HAYGOOD PAID-AND-INCURRED RULE HELD NOT TO APPLY TO HEALTH CARE PROVIDED FREE OF CHARGE UNDER INDIGENT CHARITY PROGRAM

April 2, 2012

The Dallas Court of appeals recently declined to extend the Texas Supreme Court’s Haygood v. Escabedo opinion to cover health care provided as a charity.  In Big Bird Tree Service v. Gallegos, No. 05-10-00923-CV, 2012 WL 966063 (Tex. App.—Dallas March 22, 2012), a manual laborer who fell from a ladder sued his employer for negligence, seeking to recover medical expenses, lost wages, and damages for pain and suffering.  The plaintiff provided medical expense affidavits to prove that the services provided were necessary and that the amounts charged were reasonable.  Among other damages, the jury awarded the entire amount reflected in the plaintiff’s affidavits.

The employer appealed, arguing that Haygood required the plaintiff’s recovery to be restricted to the amount “actually incurred,” and that under the facts of this case the amount actually incurred was the plaintiff’s small co-pays under a charitable program.  The court of appeals disagreed.  First, unlike Haygood, the reduction in payment in Big Bird was not pursuant to a contractual agreement between the provider and an insurer.  Thus, there was nothing that would have prevented the hospital from charging the full value of services rendered; indeed, the evidence established that the hospital would expect to be paid if the plaintiff recovered from the defendant.  Third, recovery under Haygood reflects charges paid or incurred by or on behalf of the plaintiff; here, the charges were incurred by the charitable organization on the plaintiff’s behalf.  Finally, allowing a negligent party to avoid liability because the plaintiff was indigent would result in a windfall to the negligent party, which would offend public policy.

In a separate issue, the employer argued that because the plaintiff failed to provide evidence of past income tax liability.  The court of appeals held that the insured’s testimony as to his pre-tax past earnings was sufficient to support the jury’s verdict, even without evidence of his income tax payments.