Gunn v. McCoy
Supreme Court of Texas, No. 16-0125 (June 15, 2018)
Justice Green’s opinion linked here
The central issue in this medical malpractice case was whether the plaintiffs put on legally sufficient evidence that the patient’s hypoxic brain injury was caused by the defendant doctor’s failure to administer fresh frozen plasma to counteract the patient’s severe blood loss, as opposed to being caused by naturally-occurring blood clots in the brain. The Court held that the jury could have reasonably accepted the testimony of plaintiffs’ expert over defendants’ expert and affirmed a multi-million judgment against the doctor.

But of more general significance was the Court’s holding regarding medical-expense affidavits. CPRC section 18.001 governs proving expenses by affidavit, and it is common to use section 18.001 affidavits as evidence of the reasonableness and necessity of past medical expenses. Unless a controverting affidavit is served as provided by section 18.001, an affidavit stating that the amount a person charged for a service was reasonable at the time and place that the service was provided and that the service was necessary is sufficient evidence to support a finding of fact that the amount charged was reasonable and that the service was necessary. To comply with this section, an affidavit must be made by “(A) the person who provided the service; or (B) the person in charge of records showing the service provided and the charge made.” Consistent with other parts of the CPRC, the amount listed on the affidavit must be limited to the amount actually paid or incurred, not the amount billed.

Typically, these affidavits are signed by someone in the medical provider’s office and, in this case, the plaintiffs submitted 14 provider affidavits regarding the reasonableness and necessity of the patient’s past medical expenses based on the amounts billed. Plaintiffs later withdrew those affidavits, however, and replaced them with affidavits from subrogation agents for the health insurance carriers that had actually paid the patient’s medical expenses. The new affidavits reflected the amounts actually paid. But defendants objected to these affidavits arguing that section 18.001 limits the proper affiants to providers or the record custodians for those providers.

The Court disagreed. It held that, in today’s complex healthcare marketplace, the “list price” charged by a medical provider bears very little resemblance to the price ultimately paid by an insurance carrier or the federal government through the Medicare or Medicaid programs. Indeed, “it is not uncommon or surprising that a given medical provider may have no basis for knowing what is a ‘reasonable’ fee for a specific service.” By contrast, insurance companies regularly negotiate with providers to agree upon the actual prices and maintain records and databases of both the list prices and the actual prices of specific treatments and procedures. The Court concluded that insurance agents are, therefore, “generally well-suited to determine the reasonableness of medical expenses.” In addition, although the Court acknowledged that doctors are in the best position to determine what medical care is necessary, “for better or for worse, in the context of our health care system, what is ‘necessary’ is often heavily influenced by insurance companies and by what treatments and procedures they are willing to cover.” So, the Court held the subrogation agents’ affidavits were sufficient under section 18.001 to establish the reasonableness and necessity of past medical expenses.