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RECOVERY OF MEDICAL EXPENSES IN TEXAS: PAID OR INCURRED

Personal injury claimants seek redress in our courts primarily for the recovery of monies meant to compensate them fully for their injuries. One of the primary sources of damages in this context are the monies spent to treat the injuries related to the injury-causing events. Under the Texas Civil Practice & Remedies Code, however, recovery of medical expenses is limited to the amount actually “paid or incurred”:

  • In addition to any other limitation under law, recovery of medical or health care expenses incurred is limited to the amount actually paid or incurred by or on behalf of the claimant.

TEX. CIV. PRAC. & REM. CODE §41.0105.1 But what does this mean?

As a practical matter, patients today rarely pay or otherwise become obligated to a hospital’s “full” charges. Medicare, Medicaid, HMOs, and private insurers are generally subject to discounted rates under law, or through their contracts with providers. Because the amounts they are allowed to charge are frequently a percentage of their full rate, there is an incentive for treators to inflate these full rates. But it is not these full charges that serve as the basis for the amounts recoverable for injuries, but instead the amounts that a patient or their insurer have actually paid, or otherwise become legally obligated to pay.

This is not simply some stuffy principle which becomes important only when a judgment is sought to be collected. Rather, as the Texas Supreme Court held in the 2011 case of Haygood v. de Escabedo, 356 S.W.3d 390 (Tex. 2012), since a claimant is not entitled to recover medical expenses that a provider is not entitled to be paid, evidence of such charges is irrelevant to the issue of damages. Accordingly, only evidence of recoverable medical expenses is admissible at trial, meaning that the submission of any evidence of what the “full” charges might be can introduce a potentially fatal error into a plaintiff’s case.

The issue of paid or incurred under Texas law is an unsettled area which continues to evolve to this day. Courts are continually addressing some of the novel, unanswered questions to which the law gives rise. For example, in the recent case of Big Bird Tree Serv. v. Gallegos, 365 S.W.3d 173 (Tex.App.–Dallas 2012, no pet.), the court held that a plaintiff could recover the amounts “incurred” by a charitable organization which rendered treatment to an injured person free of charge. Other questions raised by the law, however, remain unanswered. For example, neither Haygood nor the statute addresses the issue of reductions or amounts of future medical expenses. For these reasons, it is important that you have a seasoned personal injury lawyer on your side, like the lawyers at Bailey & Galyen, when litigating for the recovery of your medical damages.


1As an interesting side note to this statute, it was passed originally by the Texas Legislature as part of its 2003 reforms of Texas medical malpractice law. As such, the statute was intended by the legislature to only apply to medical negligence cases. However, because of mistakes made in the wording of the statute, the language used did not limit its application to such cases. When the legislature went back and sought to remedy this error, however, then-governor Perry vetoed their proposed changes. Thus this statute, which was only to claims of medical negligence, now applies to all claims for medical expenses.