What Does ‘Paid or Incurred’ Mean in a Personal Injury Case?
I am frequently asked “how much can we claim from the insurance company”? When it comes to personal injury cases or Texas car accident claims, there are several category of damages that a victim can seek in an insurance claim. Common personal injury claims include requests for out of pocket expenses, medical bills, destroyed or damaged personal property, pain and suffering, and mental anguish.
How Do You Calculate Medical Bills in a Personal Injury Case?
When proving a claim for personal injury damages relating to medical bills, the first thing you must do is get a copy of the medical bill from the medical provider. On the bill, you will find a few important items: (1) the total amount of the billed charges, (2) a listing of any payments that have been made, (3) a listing of any write-offs or adjustments, and (4) the total balance owed.
In 2011, the Texas Supreme Court put out its opinion in the case of Haygood v. de Escabedo, 356 S.W.3d 390, 392 (Tex. 2011). The Escobedo case, in short, holds that a personal injury claimant may only make a claim for medical bills that have actually been “paid or incurred”. This means that if you do not owe a portion of a medical bill, you cannot make a claim for that portion of the bill because it is not owed.
Where this really becomes complicated is when health insurance, Medicare, or Medicaid is involved. Here is an example (with rounded off numbers to keep the calculations simple).
Example of a Medical Bills Damages Claim for a Texas Car Accident Claim
Facts: A motor vehicle accident in Texas injures two people. Person A has health insurance. Person B has no health insurance. Both go to a medical provider who bills $6,500 for an MRI.
Person A submits this bill to her health insurance company who pays the medical provider $500 pursuant to the contract between the health provider and the health insurance company. Person A owes a $100 co-pay. Person B has no insurance and pays the medical provider $500 out of pocket for the treatment.
Under this scenario, Person A’s ‘paid or incurred’ amount is $600. Since the $5,900 has been written off or adjusted by the medical provider, it is no longer owed. Under the Escobedo case, there is no claim for that $5,900. Additionally, it is important to remember that many health insurance companies will require that they be reimbursed the money that it paid on your behalf. So, in Person A’s case, she would have to pay back the $500 paid by insurance out of any recover Person A gets from the at-fault driver’s insurance policy.
Person B, however, has no adjustments. Person B’s ‘paid or incurred’ claim would be the amount paid ($500) plus the amount owed ($6,000).
Are the Medical Bills Reasonable?
When dealing with the ‘paid or incurred’ amounts in a Texas personal injury claim, another common issue arises when there is a dispute as to the reasonableness of a medical bill. In our example, the medical provider charged $6,500 for a single MRI. The reasonableness of a medical charge in a Texas personal injury case has become a hot button issue in Texas legal circles as of 2018. In April 2018, the Texas Supreme Court issued a ruling in the case of In re North Cypress Medical Center. In the North Cypress case, an uninsured car wreck victim sued the hospital for filing a hospital lien against her based on an unreasonable charge for medical services. The Supreme Court permitted discovery into the hospital’s different rates that it charged to health insurers, medicare, and uninsured persons so that a jury could determine the reasonable rates for the services provided. Although this decision was limited to the issue of reasonable rates in hospital lien cases filed under Chapter 55 of the Texas Property Code, many lawyers are using this decision to try and argue unreasonable rates being charged in personal injury cases.