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Affidavits from Subrogation Agents on Medical Expenses allowed in Texas

Insurance carriers come into play when determining reasonableness

In a recent decision by the Texas Supreme Court, Gunn v. McCoy, the Court allowed plaintiffs to file affidavits from subrogation agents for health insurance providers to prove reasonableness of medical expenses pursuant to Texas Civil Practices and Remedies Code § 18.001. On appeal, the defendant contended that the plaintiff’s affidavits did not comply with § 18.001.

Background

Originally, the plaintiff produced affidavits from medical providers, which were subsequently rendered insufficient by the Court’s decision in Haygood since they only reflected the amount billed, not the amount paid. The plaintiff thereafter produced affidavits from subrogation agents for health insurance providers. The defendant argued that § 18.001 limits the affiants to medical providers and their record custodians based on the plain meaning of the statute.

The statute provides:

Unless a controverting affidavit is served as provided by this section, an affidavit that the amount a person charged for a service was reasonable at the time and place that the service was provided and that the service was necessary is sufficient evidence to support a finding of fact by judge or jury that the amount charged was reasonable or that the service was necessary.

To comply with the section, an affidavit must 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. Tex. Civ. Prac. & Rem. Code § 18.001(c)(2).

Court’s Decision

The Court ruled in favor of the plaintiff based on legislative intent and statutory interpretation. In Haygood, the Court described the purpose of § 18.001 as “purely procedural, providing for the use of affidavits to streamline proof of reasonableness and necessity of medical expenses.” If the court were to hold that the subrogation agents’ affidavits were insufficient as well as the original medical provider affidavits (pursuant to the ruling in Haygood) the Legislative purpose to “streamline proof procedure” would be unfulfilled.

Additionally, the Court argued that the plain language of § 18.001(c)(2) does not require that the affidavits be made by a records custodian for a medical provider. Insurance companies keep records and databases of both the list prices of specific treatments and procedures. The Court reasoned that the Legislature’s choice of language does not exclude insurance providers from being considered record custodians for the purpose of the statute.

Lastly, the Court addressed whether there was legally sufficient evidence to prove that subrogation agents were qualified to testify to the reasonableness and necessity of medical expenses. Since hospitals establish the listing prices of medical expenses with the assumption that they will only be paid a part of the listing price, insurance companies play a significant role in negotiating the prices with service providers. Therefore, a medical provider may be better suited to say what procedures are “necessary” but may have little basis for knowing what fee is “reasonable” for a specific service. However, what is “necessary” is heavily influenced by those services which insurance companies are willing to cover. The Court argued that the Legislature, in full knowledge that the ideal paradigm does not reflect today’s complex health care system, intended § 18.001(c)(2) to include subrogation agents as record custodians. Since insurance agents have national and regional bases on which to compare prices, they are well-suited to determine the reasonableness of medical expenses.

Importance

This decision gives insurance companies a significant role in the procedural posture of medical malpractice cases. The Texas Supreme Court recognized the influence and negotiating power that health insurance providers have over medical procedure listing prices.

If you have questions about the reasonableness of medical expenses by a plaintiff, or about the Texas Civ. Prac. & Rem. Code § 18.001, the experienced counsel at Parker, LLP Attorneys at Law can help. Contact us today for more information.