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Texas Supreme Court Explains Interrelation of Ch. 33 Settlement Credit and Ch. 74 Damages Cap

By: Michelle Robberson

In Regent Care of San Antonio, L.P. v. Detrick, No. 19-0117, 2020 WL 2311943 (Tex., May 8, 2020), the Texas Supreme Court performed statutory construction to determine the proper order for applying a settlement credit and the Chapter 74 damages cap to a jury’s verdict.  The Court also addressed Chapter 74’s periodic payments for future damages subchapter. 

The case involved alleged negligence in nursing home care that resulted in spinal cord compression and paralysis.  The family settled with some defendants and went to trial against the nursing home.  The jury held the facility 55% negligent and awarded damages of $3 million for future medical expenses, $390,000 for past medical expenses, and $245,000 for loss of household services ($3,635,000), plus $10,250,000 in noneconomic damages.  The total amount of settlements was $1.85 million.  The facility elected a dollar-for-dollar credit.

The Texas Supreme Court affirmed the trial court’s judgment computation.  It recognized that Chapter 33 of the Texas Civil Practice & Remedies Code instructs courts on how to determine both the claimant’s recovery and the defendant’s liability, each of which must be calculated separately.  Section 33.012(c)(1) provides for the settlement credit; it is applied to “reduce the amount of damages to be recovered by the claimant with respect to a cause of action by an amount equal to ... the sum of the dollar amounts of all settlements.” 

The facility was jointly and severally liable for the damages because the jury found it 55% responsible and, thus, not entitled to limitations on its recovery under section 33.013(a) (limiting to defendant’s percentage responsibility).  However, the facility was entitled to the Chapter 74 damages cap (section 74.301(b)), which provides a “limit of civil liability for noneconomic damages” at $250,000 per health care institution. 

Citing to its earlier opinions in Edinburg Hospital Authority v. Trevino, 941 S.W.2d 76, 81-82 (Tex. 1997), and Roberts v. Williamson, 111 S.W.3d 113, 123 (Tex. 2003), the Court emphasized that the Chapter 74 damages cap limits the defendant’s liability only, not the claimant’s recovery, the same as section 33.013 limits the defendant’s liability only and not the claimant’s recovery.  The Court said:  the “damages to be recovered by the claimant,” as used in section 33.012(c)(1) (i.e., the amount of damages found by the jury minus any settlement credits) is independent of the defendant health care institution’s “limit of civil liability for noneconomic damages” under Chapter 74.  

The Court thus affirmed the trial court’s application of the relevant statutory provisions and the following judgment computation: 
 
Jury award, economic damages: $3,635,000.00
 
Jury award, non-economic damages: $10,250,000.00
 
Prejudgment interest on past damages: $51,375.00
 
Total verdict: $13,936,375.00
 
Applied $1.85 million credit first
to prejudgment interest ($51,375): $1,798,625.00 credit remaining
 
Apportioned % of economic (27%)
versus non-economic (73%) damages:
 
27% of credit to economic ($485,629): $3,149,371.00 economic remaining
 
73% of credit to non-economic ($1,312,996): $8,937,004.00 non-economic remaining
 
Capped non-economic at $250,000.00 $250,000.00 non-economic remaining
 
Leaving final judgment of: $3,399,371.00 recovery for plaintiffs
 

In a final issue, the Court reviewed the periodic payment provisions in Chapter 74, which, under certain conditions, govern the award of future damages in any judgment.  The statute provides that, when a trial court orders periodic payments, it “shall make a specific finding of the dollar amount of periodic payments that will compensate the claimant for the future damages,” and shall specify the amount, number, timing, and recipient of those payments in its judgment.  (Sections 74.503(c)-(d)). 

The facility complained that the trial court should have ordered the entire $3 million awarded in future medical care expenses to be paid in periodic payments.  First, the family argued (and the facility did not dispute) that the trial court appropriately deducted attorney’s fees from the $3 million (as they should have been awarded lump sum under the statutory language), leaving a remainder of $1,256,358 in future medical expenses. 

Second, the family argued that the evidence before the trial court supported that the patient had $1 million in immediate medical care needs, which in turn supported the trial court’s decision to order that only $256,358 was to be paid in periodic payments.  The facility disagreed, asserting that no evidence supported the need for an immediate, lump-sum payment of $1 million.  The Texas Supreme Court agreed that the evidence did not support the trial court’s finding that Detrick needed a lump-sum payment of $1 million for any immediate medical needs, with the rest in periodic payments. 

However, the evidence also did not support any other award that would fairly “compensate the claimant.”  The jury already had discounted the plaintiff’s future medical expenses to present value (awarding the sum that would compensate him, “if paid now in cash”)  The Court agreed with plaintiff that ordering the jury’s present-value damages award to be paid in periodic payments would effectively “double discount” the award, leaving him undercompensated for future medical expenses.  Thus, without evidence to support a different periodic payments award, the Court did not disturb the trial court’s finding.

 


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