On June 15, 2018, the Texas Supreme Court released a major opinion in the case styled Debra Gunn, Obstetrical and Gynecological Associates, P.A., and Obstetrical and Gynecological Associates, P.L.L.C. v. Andre McCoy, As Permanent Guardian of Shannon Miles McCoy, an Incapacitated Person; No. 16-0125, Texas Supreme Court (June 15, 2018).
This is the second article in a three-part series about the breadth and impact of the Gunn case. On June 15, 2018, the date of the opinion, I wrote about how the Gunn opinion upheld a large trial verdict in favor of the plaintiff on a sufficiency of the causation evidence point.
This article focuses on how the Supreme Court green-lighted a procedure that will further streamline the submission of evidence on past medical bills.
Past medical bills
In a medical malpractice case, one of the elements of damages (money that can be awarded by a jury) is past medical bills that are related to the alleged negligence. In many cases, these bills can be considerable.
For many years, evidence of past medical bills was submitted to the jury by plaintiffs in the form of the total amount was billed by the healthcare provider. This all changed in another landmark Texas Supreme Court opinion styled Haygood v. Escabedo, 356 S.W.3d 390 (Tex. 2011).
The Escabedo case changed the legal standard, allowing only submission of evidence of past medical expenses that were actually paid (i.e., by the insurance company or out of pocket) or legally owed. Escabedo was a boon to insurance companies and defendants because it significantly reduced the amount of past medical damages that plaintiffs could recover at trial.
Submission of past medical bills into evidence
As a Houston, Texas medical malpractice attorney, part of my job is to collect the past medical bills related to the negligent healthcare provided to my clients. Like many other lawyers, I take advantage of an affidavit procedure that Texas law allows parties to use to get these bills into evidence. (The alternative, by the way, is to undergo significant expense and hassle of calling live witnesses to prove-up medical bills).
Texas Civil Practice & Remedies Code Section 18.001 contains a form Affidavit Concerning Cost and Necessity of Services that can be made by “(A) the person who provided the service; or (B) the person in charge of records showing the service provided and the charge made.”
Most attorneys order billing records from each hospital or physician and then have the records custodian complete the affidavit. Post-Escabedo, the statutory form includes the following language and blanks:
The total amount paid for the services was $_____ and the amount currently unpaid but which __________ has a right to be paid after any adjustments or credits is $_____.
After collecting the affidavits, plaintiffs’ attorneys file them with the court and serve copies on all parties to the litigation. Under Section 18.001(d), the deadline to do so is 30 days before the day on which evidence is first present at trial.
If a party wants to oppose the billing records affidavits without leave of court, Section 18.001(e) specifies that it must serve a controverting affidavit on all parties to the litigation not later than 30 days after it receives the original affidavit and at least 14 days before the day on which evidence is first presented at trial.
In short, if the affidavits are properly and timely served, and not controverted, the plaintiff can admit evidence of past medical bills without calling a live witness.
The Gunn approach to billing records affidavits
In the Gunn case, the Texas Supreme Court considered the question of who is a proper witness to a medical billing affidavit. At the trial court later, the plaintiff filed 14 separate Section 18.001 affidavits from medical providers or their records custodians. In that the affidavits were filed before the Haygood opinion, they only contained the total amounts billed, rather than breaking down those numbers into the amounts paid and what was still legally owed, as required by the new standard.
To fix this issue, the plaintiff’s lawyer withdrew the initial affidavits and submitted new ones from subrogation agents for the plaintiff’s healthcare providers. The defendants, of course, objected, and presented their argument to the Texas Supreme Court.
A brief rabbit trail: What is subrogation?
One of the things that I always ask medical malpractice clients up front is whether they have an ERISA, or employer-based, healthcare plan. The reason for this question is that these plans almost invariably have a contractual provision in the plan language that gives the insurer the right of subrogation for any recover.
For medical malpractice plaintiffs, existence of a subrogation right is unwelcome news. It means that if your health insurance company paid any medical bills related to the negligence, the insurer can swoop in at the last minute and demand reimbursement up to the full amount of that is paid for treatment.
As a Houston, Texas medical malpractice lawyer, I have found that most clients are a bit shocked when I explain this to them. After all, the clients paid health insurance premiums, yet the health insurance companies have no legal obligation to contribute to the attorney’s fees or case expenses that lead to a settlement or judgment that the insurer subrogates against.
Most health insurance companies use third-party vendors, or subrogation agents, to enforce their subrogation rights. I always seek and try to negotiate a reduction of the subrogation interest for my clients.
Back to the Gunn approach for proving-up past medical bills
On page 397 of the Escabedo opinion, the Texas Supreme Court commented that section 18.001 is “purely procedural, providing for the use of affidavits to streamline proof of the reasonableness and necessity of medical expenses.”
In the Gunn decision, the Texas Supreme Court noted that the plain language of Section 18.001 “does not require that affidavits be made by a records custodian for a medical provider.” On page 40 of the opinion, the court added that the drafting of Section 18.001 “does not limit the proper affiants to medical providers and medical providers’ records custodians, and the reality of our health care system does not mandate such a limitation in order to establish the reasonableness and necessity of expenses.”
In Gunn, the Supreme Court concluded that the affidavits from subrogation agents were “proper and constituted legally sufficient evidence of [the plaintiff’s] past medical fees.”
Why the new Gunn procedure matters
From a practical perspective, it can be time consuming, costly, and frustrating for plaintiffs to assemble comprehensive past medical bills. In my experience, most healthcare providers records custodian miss some charges that still show up on the subrogation claims, which means that plaintiffs get short-changed in the process.
In contrast, a subrogation agent for a health insurance company already has information about ever paid charge readily available—and they are usually happy to cooperate in order to preserve the subrogation interest.
In my view, the billing affidavit procedure blessed by the Gunn court is a positive step by the Texas Supreme Court to remove some of the gamesmanship in the procedural task of assembling billing records. In short, it is good news for plaintiffs and plaintiffs in Texas.
Tomorrow, I will write my third, and final, article about the Gunn case, talking about its take on the superiority requirement in medical negligence cases.
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Robert Painter is a medical malpractice attorney at Painter Law Firm PLLC, in Houston, Texas. He is a former hospital administrator who represents patients and family members in medical negligence and wrongful death lawsuits against hospitals, physicians, surgeons, anesthesiologists, and other healthcare providers. A member of the board of directors of the Houston Bar Association, he was honored, in 2017, by H Texas as one of Houston’s top lawyers. In May 2018, the Better Business Bureau recognized Painter Law Firm PLLC with its Award of Distinction.
