Jury erred when awarding full payment for medical expenses, high court rules

By Steve Korris | Jul 10, 2011


AUSTIN – Angelina County District Judge Barry Randolph shouldn't have let a jury award accident victim Aaron Haywood $110,069.12 in medical expenses when Medicare discounts trimmed his bills to $27,739.43, the Supreme Court of Texas ruled on July 1.

All nine Justices agreed that Texas law limits recovery to amounts actually paid or incurred by or on behalf of a claimant.

Seven Justices held that jurors shouldn't even see original amounts on discounted bills.

"Evidence which is not relevant is inadmissible," Justice Nathan Hecht wrote. "This includes evidence of a claim of damages that are not compensable."

Two dissenters would have let trial judges reduce verdicts to account for differences between original amounts and actual payments.

Hecht answered that requiring a judge to resolve disputed facts in determining damages would violate the constitutional right to trial by jury.

Appellate courts in Amarillo, Dallas, El Paso and Corpus Christi had approved the idea of letting judges adjust verdicts, but Hecht tossed their work into a trash can.

"We disapprove the cases that have reached conflicting decisions," he wrote.

Court records show Haygood sued Margarita Garza De Escabedo after a traffic collision, blaming her for neck and shoulder injuries.

Twelve providers billed Haygood a total of $110,069, but his Medicare Part B coverage resulted in credits of $82,329.

Escabedo moved to exclude evidence of expenses other than those paid or owed, and Haygood moved to exclude evidence of adjustments or payments.

Haygood relied on the collateral source rule, which precludes reduction of a tortfeasor's liability due to benefits a plaintiff received from someone else.

Judge Randolph granted Haygood's motion and denied Escabedo's motion.

Each of Haygood's health care providers testified for him at trial.

Hecht wrote, "The providers testified the charges billed to Haygood were reasonable, even though those charges were four times the amount they were entitled to collect."

Jurors awarded the full amount, plus $7,000 for future medical expenses, $24,500 for past pain and anguish, and $3,000 for future pain and anguish.

Appellate judges at the 12th District in Tyler reversed the verdict and remanded the case for new trial after Haygood rejected an adjustment they proposed.

Haygood appealed, arguing that an adjustment required by an insurer is a collateral benefit covered by the rule.

Hecht wrote, "We disagree."

"The benefit of insurance to the insured is the payment of charges owed to the health care provider," he wrote.

"An adjustment in the amount of those charges to arrive at the amount owed is a benefit to the insurer, one it obtains from the provider for itself, not for the insured."

He wrote that the collateral source rule reflects the position of the law that a benefit that is directed to the injured party should not be shifted so as to become a windfall for the tortfeasor.

"To impose liability for medical expenses that a health care provider is not entitled to charge does not prevent a windfall to a tortfeasor; it creates one for a claimant," Hecht wrote.

He also denied Haygood's plea to allow the higher amounts as evidence suggesting more serious injuries.

"Haygood's solution is to allow the jury to consider evidence of non recoverable economic damages in setting non economic damages," Hecht wrote. "But we think that any relevance of such evidence is substantially outweighed by the confusion it is likely to generate, and therefore the evidence must be excluded."

Chief Justice Wallace Jefferson agreed, along with Justices Dale Wainwright, Paul Green, Phil Johnson, Don Willett and Eva Guzman.

Dissenting Justice Debra Lehrmann warned that juries might deliver "insupportably divergent results" in verdicts between plaintiffs with insurance and those without it.

She wrote that a jury might award an uninsured plaintiff significantly more than an insured plaintiff -- even though they were billed the same amount for the same care to treat the same injuries.

Justice David Medina joined her opinion.

Frank Cawley represented Escabedo.

Ronald Schaeffer and Peter Kelly represented Haygood.

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