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May 15, 2015

Thoughts on Chapter 18 - Is it Doing What it Was Designed to Do?

By: Gordon K. Wright

Chapter 18 of the Texas Civil Practices and Remedies Code is an effort to try to streamline litigation in Texas.  It provides that a person seeking to recover medical expenses in litigation can file an affidavit by the person who provided the service or person in charge of the records showing the services provided, which state the amount of charges incurred, and what has been paid.  The statute also provides forms that may be used by such person making the affidavit to prove up medical bills and expenses.  A proper affidavit is “sufficient evidence to support a finding of fact by a judge or jury that the amount charged was reasonable or that the service was necessary.”  Primarily, the purpose is to allow plaintiffs to avoid the necessity of bringing witnesses to testify as to the reasonableness and necessity of the medical bills.

A defendant who wishes to controvert a claim reflected by the affidavit must prepare a counter-affidavit.  That counter-affidavit has to give proof of “reasonable notice of the bases on which the party serving it intends at trial to controvert the claim reflected by the initial affidavit.”  Further, “the counter-affidavit must be made by a person who is qualified by knowledge, skill, training, education, or experience, to testify in contravention of all or part of any of the matters contained in the initial affidavit.”  In short, a defendant who wishes to controvert the affidavit, must hire an expert in the particular field covered by the affidavit, in order to file a controverting affidavit. 

Chapter 18 appears to favor plaintiffs.  The affidavit for medical expenses will frequently be signed by someone who works in the physician’s office, or in the billing records area of the hospital, and who does not have any particular training in medical procedures or medical expenses.  They can simply testify that they were informed by the person providing the service that the services were necessary and the charges are reasonable.  Plaintiffs incur virtually no cost in seeking such affidavits; treating physicians and hospitals have every incentive to provide the affidavit.  On the other hand, it can be argued that the requirements of Chapter 18 make it necessary for defendants to obtain counter-affidavits in each of the areas of specialty at issue by hiring a physician to prepare an affidavit contravening the issues in the plaintiff’s affidavit.  That can run to a very significant expense simply to raise issues about the reasonableness of the service or the fee.

In the statute, it is unclear if other attacks can be made on the affidavit in the absence of a counter-affidavit from the defendant.  For example, can the defendant call as a witness the affiant at trial and attack the foundation of the affidavit?  We have seen cases where multiple affidavits for various specialties (the doctor, the pharmacist, and the physical therapist) are all signed by the same person.  Does that individual really have the knowledge and experience to be able to testify that every itemized cost or expense was reasonable and necessary?  What communications did that individual have with the service provider about the reasonableness and necessity of those services?  Many of us have been to a doctor’s office where, after the doctor provided services, the doctor simply handed the file to one of his office people and stated that the bill should reflect an examination or a procedure.  Typically, there is virtually no discussion of the necessity of that procedure.  Why should the defendant be put to the cost of hiring an expert when the plaintiff is simply using a non-professional to testify about the reasonableness and necessity of the medical expenses?  The defendant should be able to attach the affidavit as having an insufficient foundation without incurring the costs of an expert.  On the other hand, the statute does provide that a party intending to controvert a claim reflected by the affidavit “must” serve a copy of the counter-affidavit.

Plaintiffs sometimes use affidavits as an to attempt to circumvent the paid or incurred provisions of Texas law.  By stating that nothing has been paid, the plaintiffs are able to seek recovery of a much higher amount.  Defendants should seek to understand if there are any agreements between the plaintiffs and the health care providers or between plaintiffs’ counsel and the health care providers that the bills will be paid at some future time. 

Plaintiffs often attack counter-affidavits that are filed.  If the defendant files a counter-affidavit that follows the language of the statute, the plaintiffs argue that there is no sufficient basis for the counter-affidavit, there is an insufficient showing of the expertise of the affiant, and that he has an inadequate foundation for his opinions.  In short, plaintiffs sometimes view the statute as very one-sided.  They file affidavits following the form in the statute, and they need do nothing else at the trial to prove-up medical records or the services that are rendered.  They can attack the counter-affidavit without any prerequisite affidavit, but argue that any attack on the plaintiff’s affidavit must be preceded by a costly counter-affidavit.

The ability to attack the Chapter 18 affidavit is important, and may justify the expense of obtaining a counter-affidavit, given the money that can be saved.  For example, MRI services that are provided to a patient are usually billed at a much higher number than the provider ever expects to receive from an insurer.  It will be instructive for the jury to hear cross-examination of the custodian of records about why the provider views it as reasonable to receive 50 or 60 cents on the dollar from a health insurer, but the bill to the particular plaintiff is for the exact same MRI is reasonable even though it is nearly double what a normal reimbursement rate is.  If plaintiffs argue that they are able to give the insured a better rate because of the volume of work then they do for the insurer, they leave themselves open to the argument that the rate being sought from the plaintiff is actually designed to boost the bottom line of the provider.  Sometimes providers argue that the higher rate is to make up the difference for all the free care that they give.  Defendants can then argue that what is really happening is not a reasonable rate for the services to this plaintiff, but a reasonable rate to service the bottom line of the provider.