Last Friday, the Supreme Court of Texas issued an important evidentiary decision which has particular significance in the realm of third-party defense of injury cases, upholding the right of litigants to challenge the reasonableness of potentially inflated medical expenses offered by injured claimants.  In Re Allstate Indem. Co., --- S.W.3d ---, No. 20-0071, 2021 WL 1822946 (Tex. May 7, 2021) involved an auto accident and subsequent UIM case in which the insured submitted $41,000 in medical bills supported by an affidavit under Texas Civil Remedies & Practices Code § 18.001.  Allstate retained an expert with a nursing degree and extensive experience in medical coding and auditing, who reviewed the bills and timely submitted a counter-affidavit challenging their reasonableness.

The insured moved to strike the counter-affidavit on the ground that the nurse auditor was not qualified to challenge medical bills, essentially arguing that a doctor’s bills may only be challenged by another doctor in the same field.  The trial court struck the counter-affidavit and prohibited the expert from offering any testimony on the reasonableness or necessity of the medical bills.  This mandamus proceeding ensued.

The court first traced the history of Tex. Civ. Prac. & Rem. Code Chapter 18, which governs the use of affidavits to prove medical expenses and is designed to streamline the process of proving medical expenses without requiring the use of formally designated experts and extensive expert testimony.

The supreme court concluded the nurse auditor was highly qualified to review billing codes, compare them to national databases of prices for medical services with the same or similar billing codes to which she had access, determine the median prices for those services, and give expert opinion on whether the bills being offered were reasonable relative to median prices for those services.

The supreme court agreed with prior opinions holding that credentials in a particular field of medicine do not necessarily qualify any medical practitioner to testify on every medical matter, but rejected the notion that this principle requires a wholesale rule that only someone who practices in the same field can ever give qualified rebuttal testimony.  The court observed that given the current landscape of medical coding and billing, there may be many doctors who have no particular expertise in medical coding and billing.  Here, there was evidence the nurse auditor had extensive experience in the precise area on which her affidavit gave testimony – medical coding, billing, and price auditing.

The insured also challenged whether the counter-affidavit gave reasonable notice of the opinions being given, and here again, supreme court upheld the counter-affidavit, noting the counter-affidavit itemized each charge that was being challenged and explained the bases for the nurse auditor’s opinions and the methodology she used to arrive at her conclusions.

The insured also argued the nurse auditor’s opinions were unreliable, attempting to convert the examination of the counter-affidavit into a traditional expert testimony gatekeeping function under Daubert.  The supreme court rejected this notion as well, and declined to subject a medical billing affiant or counter-affiant to the full reliability inquiry required of traditional expert testimony under Daubert.

Finally, the supreme court held the trial court had abused its discretion by not only striking the counter-affidavit, but also prohibiting Allstate from doing anything else to challenge the reasonableness of the medical bills, such as cross-examining the original affiant or bringing additional witnesses.  While Chapter 18 is designed to set minimum standards that are sufficient to prove medical bills, the court concluded nothing in it makes the initial affidavit conclusive, even in the absence of a compliant counter-affidavit.  The court rejected any reading of Chapter 18 that suggests it imposes a waiver of the right to contest the reasonableness of medical bills, and disapproved several other Texas court opinions following that reading.

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