorney will gather the evidence to prove that you suffered mental anguish due to the crash.

  • Lost Wages and Loss of Earnings Capacity

    You can recover any wages lost due to being unable to work because of the injury. You also may have loss of earning capacity compensation if the injury caused you to have a lowered ability to earn money.

  • Physical Impairment or Disfigurement

    If you have been permanently disabled or disfigured, you may have compensation for this loss of enjoyment of life. Personal injury claims are often resolved through negotiation with the insurance company. Your lawyer will review the details, gather important information and documentation and negotiate with the insurance company on your behalf.

Plaintiffs vs Insurance

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.
A hospital may charge its full rate for services, as when a patient lacks health insurance or may charge a discounted rate, as when contracts with providers or coverage from Medicare or private insurance is involved. Due to the 2003 “paid and incurred” law and later Texas court decisions, when plaintiffs seek payments for medical costs which have already been paid, the basis of their claim and the amount which can be recovered cannot be a hospital’s full charge, but rather only the costs already paid or incurred. This means that in some cases only the actual payments or legal obligations to pay hospitals are admissible at trial. Submitting evidence of the full rate of a hospital’s charge is only admissible if the bill has not been paid and is due in full.
Eliminating hospitals’ full charges at trial works against plaintiffs and benefits only insurance companies. Their exposure can be reduced at trial by allowing in evidence only the costs actually due or paid to a hospital and not the greater initial value of such costs — that is, a hospital’s full charges. To put it simply: plaintiffs’ lawyers believe the law’s “paid or incurred” language should include any amount billed by a hospital or medical provider. Defense lawyers hold that “paid or incurred” means only the amount actually due or paid to such hospitals or medical providers. In view of these circumstances, it’s vital that you engage a knowledgeable and experienced personal injury lawyer for your claim — an advocate such as “The Texas Torch” who can work to ensure that the “paid and incurred” law is properly interpreted and applied in court.

October 22, 2021
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