Articles Posted in Medical Malpractice

The original Medicare statute, 42 U.S.C. 1395, contains no provisions for a Medicare set aside in liability cases. The original statute provided for a set aside in worker’s compensation cases and those provisions have been extended by policy but not by regulation to liability cases. The CMS website has memos which shed light on the CMS expectations regarding Liability Medicare Set Asides (LMSA) but these memos technically have only the power of persuasion.

The Big R Towing case blessed the establishment of a LMSA. The Schexnayder case held that CMS approval of a LMSA is not required. The Guidry case in 2011 again approved a LMSA proposal. The United States Supreme Court in Chevron, 467 U.S. 837 (1984), set forth the analysis for determining whether an agency policy is enforceable. To be enforceable Congress must have spoken clearly on the issue or the agency’s position must be a reasonable interpretation of the statute.

The Medicare statute is silent as to LMSAs and Congress has not otherwise addressed LMSAs. The MSP Act is at best vague and ambiguous regarding the issue of LMSAs. Medicare has not me the Chevron test. In Christensen v. Harris County, 529 U.S. 576 (2000), the United States Supreme Court held that internal agency interpretations and memorandums have the power of persuasion only. Nonetheless, the prudent practitioner would be well advised to thoroughly document their file including showing the factors considered in determining if a LMSA is appropriate and preparing an allocation showing the amounts allocated to each element of damages.

The United States Supreme Court in Daubert v. Merrell Dow Pharmaceuticals, Inc. set forth the factors to be considered when determining the admissibility of expert scientific testimony. The factors are the degree to which the scientific theory has been or is subject to being verified by testing, the degree to which the science relies upon subjective interpretation by an expert, whether the theory has been published in professional publications or subjected to peer review and th rate of error of the technique.

The Texas Supreme Court has further defined and expanded the Daubert requirements in the cases of E.I. du Pont de Nemours Company v. Robinson, Broders v. Heise, United Blood Services v. Longoria, Merrell Dow Pharmaceuticals, Inc. v. Havner, Maritime Overseas Corp. v. Ellis and Gammill v. Jack Williams Chevrolet, Inc. The most noteworthy of these opinions is Havner which focused on whether the science applied by the expert was reliable. Havner added the requirements that the underlying data must accurate and the methodology sound.

Thus in presenting expert testimony it is critical that each of the foundational requirements be met before any expert opinions are elicited.

The United States Supreme Court’s decision in Arkansas Department Of Human Services v. Ahlborn, 547 U.S. 268 (2006), has open the door for the made whole doctrine to be applied to Texas Medicaid subrogation. Historically, prior to the Ahlborn, Texas Medicaid largely refused to reduce their subrogation interest even if the interest absorbed most or all of the victim’s recovery.

In Alhborn, Heidi Alhborn was severely and permanently injured in an automobile accident and received $215,000.00 in medical care which was paid for by the Arkansas Department Of Human Services. The case settled for $550,000.00, an amount which all involved agreed was vastly less than the full value of the case. The Arkansas Department Of Human Services asserted a right to be reimbursed the full amount of their subrogation interest in spite of the fact that doing so would clearly result in Alhborn being inadequately compensated for her injuries. The parties stipulated that Alhborn’s claim was worth $3,040,000.00. The Trial Court held that ADHS was entitled to their full subrogation interest. The Eighth Circuit reversed the District Court holding that the ADHS could only recover that portion of the settlement that represented the recovery of medical expenses. The United States Supreme Court affirmed.

The Social Security Act, 42 U.S.C. 1396 et. seq., which create the Medicaid program, includes an anti-lien provision which prohibits a State Medicaid program from filing a lien for medical payments against the property of an individual prior to his death. The Supreme Court held that the anti-lien provision prohibited the State from attaching a lien to the non-medical portion of the recovery. The Ahlborn decision was based upon stipulated amounts. The appropriate procedure is a little less clear in situations where a case is settled without any stipulations or judicial findings as to how the settlement funds are allocated between the various elements of Texas personal injury damages. Many times Texas cases are settled for the amount of the available insurance policy limits even though all involved agree that the case is worth considerably more than the policy limits. Ahlborn gives rise to a persuasive argument that the Texas Medicaid subrogation interest should be limited to a proportional share of the recovery in a limited recovery situation.

I frequently hear people say that in Texas medical malpractice damages are capped at $250,000. This is incorrect. The $250,000 damage cap refers to the cap on noneconomic damages recoverable from a single physician, health care provider, or heath care institution.

Texas medical malpractice damage caps are set forth in Section 74.301 of the Texas Civil Practices and Remedies Code. Section 74.301 limits the amount of noneconomic damages such as pain and suffering, physical impairment, or disfigurement to $250,000 from all doctors and individual health care providers. Section 74.301 further limits noneconomic damages recoverable from each health care institution(hospital) to $250,000 with a cap of $500,000 from all health care institutions. The injured claimants’ medical expenses and lost wages are not included in the caps.

Medical malpractice damages often add up to substantially more than $250,000. Take for example the case of a worker who is admitted to the hospital by a private physician and while in the hospital is the victim of malpractice by both the doctor and the hospital resulting in the loss of his leg. Assume that the patients’ medical expenses total $180,000 and he will sustain $800,000 in lost wages. His recoverable damages would be a total of $1,480,000. This is not a lot of compensation for losing a leg but it is a lot more than $250,000.

For as long as anyone who is alive today can remember an accident victim in Texas has had a right to recover the reasonable amount of their accident related medical expenses. Then in 2003 the insurance lobby, the so-called Texans for Lawsuit Reform, sought to limit victims to recovering only their deductibles, co-pays, and other out of pocket expenses. The health insurance lobby fought back, fearing that the victims would not recover enough medical damages to repay the health insurance company. The outcome was Texas Civil Practices and Remedies Code section 41.0105 which limits an injured Texan to recovering the amount “actually paid or incurred.” Under normal rules of construction “paid or incurred” would simply mean that the victims could choose between the alternative measures of damages.

This was not what the insurance lobby, the Texans for Lawsuit Reform(TLR), had in mind and they launched a vigorous campaign to have the statute interpreted and applied in a way which limited accident victims to recovering only the amount of the medical expenses that had been paid by health insurance or the amounts actually paid out of pocket by the victims. Furthermore, the alternative language in the statute gave rise to a quagmire of unanswered legal and procedural questions. In 2005 the Texas legislature voted almost unanimously to repeal the problematic statute but Governor Rick Perry, pursuant to instructions from TLR, vetoed the repeal. The political wrangling regarding this issue continues.

Texas courts continue to struggle with how to apply the “paid or incurred” standard. The prevailing practice is to apply traditional rules of evidence and submit all of the victim’s medical bills to the jury and after the verdict to reduce the amount of the medical expenses awarded by the jury to the amount paid by health insurance, out of pocket, etc. This method of applying the paid or incurred statute post verdict has been approved by most of the Texas appellate courts that have written on the issue. However, the Twelfth Court of Appeals that covers Tyler and the surrounding seventeen county area has ruled in the Escobedo case that only the “paid” amount of the medical bills should be submitted to the jury.

During the last several sessions of the Texas Legislature the changes to the medical negligence laws have been substantial. Generally, health care liability claims have a two year statute of limitations which does not begin to run on minors until their eighteenth birthday. There are a variety of caveats and limiting doctrines so the potential claimant would be well advised to seek advice early on. A claimant is required to file an expert report within 120 days of the filing of a lawsuit addressing both malpractice and the causation of damages. This is true regardless of whether the case requires expert testimony. For example, if you go in for surgery and the surgeon amputates the wrong leg you must pay a surgeon to author a report stating that it is beneath the standard of care to remove a healthy leg by mistake.

The most notable of the changes are the damages caps. In medical malpractice actions filed after September 1, 2003, noneconomic damages from individual defendants are limited to $250,000 and noneconomic damages from institutions are limited to $250,000 each with a maximum from all institutions of $500,000. Under the current statutes the average injured patient is entitled to recover their medical expenses, lost wages, and a maximum of $250,000 from the physician plus an additional $250,000 if the hospital or clinic can be held responsible. This is true regardless of the severity of the injuries.

The changes to the law are not intuitive and those unfamiliar with their complete meaning should seek assistance.

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