Texas Supreme Court Deals Another Blow to Justice in Texas

Haygood v. De Escobedo

The Texas Supreme Court handed down the Haygood v. De Escobedo case this morning affirming the Appellate Court’s decision to require the Plaintiff in a personal injury case to offer only the actual amount paid by any insurance carrier, person, etc. rather than the amount that was billed.  This effectively renders useless the long-standing collateral source rule–a rule that prevented tortfeasors from benefiting from health or other insurance that the Plaintiff paid the premiums for.

The Plaintiff now gets punished for being responsible enough to have insurance. In the past, a tortfeasor was not allowed to benefit from the fact that a Plaintiff was responsible enough to purchase health insurance. The Defendant did not pay those premiums, thus, it made no sense to let him reap the benefit after negligently causing someone harm. In light of this ruling, that rule is now defunct.

The Paid vs Incurred Law vs The Collateral Source Rule

In 2003 during the tort reform sweep, the Texas Legislature enacted Texas Civil Practice and Remedies Code Sec. 41.0105.  That code provides that “recovery of medical or health care expenses incurred is limited to the amount actually paid or incurred by or on behalf of the claimant.”  Because every lower-level trial and appellate court that read this new law saw it as a direct conflict with the collateral source rule, the common practice for courts after the law was enacted was to allow the Plaintiff to offer evidence of the total amount of the bill and then, have the court go back and do an evidentiary hearing to reduce the amount awarded for any parts of the bill discounted by a collateral source.

The Texas Supreme Court Weighs In: Haygood ve De Escobedo

In Haygood v De Escobedo, the Texas Supreme Court held that the Paid vs Incurred Law was an evidentiary rule that prohibited the offering of evidence of any part of a bill that a provider was no longer “legally entitled to collect” due to payment by any collateral source rule. This, in effect, takes the real amount of the bills out of the view of the jury without informing them that the amount was reduced by a health insurance carrier or another collateral source. As a result, the actual damages appear smaller and give the jury a smaller impression of the overall damages.  Furthermore, it is now the Plaintiff’s burden to sort out the discounted parts of any bills and only offer evidence of the reduced amount paid by the collateral source.

Thus, instead of upholding the collateral source rule to protect injured victims, the Texas Supreme Court has opted to interpret the law in a way favorable to the insurance companies and tortfeasors responsible for causing the injuries.





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