Articles Posted in Damages

Doctor.jpgCharges for health care, once based on the provider’s costs and profit margin, have more recently been driven by government regulation and negotiations with private insurers. A two-tiered structure has evolved: ” list” or ” full” rates sometimes charged to uninsured patients, but frequently uncollected, and reimbursement rates for patients covered by government and private insurance. Few patients today ever pay a hospital’s full charges, due to the prevalence of Medicare, Medicaid, HMOs, and private insurers who pay discounted rates. Hospitals, like health care providers in general, feel financial pressure to set their “full” charges as high as possible, because the higher the “full” charge the greater the reimbursement amount the hospital receives since reimbursement rates are often set as a percentage of the hospital’s “full” charge. Although reimbursement rates have been determined to be reasonable under Medicare or other programs, or have been reached by agreements between willing providers and willing insurers, providers nevertheless maintain that “list” rates are also reasonable. Providers commonly bill insured patients at “list” rates, with reductions to reimbursement rates shown separately as adjustments or credits. Portions of bills showing only list charges are often admitted in evidence in court proceedings, with proof of the reasonableness of the charges coming from testimony by the provider. Against this backdrop of health care pricing practices, the Texas Legislature enacted Section 41.0105 of the Texas Civil Practices and Remedies Code.

Section 41.0105, provides that, in addition to any other limitation under law, recovery of medical or health care expenses in a personal injury suit is limited to the amount actually paid or incurred by or on behalf of the claimant. In the recent opinion of Haygood v. De Escabedo, 356 S.W.3d 390 (Tex.2011), the Texas Supreme Court stated that Section 41.0105 is a limitation on the claimant’s recovery so that only evidence of recoverable medical expenses is admissible at trial. In other words, only evidence of expenses actually paid or incurred by the claimant can be presented to a jury and any determination of what was paid or incurred precedes any reduction for the claimant’s percentage of responsibility.

In Haygood, the Texas Supreme Court reasoned that although reimbursement rates have been determined to be reasonable under Medicare or other programs, or have been reached by agreements between willing providers and willing insurers, providers nevertheless maintain that list rates are also reasonable. The court stated that as a general principle, compensatory damages, like medical expenses, are intended to make the plaintiff whole for any losses resulting from the defendant’s interference with the plaintiff’s rights. But the collateral source rule is an exception to this principle. Long a part of the common law of Texas and other jurisdictions, the collateral source rule precludes any reduction in a tortfeasor’s liability because of benefits received by the plaintiff from someone else as a collateral source. For example, health insurance payments to or for a plaintiff are not credited to the damages awarded against the defendant because of the collateral source rule..

Money.jpegMany people don’t know that the Texas legislature has passed a law that puts limits on their right to recover damages when they have been injured by the gross negligence of others. This limitation on damages is contained in Chapter 41 of the Texas Civil Practices and Remedies Code. This statute applies to any action in which a plaintiff seeks recovery of monetary damages relating to a cause of action. Chapter 41 establishes the maximum damages that may be awarded in certain types of lawsuits, including an action for which damages can be awarded under other Texas law. However, Chapter 41 does not apply to the extent another law establishes a lower maximum amount of damages for the particular claim.

In an action to which Chapter 41 applies, the provisions of Chapter 41 will prevail over all other law to the extent there is any conflict. But the statute does not apply to suits brought under Section 15.21 of the Texas Business & Commerce Code (Texas Free Enterprise and Antitrust Act of 1983); an action brought under the Texas Deceptive Trade Practices-Consumer Protection Act (Subchapter E, Chapter 17, Business & Commerce Code) except as specifically provided in Section 17.50 of that Act; an action brought under Chapter 36 of the Texas Human Resources Code; or an action brought under Chapter 21 of the Texas Insurance Code.

Chapter 41 provides that exemplary damages may only be awarded if the plaintiff proves that the harm for which the plaintiff seeks the recovery of exemplary damages in the suit results from:

  • fraud;
  • malice; or
  • gross negligence.

“Fraud” means fraud other than constructive fraud.

“Malice” means a specific intent to cause substantial injury or harm to the plaintiff.

“Gross negligence” means an act or omission, which when viewed from the standpoint of the actor, involves an extreme degree of risk considering the probability and magnitude of the potential harm to others and which the actor has actual awareness of the risk involved, but nevertheless proceeds with conscious indifference to the rights, safety, or welfare of others.

The plaintiff must prove by clear and convincing evidence the elements of exemplary damages described above. The plaintiff’s burden of proof may not be shifted to the defendant or be established by evidence of ordinary negligence, bad faith, or a deceptive trade practice.

If the plaintiff relies on a statute establishing a cause of action which authorizes exemplary damages in specified circumstances or in conjunction with a specified culpable mental state, exemplary damages may be awarded only if the plaintiff proves by clear and convincing evidence that the damages result from the specified circumstances or the culpable mental state.

The statute establishes several factors that preclude the recovery of exemplary damages. Exemplary damages may only be awarded if damages other than nominal damages are awarded and exemplary damages may not be awarded to a plaintiff who elects to have his recovery multiplied under another statute, such as the Texas Deceptive Trade Practices Act.

In any action in which there are two or more defendants, an award of exemplary damages must be specific as to a defendant and each defendant is only liable for the amount of the award made against that defendant.

Chapter 41 places limitations on the amount that can be awarded for exemplary damages. In an action in which a plaintiff seeks recovery of damages, the jury must determine the amount of economic damages separately from the amount of other compensatory damages. The exemplary damages that can be awarded against a defendant may not exceed an amount of:

  • two times the amount of economic damages; plus an amount equal to any noneconomic damages found by the jury, not to exceed $750,000; or
  • $200,000, whichever is greater.

“Exemplary damages” means any damages awarded as a penalty or by way of punishment but not for compensatory purposes. Exemplary damages include punitive damages.

“Economic damages” means compensatory damages intended to compensate the plaintiff for actual economic or pecuniary loss. Economic damages do not include exemplary damages or noneconomic damages. However, with regard to certain economic damages, Chapter 41 limits the recovery of damages for medical or health care expenses to the amount actually paid or incurred by or on behalf of the plaintiff.

“Noneconomic damages” means damages awarded for the purpose of compensating the plaintiff for physical pain and suffering, mental or emotional pain or anguish, loss of consortium, disfigurement, physical impairment, loss of companionship and society, inconvenience, loss of enjoyment of life, injury to reputation, and all other nonpecuniary losses of any kind other than exemplary damages.

Chapter 41 provides for a bifurcated trial on the issue of punitive damages. Following a motion filed by a defendant, the court is required to provide for a bifurcated trial on the issue of the defendant’s liability for exemplary damages. The motion must be made prior to the selection of the jury or at the time required by any pretrial order issued by the court. If there is more than one defendant, the court is required to provide for a bifurcated trial on the motion of any of the defendants.
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