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Can I Still Recover My Medical Bills at Trial?

My Healthcare Insurance Company Paid My Medical Bills. 

Can I Still Recover Medical Bills at Trial?

If you have ever been injured or harmed by the negligence or wrongful act of another person, then you are entitled to seek compensation for damages, which includes the recovery of all related medical expenses.  However, as if often the case, people who have been injured need immediate medical treatment, and they will elect to use their own healthcare insurance provider to pay for their medical treatment. What many people do not know is that Healthcare insurance companies do not pay the entire amounts of the bills. Rather, these insurance companies receive huge discounts on the medical bills and may end up only paying a fraction of the total amount.

For example, pretend you have been injured in a car wreck that was proximately caused by the negligence of another person. You are quickly taken to the hospital to receive medical treatment for your injuries. After you are done treating, the hospital provides you with a $20,000 bill for your medical treatment and asks how you intend to pay it. If you did not have health insurance, you would be personally accountable for the entire amount of the bill with no discounts. However, if you do have health insurance and you provide the hospital with your healthcare insurance information, there are contracted medical billing rates between your health insurance company and the medical provider which are usually much lower than the charges if you have no insurance. When your health insurance company receives the total bill from the hospital, it does not pay the entire $20,000.00 that would be due if you had no insurance. Rather, the health insurance company and the hospital, if they take your insurance, have an agreement for reduced rates on the medical bills. Typically, the contracted rates provide that the medical provider agrees to the reduced rates in return for the insurance company approving the medical provider in its provider network.

In this example, we will use $8,000.00 as the contracted reduced rate. This raises the question: If you sue the negligent driver that caused your injuries, are you allowed to recover the amount that the hospital billed for your services ($20,000.00) or only the amount that was paid for by your health insurance company ($8,000.00)? Prior to 2011, the law in Texas was unclear whether you could introduce evidence of the total amount that was billed or only the amount that was paid on your behalf by your insurance company. Specifically, Texas Civil Practices and Remedies Code §41.0105 provided that the recovery of medical expenses is limited to the amount actually paid or incurred on your behalf. Some courts interpreted this provision to mean you could present evidence of the total bills that were incurred ($20,000.00). The idea was that even though your medical bills were significantly less when paid by your insurance company, the person who harmed you should not get a benefit because you were the one responsible enough to carry healthcare insurance. Other courts, however, interpreted this provision to mean that you could only recover the medical expenses that were actually paid for by your insurance company ($8,000.00).

In 2011, the Texas Supreme Court decided the issue in the case of Haygood v. Escobedo. In a 7-2 decision, the Court held that you can now only introduce the amounts that your healthcare provider paid for your medical treatment and not the total amount actually billed. In other words, if you used your insurance to pay for your medical bills, then you can only show the jury the amount your insurance company actually paid. Thus, in the above example, a jury would only be able to see evidence of $8,000.00 in medical bills, when in reality, the bills were really $20,000.00 before your insurance agreed to pay them. In effect, the at-fault negligent party and their liability insurance carrier get a windfall because you were responsible enough to pay insurance premiums for probably many years.

The biggest effect of this decision, however, is on the amounts that you can recover for physical pain and mental suffering. Unlike medical expenses, which have exact dollar values, there is no formula for determining how much a jury should award a person for the pain and suffering that have suffered as a result of the negligence of another person. Typically, juries will consider the amount of the injured person’s medical bills when trying to place a dollar amount on pain and suffering. The more expensive your medical bills are, the more money a jury is likely to give you for pain and suffering. Thus, if you are allowed to present medical bills of $20,000.00 to a jury, it is likely to award you more money in pain and suffering than if you are only allowed to present medical bills of $8,000.00. The lower number serves as an anchor for all of your damages which are not even related to the medical bills. The lesson to be learned from Escobedo is that the Texas Supreme Court has decided to protect negligent parties and their liability carriers by reducing the amounts you can recover for your medical expenses, physical pain, and mental suffering.

The best way of avoiding the effects of Escobedo is to either pay your medical expenses out of your own pocket (if possible) or enter into an agreement with your doctors whereby you promise to pay them back out of the proceeds you receive from a settlement or a jury verdict. If you have questions or concerns on how this law affects a potential claim you may have against another party, please feel free to contact our personal injury attorneys for a free and private consultation about your legal matter.