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FHMBK analyzes Texas Supreme Court’s recent Haygood v. Escabedo opinion, which resolves significant unanswered questions about the “paid or incurred” provisions of the Civil Practice and Remedies Code.

On July 1, 2011, The Texas Supreme Court issued a significant opinion addressing and interpreting Section 41.0105 of the Texas Civil Practice & Remedies Code.

In Haygood v. Garza de Escabedo, No. 09-0377, 2011 Tex. LEXIS 514 (Tex. 2011), Justice Hecht, writing for the majority, addressed the “paid or incurred” provisions of Section 41.0105, and provided clear guidance about how this section is to be interpreted and applied.

The court noted that Section 41.0105, enacted in 2003 as part of the Texas legislature’s tort reform effort, purports to limit recovery of healthcare expenses “to the amount actually paid or incurred by or on behalf of the claimant,” but that trial courts have not been uniform in their interpretation of the statute.  Haygood now clearly instructs trial court judges to limit not just a claimant’s recovery, but also the evidence admitted before a jury, to the reduced amounts paid by insurers or governmental programs.

Application of the Haygood rule is particularly significant as juries tend to use the amount of a claimant’s medical expenses as a yardstick in order to gauge appropriate recoveries for non-economic elements of damage, such as the claimant’s pain and suffering.  The court acknowledged this concern, but held that allowing the jury to consider evidence of non-recoverable economic damages leads to confusion which substantially outweighs the relevance of any such evidence.

Please click here to read the court’s majority opinion in full.

The Haygood rule clearly has the potential to significantly impact pending claims where medical bills have been paid, following reductions, by group health insurers or by governmental programs such as Medicare or Medicaid.  If you have any questions about application of the Haygood rule, please contact one of our attorneys.