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A Win for the Injured Victim - Case Law Update

IRVING HOLDINGS, INC. AND ISAIAS TEWELDE

v.

HERMAN BROWN AND EMPLOYERS INSURANCE OF WAUSAU

Recently, on January 5, 2009, the Dallas Court of Appeals (5th District) issued an opinion that I would consider a small win for the personal injury victim. The opinion involves the application of Texas Civil Practices & Remedies Code ("the Code") 41.0105 and how it operates in conjunction with Chapter 33 of the Code. This case illustrates that there are two approaches that can yield very different results. The court clearly sets out the proper method.

First, I think a very brief summary of these Code provisions is necessary. 41.0105 of the Code states that "in addition to any other limitation under law," the recovery of a claimant's medical or health care expenses is limited to the amount "actually paid or incurred by or on behalf of the claimant." This is a hotly contested statute that basically allows a negligent party to benefit from the fact that an injured victim's medical bills were paid in an amount less than was actually charged, even without any guarantee that the medical provider will not seek the difference from the injured victim. I could write for days on why this is a terrible statute, but I think this is sufficient for our purposes.

Chapter 33 of the Code directs the trial court, in certain cases, to reduce the amount of damages a claimant can recover by a percentage equal to the claimant's percentage of responsibility. In other words, if the injured victim is found to be 20% at fault for causing his or her own injuries, then the victim's recovery, if any, is reduced by 20%. This is the essence of proportionate responsibility. In Texas, if the victim is found to be more than 50% at fault, he or she cannot recover at all. This is also a terrible rule, as it allows a party that the jury has found at fault to escape liability altogether, but that is beyond the scope of this blog entry.

In this case, the sole issue presented was: when both provisions apply, which is applied first. As the court noted, the answer was worth about $22,000 to the injured victim, Herman Brown. Mr. Brown was injured in an auto accident by a taxicab driven by Isaias Tewelde. Brown was covered by a workers' compensation insurance policy written by Employers Insurance of Wausau. Brown sued Tewelde and Tewelde's employer, Irving Holdings, Inc., for personal injuries. Wausau intervened to recover the amounts it paid for Brown's medical expenses and in indemnity payments.

Brown filed several affidavits of reasonable and necessary services relating to his medical or health care expenses. The amounts stated in the affidavits totaled approximately $89,000. This was Brown's proof of past medical expenses that were caused by the incident. Tewelde and Irving Holdings did not file counter-affidavits and did not dispute the reasonableness or necessity of the amounts of medical expenses stated in the affidavits.

The jury found Brown and Tewelde were both negligent and the percentage of responsibility for Brown's injuries attributable to each was 50 percent. The jury also found that $89,000 would "fairly and reasonably compensate" Brown for his "reasonable and necessary medical expenses that were incurred in the past. Outside the jury's presence, it was established Wausau paid $45,429.95 for Brown's medical expenses under the workers' compensation policy.

Appellants did not challenge (and do not challenge on appeal) the jury's $89,000 finding for reasonable and necessary past medical expenses. Instead, after the verdict, Tewelde and Irving Holdings filed a motion for judgment notwithstanding the verdict. Irving Holdings argued Brown's medical expenses were limited to the $45,429.95 actually paid by Wausau, and that the trial court should reduce the jury's $89,000 damage finding to $45,429.95 before further reducing the award by Brown's percentage of responsibility (50%). Under this interpretation, Irving Holdings asserted the trial court should award Brown $22,714.97 for past medical expenses.

Brown filed a motion for judgment. He argued the court first had to determine the total amount of medical expense-based damages he was entitled to recover under the jury verdict ($89,000 reduced by his 50% comparative responsibility, or $44,500), and then determine if that amount of recovery is further limited by section 41.0105's "amount actually paid or incurred" limitation. The trial court denied appellants' motion and rendered judgment, based on the jury verdict and Brown's motion, for $44,500 for past medical expenses. Irving Holdings renewed its argument in a motion to modify the judgment, which was denied.

The court held that under the trial court's judgment, Brown (and indirectly Wausau) was not compensated for more than the amount of medical expenses actually paid or incurred on his behalf; he recovered only $44,500 in medical expenses while the amount of medical expenses actually paid or incurred on Brown's behalf was $45,429.95. Brown did not recover medical expenses in excess of the amount actually paid or incurred, nor was Irving Holdings held responsible in judgment for more than that amount. Thus, the intended effect of section 41.0105 of limiting Brown's recovery of medical expenses to the amount actually paid or incurred by or on his behalf was accomplished. Following appellants' argument would result in appellants receiving the benefit of Brown's workers' compensation policy. Despite being responsible for 50 percent of the cause of the accident, appellants would pay only 25 percent of the reasonable and necessary medical expenses found by the jury.

In conclusion, the court noted that the jury awarded Brown $89,000 based on "reasonable and necessary medical expenses that were incurred in the past." The jury also found that Brown was 50 percent responsible for the accident. After reducing Brown's damages-including the amount of damages based on Brown's medical or health care expenses-by 50 percent, the trial court properly compared the result to the limitation in section 41.0105 on recovery of medical expenses. As the resulting damages ($44,500) did not exceed the amount of medical or health care expenses "actually paid or incurred" on Brown's behalf ($45,429.95), the trial court properly entered judgment based on the $44,500 amount.

While I disagree with 41.0105 and I truly believe that it should be repealed, at least this case represents a small win for the injured victim. After all, the goal of tort law is to make the injured victim whole, not to allow the liable parties to escape responsibility by receiving the benefit of payments from a collateral source.

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