Personal Injury Claims: What is Paid vs. Incurred?

Currently in Texas a system exists where uninsured claimants receive the benefit of having their total medical bills submitted to the jury. In contrast, claimants whose medical bills are paid by health insurance may not be submitted to the jury.

Why does it matter?

The current system generally creates a situation in which medically insured claimants may find it more difficult to establish evidence to support mental anguish damages.

Read on to see how this situation was created in Texas, and what it could look like going forward.

Tort Reform begins changes for plaintiffs across Texas

In 2003, Tort Reform legislation was passed in Texas. Specifically, Section 41.0105 of the Texas Civil Practices and Remedies Code, often referred to as “Paid vs. Incurred”, has created much confusion for those who practice personal injury litigation. The law states 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”.

What Does “Actually Paid Or Incurred” Mean?

Say for instance that you were in an accident and you went to the hospital and the hospital charged you $10,000 for the services rendered. Say you had Medicaid and they paid $5,000 to the hospital and the hospital got a write off for the remaining balance so that you owed them no money. Some people interpret the new law so that the triers of fact only get to consider the amount paid by Medicaid, the $5,000. While others interpret the law to mean that the triers of fact get to consider the entire amount incurred, the $10,000.

Recent decisions by the Courts of Appeal seem to ignore the “collateral source rule”, which says that a tortfeasor should not benefit because you have insurance, and side with those who believe the triers of fact should only get to consider the amount actually paid.

Why is This Interpretation Wrong?

The most obvious answer is that a defendant should be responsible for his actions and not be the recipient of a windfall because of an injured party’s foresight to buy medical insurance. Also, most citizens are responsible and carry medical insurance and pay premiums on that insurance. Therefore, they should be the ones who reap the full benefits of the insurance coverage they have purchased. Meaning that if a hospital gives a discount because you carry a certain insurance policy, you should be the one who reaps the benefits of that discount because you are the person who has been paying the premiums all these years. To pass this benefit along to the tortfeasor is unjust and should be against public policy.

Rick Perry’s 2007 Veto

Because of the obvious confusion created by the language of Section 41.0105, House Bill 3281 was introduced in 2007. This bill would have corrected the disadvantage to injured parties and limited Section 41.0105’s application to only Medical Malpractice and Healthcare liability claims. However, after passing the House with a vote of 139-0 and passing the Senate with a vote of 28-2, our governor, Rick Perry, vetoed the bill. Why you ask? One can only conclude that Rick Perry stands for big business and insurance companies and has little concern for consumers.  Because of Perry’s veto, we are left to deal with this ambiguous statute.  How it’s interpreted depends on whose court you are lucky or unlucky enough to land.

Popular Content Like This:

In wrongful death cases, the family of the deceased or their estate can receive compensation in for medical and funeral expenses. Other damages such as, lost earning and financial support for the surviving spouse and children can be recovered. There can also be compensation for emotional distress, especially if the survivor witnessed the accident or negligent that caused to the death of the deceased. Other issues to bring before the court would be Loss of Consortium and comfort. Due to the significant compensation paid to the families of wrongful death cases, the litigation can be complex. We will begin an immediate investigation into your case to ensure that necessary evidence is preserved. Our attorneys will work with experts including accident re-constructionists who can assess the pain and suffering caused to the victim, and forensic accountants who can make an immediate and long-term evaluation of your economic losses. When your family suffers, you need attorneys who can provide the aggressive and effective advocacy you need to get results.