Texas Civil Practice and Remedies Code Section 41.0105 limits recoveries of medical care expenses by an injured claimant to those expenses actually paid or incurred by or on behalf of the claimant.  A number of appellate decisions have addressed what this paid-or-incurred language means in different contexts.  The opinion in Katy Springs Manufacturing, Inc. v. Favalora, 476 S.W.3d 579 (Tex. App.—Houston [14th Dist.] 2015, pet. denied, motion for rehearing pending), is another such case.

The plaintiff, Favalora, was injured on the job, and, uninsured, he incurred over $200,000 in medical expenses.  Favalora then entered into contracts with several of his health care providers, assigning his interest in and granting a security interest in any proceeds that might be recovered in his pending personal injury suit against his employer, Katy Springs.  Favalora’s health care providers in turn sold those accounts receivable at a discount and the accompanying assignment and security interest in the lawsuit proceeds to Medstar Funding, a “direct funder of health care receivables.”

Katy Springs argued that only the discounted sale price, paid by MedStar to the health care providers, was admissible as evidence of Favalora’s past medical expenses “actually paid or incurred,” pursuant to section 41.0105 of the Texas Civil Practice and Remedies Code and the Texas Supreme Court’s decision in Haygood v. De Escabado, 356 S.W.3d 390 (Tex. 2011).  Favalora argued that he was still on the hook for the full amount of the medical bills, which could and would be collected by MedStar.

The Houston Fourteenth Court of Appeals agreed with Favalora, affirming the trial court’s ruling.

Katy Springs filed a petition for review with the Texas Supreme Court raising a number of issues including issues challenging the lower courts’ rulings concerning evidence of plaintiff’s medical expenses and the impact of medical lien financing.  The petition for review was denied.  Katy Springs has now filed a motion for rehearing.  The Supreme Court requested a response from Favalora, which has been filed, and Katy Springs has filed a reply brief.  An amicus curiae brief has been submitted by the Texas Association of Defense Counsel as well.

Katy Springs Manufacturing, Inc. v. Favalora, 476 S.W.3d 579 (Tex. App.—Houston [14th Dist.] 2015, pet. dism’d, motion for rehearing pending [15-0923]).