Medical Expense Challenges – What To Do When Health Insurance Doesn’t Pay
One of the most important issues that arises in the defense of third-party automobile liability and first-party uninsured/underinsured motorist cases is damages for medical expenses. Section 41.0105 of the Texas Civil Practice and Remedies Code provides that, in addition to any other limitation under law, recovery of medical or health care expenses in a personal injury suit is limited to the amount “actually paid or incurred” by or on behalf of the claimant. Tex. Civ. Prac. & Rem. Code § 41.0105. In Haygood v. Escobedo, 356 S.W.3d 390 (Tex. 2011), the Texas Supreme Court held that Section 41.0105 limits a plaintiff’s recovery of medical expenses to actual costs paid, not the “list price” posted on a medical provider’s bills. The court reasoned that “[t]o impose liability for medical expenses that a health care provider is not entitled to charge” would create a windfall for the plaintiff. Id. at 395. Following Haygood, plaintiffs were left with presenting to the jury medical expenses that were actually paid by insurance companies or were actually incurred by the plaintiff, generally an amount significantly less than that billed by the health care provider.
In a number of recent cases, plaintiffs with health insurance have not submitted their medical expenses to health insurance companies for payment, presumably to avoid the effects of Haygood and the discount insurers take on the list price of medical expenses. The courts have provided little guidance on this “intentionally-uninsured-plaintiff” problem.
The Texas Civil Practice and Remedies Code (“CPRC”) sections related to the billing deadlines for healthcare providers offer a partial potential solution. Section 146.002 of the CPRC requires health care providers to bill the patient, the patient’s health insurer, or Medicare/Medicaid not later than eleven months after the date of service or, if there is a contract between the provider and the patient’s health insurance carrier, the date required under the contract. See Tex. Civ. Prac. & Rem. Code § 146.002. If a health care provider violates Section 146.002, the provider “may not recover from the patient any amount that the patient would have been entitled to receive as payment or reimbursement under a health benefit plan or that the patient would not otherwise have been obligated to pay had the provider complied with Section 146.002.” Tex. Civ. Prac. & Rem. Code § 146.003(a). “If recovery from a patient is barred under this section, the health care service provider may not recover from any other individual who, because of family or other personal relationship with the patient, would otherwise be responsible for the debt.” Tex. Civ. Prac. & Rem. Code § 146.003(b).
If a provider violates section 146.002 by failing to bill the health insurance company within the deadlines provided, the provider’s recovery is limited to the amount that the patient would have been obligated to pay, e.g. a deductible and/or a co-payment. The provider is not legally entitled to recover the amount that the health insurance company would have paid or the amount that the provider had to write off due to its contract with the health insurer. The provider’s reduced legal right to recovery is the amount “actually paid or incurred” by the plaintiff because awarding anything greater would constitute a windfall.
Assume, for example, that Ms. Smith’s back was injured in a car accident. Ms. Smith has health insurance with XYZ Healthcare. She has an MRI with contrast of her lumbar spine. The MRI provider bills $10,000 for the procedure, but its contract with XYZ Healthcare reduces that amount to $3500. Smith’s insurance plan provides that she has a $1000 deductible (that has not yet been met) and a $20 co-pay. The MRI provider violates Section § 146.002. Pursuant to § 146.003, the MRI provider is legally entitled to recover only $1020 from Smith. There is a good argument that in the UM/UIM lawsuit against her automobile insurance carrier, Smith is permitted to introduce as evidence of medical expenses from the MRI provider only the $1020 because Smith can never be legally liable for more than that amount.
These billing-deadline sections of the CPRC should inform a court’s construction of Section 41.0105 when a provider fails to submit timely bills to the insurer – whether by mistake or in a coordinated “tolling” effort with plaintiff to inflate damages. How these rules apply when a plaintiff intentionally refuses to provide health insurance information to the provider so that no health insurance claim can be submitted (and list prices attach by default) remains to be seen.