In a per curiam opinion, the Texas Supreme Court has granted mandamus relief to a relator whose discovery requests for relevant evidence of a health care provider’s negotiated rates for specific services performed on behalf of a plaintiff in a personal injury lawsuit were denied by the trial court. In In re ExxonMobil Corporation (No. 20-0849), the Court applied its recent decision in In re K&L Auto Crushers, LLC, 627 S.W.3d 239 (Tex. 2021) to hold that a Houston trial court abused its discretion by denying Exxon’s narrowly tailored discovery requests and that the company had no adequate remedy on appeal. The Court’s ruling reversed a decision by the Fourteenth Court of Appeals [Houston] upholding the trial court’s order.
As we did in K&L Auto, TCJL participated as amicus curiae in this case. Our brief made the following argument:
As we noted in our amicus curiae brief filed in In re K & L Auto Crushers LLC and Thomas Gothard, Jr., Relators(19-1022), the issues in this case reflect a larger pattern of abuse and evasion of §41.0105, Civil Practice & Remedies Code, the so-called “paid or incurred rule.” Enacted with the united support of civil justice reform and health care organizations, §41.0105 limits the recovery of medical or health care expenses only to the amount actually “paid or incurred” for the services. The courts have interpreted this provision to limit recovery of such expenses to the amount reimbursed by third-party payors. The paid or incurred rule serves a fundamental policy of the State of Texas: to prevent inflation of “hard” economic damages in personal injury actions, which are tied to a true valuation of a personal injury claim, the calculation of punitive damages, and the ultimate size of the plaintiff’s lawyer’s contingency fee. Nearly two decades after the adoption of §41.0105, these efforts to evade its effect have finally made it before this Court and must be addressed. We reiterate the concerns we have expressed in In re K & L Auto Crushers and will not repeat them here.
But as the practice of gutting §41.0105 continues to expand, we feel compelled to protest against what we view as an attack on the integrity of the judicial system itself. As in K & L Auto Crushers, here the trial judge blocked ExxonMobil from conducting any discovery from various third-party medical providers about the amounts they had accepted as payment for patients similarly situated to the plaintiffs for the same services over a similar period. ExxonMobil requires this discovery to assess the reasonableness of the amounts claimed by the plaintiffs, as the law clearly demands. In order to effectuate the policy objective of §41.0105, this discovery is appropriate and warranted. Failure to allow ExxonMobil to discover this information will severely limit its ability to contest the reasonableness of the charges. At some level, moreover, depriving a defendant of relevant discovery impairs an even more fundamental right: due process of law. Trial judges have the grave responsibility of acting as first-line guarantors of every citizen’s right to a fair and impartial trial. By refusing relevant discovery, this trial judge has put a very heavy finger on the scale of justice in this case and exposed a civil defendant to potential liability for excessive damages not actually incurred by the claimants. Civil defendants should bear responsibility for the damages they cause, but not for very real and serious shortcomings of our impossibly byzantine health care financing system. These actions undermine our system of justice and cannot be permitted to stand.
We applaud the Court’s decision and its larger effort to restore the paid or incurred rule to its full legislative purpose. We also commend the Court for addressing the pernicious practice of letters of protection, which both circumvent the rule and promote unreasonable health care charges in personal injury cases at the defendant’s expense.
