Texas Supreme Court Holds that Defendant Can Challenge Reasonableness of Plaintiff’s Medical Expenses

On May 7, 2021, the Texas Supreme Court held that a trial court abused its discretion in preventing the defendant from challenging the reasonableness of the medical fees incurred by the plaintiff.  This case represents a win in the fight against phantom damages statutes. It prevents plaintiffs and their attorneys from receiving a windfall at the expense of defendants.  

Phantom damages occur when plaintiffs receive the total cost of medical expenses rather than the actual amounts paid to the medical care provider.  These inflated bills increase the cost of litigation which companies pass on to consumers and taxpayers in the numerous states that allow for these damages.  By providing defendants with a method to challenge the reasonableness of medical expenses, the Texas Supreme Court ensured that businesses and the citizens of Texas take priority over plaintiffs’ attorneys. 

The case arose out of a suit in which plaintiff Norma Alaniz sued her insurance provider, Allstate Indemnity Company, for $37,000 in damages for injuries arising out of an automobile accident.  In response, Allstate filed a counteraffidavit from Christine Dickison who challenged the reasonableness of the expenses based on her experience as a registered nurse who processed and coded medical bills.  Plaintiff moved to strike the counteraffidavit and the trial court granted the motion.  The court went as far as preventing Dickison from testifying about the medical expenses and prohibited Allstate from “questioning witnesses, offering evidence, or arguing to the jury the ‘reasonableness of the medical bills’”.  Allstate appealed and the Court of Appeals affirmed.  Allstate further appealed to the Texas Supreme Court. 

Not surprisingly, the Texas Supreme Court found that the trial court abused its discretion.  The Court found that the counteraffidavit satisfied the requirements set forth in the statute governing recovery of medical expenses.  The Court held that Dickison was qualified to testify about the medical expenses, the counteraffidavit provided reasonable notice to the plaintiff, and the counteraffidavit did not need to meet the admissibility requirements of expert testimony.  Finally, the trial court abused its discretion in preventing Dickison from testifying and Allstate from challenging the reasonableness of the medical bills.