East Texas Court of Appeals affirmed by Texas Supreme Court in Haygood v. De Escobedo

As a Tyler injury lawyer I have struggled with how to apply §41.0105 of the Texas Civil Practice and Remedies Code in a way that is both consistent with the language of the statute and the conflicting interpretations of the Texas appellate courts. That struggle came to an end last week when the Texas Supreme Court delivered its opinion in Haygood v. De Escobedo.

In 2003 the Texas legislature enacted §41.0105 of the Texas Civil Practice and Remedies Code which provided that the “recovery of medical or health care expenses incurred is limited to the amount actually paid or incurred by or on behalf of the claimant.” The Texas Supreme Court in Escobedo held that the statute limits the evidence at trial to the recovery of medical expenses which the provider “has a legal right to be paid.” The court’s ruling creates a windfall for negligent wrongdoers and their insurance companies at the expense of the victims.

Haygood v. De Escobedo involved an auto accident which occurred when Escobedo backed her minivan out of a parking lot causing a collision with Haygood’s car. Haygood sustained serious injuries to his neck and shoulder which required surgeries at a total medical expense of $110,069.12. Haygood was covered by Medicare. After adjustments and reductions Haygood’s medical expenses were reduced to $27,739.43. At trial Escobedo sought to exclude evidence of Haygood’s medical expenses in excess of those amounts paid or to be paid by Medicare. Pursuant to the Collateral Source Rule Haygood sought to admit the full amount of his medical expenses. The court admitted all of Haygood’s medical expenses and the jury awarded $110,069.12 for past medical expenses.

The Collateral Source Rule prohibits the admission into evidence of payments by third parties on behalf of the plaintiff. “The theory behind the Collateral Source Rule is that a wrongdoer should not have the benefit of insurance independently procured by the injured party, into which the wrongdoer was not privy.” The Texas Supreme Court held that the reductions in the medical charges by a collateral provider such as Medicare were not part of the Collateral Source Rule and that the tortfeasor, and more importantly its insurance company, were thus entitled to the benefit of the victim’s insurance.

The Supreme Court acknowledged that the Collateral Source Rule provides that a benefit that is directed to the injured party should not be shifted so as to become a windfall for the tortfeasor then leaps to the conclusion that to allow a tortfeasor the benefit of the victim’s collateral source reductions does not create a windfall. In conclusion, the Texas Supreme Court stated, “Of course the Collateral Source Rule continues to apply to such expenses, and the jury should not be told that they will be covered in whole or in part by insurance. Nor should the jury be told that a health care provider adjusted its charges because of insurance.”

For more information contact a Tyler Auto Accident Attorney.