By: David Helmey and Hamed Moradi The Texas Supreme Court is hearing oral argument today regarding the discoverability of evidence relevant to inflated medical charges in Texas personal injury lawsuits. In re K&L Auto Crushers LLC is a personal injury case arising out of a motor-vehicle accident. The plaintiff received medical treatment under financial arrangements between the plaintiff’s attorney and the medical providers. Due to the inflated and excessive nature of the charges claimed, the defendants served the medical providers with subpoenas seeking evidence as to what they are actually paid for the services at issue, when not operating under an agreement with plaintiff attorneys in the context of a lawsuit. The trial court blocked the defendants’ request, denying disclosure of this key evidence. The case is set for oral argument before the Texas Supreme Court on January 5, 2021 at 10:40 a.m. CST. Information regarding access for the live stream or video of the oral argument is below, at footnote 1.  Although the Texas Supreme Court’s analysis in its In Re North Cypress precedent set out a thorough explanation of the relevancy and importance of reimbursement rates, many lower courts continue to deny the type of discovery that the Texas Supreme Court approved of in the In Re North Cypress case. Courts oftentimes interpret In Re North Cypress to limit its ruling only to disputes between patients and hospitals. The Texas Supreme Court will now answer the question as to discoverability of reimbursement rates in third party claims. This decision has major implications for all defendants in Texas, especially the trucking industry. Egregiously inflated medical bills have resulted in six and seven figure settlements and verdicts that have caused insurance premiums to reach unsustainable levels, driving many trucking companies out of business. For example, the bills at issue before the Texas Supreme Court include $628,000 charged by St. Camillus Medical Center for a cervical spinal fusion and a three-night inpatient stay. As a basis for comparison, Medicare’s range of mean payment rates in the same year to hospitals in the same geographic area (Dallas-Fort Worth) for the same inpatient procedure was $13,000 to $22,000. While we consistently hear that Medicare’s rates are unreasonably low, several other physician-owned hospitals in Texas publicly post their own negotiated private insurance and cash-pay rates, with a typical range of $25,000 and $35,000. This is consistent with what we see in cases where the plaintiff’s bill has actually been paid by their health insurer. In other words, the hospital bill presented in litigation is between 1,700% and 4,800% the amount that hospitals regularly accept for these services. The question is now whether or not the defendants get to discover evidence to uncover those facts so that a jury can hear the truth as to what these services are actually worth. The medical industry has long had a questionable set of billing practices, with a standard industry practice of submitting artificially inflated charges many times above what hospitals expect to get paid, or are ever paid. That’s what led to the national Hospital Price Transparency rule that went into effect January 1, 2021 and mandates that hospitals be more transparent with patients regarding billing practices.  During the pandemic, oral arguments are not being live streamed on the Texas Bar CLE’s website. Some arguments may instead be streamed live on the Texas Supreme Court’s YouTube channel (https://www.youtube.com/channel/UC0gZPfa2qBYO7oJvt6TKixg). The recordings of all arguments will be available on the Texas Bar CLE’s website (https://www.texasbarcle.com/CLE/TSC.asp).
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