Archive for July, 2011

What’s “reasonable”? Ask a claims adjuster.

Thursday, July 14th, 2011

The word “reasonable” gets thrown around a lot in Texas law.  A lawsuit for negligence claims that someone acted other than as a “reasonable” person would under the same circumstances.  When you go to the doctor, you’re entitled to the same level of treatment that a “reasonable” doctor would provide.  And if you ever do get hurt and wind up incurring medical expenses as a result, what sort of medical expenses can you be paid?  Why, “reasonable” ones, of course.

All this leaves us asking, though, what does “reasonable” mean?  Is it the definition found in Webster’s or some other dictionary?  Well, thanks to the Texas Supreme Court’s recent decision in Haygood v. Escabedo, you needn’t go any further than your insurance company to find out just what “reasonable” means in Texas.

Given the predilections of many of our legislators—a substantial number of whom appear to lie awake in a cold sweat at night, fretting over the nightmare scenario where a lawsuit plaintiff receives a penny more than his out-of-pocket damages—it was only a matter of time until someone simply decided to let insurance companies decide what the law is.  Well, that day has arrived.  In  Haygood, the Texas Supreme Court interpreted Section 41.0105 of the Texas Civil Practice and Remedies Code, a law that had been on the books for a number of years but that had been applied in a number of different ways.  The statute basically provides that a plaintiff in a lawsuit can recover as medical or health care expenses only what is owed or what has actually been paid on his or her behalf.  (The longstanding rule was that a plaintiff could recover the “reasonable value”—there’s that word again—of the services rendered.)  Given our insurance-driven health care system, the switch to “actually paid” is a big one.  Insurance companies generally negotiate down the cost of medical services to a fraction of the original figure quoted by a doctor or hospital.

Different trial judges applied sec. 41.0105 in different ways.  Some limited the damages information submitted to juries to the amounts actually paid.  Still others simply let the jurors review all of a plaintiff’s medical bills and come up with a reasonable figure and then applied sec. 41.0105, themselves, capping the amount awarded by the jury at the “actually paid” figure.  Haygood holds that the actual value of services normally charged by a medical provider is not only not the measure of damages, it’s not even relevant to the determination of anything in the lawsuit and therefore inadmissible.  The impact on jury awards for health care expenses is likely to be less than the impact on awards for all other kinds of damages.  Texas has long allowed recovery for the pain, suffering, and mental anguish that accompany any sort of physical injury, but it is a tried and true axiom that medical costs are what drives all aspects of recovery.  So if a plaintiff has an injury that requires $100,000 of medical care but the hospital accepts $5,000 in payment—and the latter is the only figure the jury ever hears—the jury will likely ask “how bad can it really have been?”  Because the original value of medical services is not only not recoverable, but not even relevant under Haygood, a plaintiff does not even get the opportunity to explain that, while his medical costs are for a $5,000 injury, his pain is for a $100,000 one.

The practical upshot is that an insurance company—not a court, a jury, or even a health care provider—gets to set the upper limit on what is a “reasonable” medical recovery.  Whatever a jury may award, it is limited by the amount that a health insurer is willing to pay.  Since doctors and hospitals often accept whatever insurers will pay rather than attempt to pursue patients for compensation, it places all new and enormous power in the hands of insurers.


The Cubs files

Tuesday, July 5th, 2011

As I write, I’m sitting watching the Chicago Cubs take on the Washington Nationals on Independence Day.  What could be more all-American than the national pastime played by the team from our nation’s capital against one of the most storied franchises in baseball on the Fourth of July?

But it got me thinking about the current state of the Chicago Cubs.  The Cubs’ history for the last one hundred plus years has been, primarily, one of futility.  No championships since 1908; and the club’s last World Series appearance was in 1945.  Despite a rabid fanbase that spans far more than the city of Chicago, the Cubs have rarely risen above mediocrity.  Despite a payroll that ranks among the top six in baseball and a team worth that ranks among the top five, according to Forbes magazine, the Cubs can’t put together a championship season and rarely even a pennant-winning one.  So what gives?  Is it bad luck (see Wood, Kerry and Prior, Mark) or are they even trying (seriously, look at the contract they gave Alfonso Soriano in 2006)?  And what would a championship mean to the franchise?

That last question is really my point.  How much is it worth to be a perennial lovable loser?  Would rooting for the Cubs have the same panache if they actually seized that World Series ring or would the team lose its charm?  Its loser chic?

Whenever a team—in any sport—wins a championship, it inevitably sees a spike in merchandise sales.  Americans love a winner, and nowhere is that more evident than in sports.  Fair weather fans pile on to boost t-shirt and cap sales, and the team’s brand becomes more valuable.  But are long-time fans—especially baseball fans, who have a tendency to wax romantic about the game—more impressed by winning or by losing?

Unfortunately for the Cubs, the big prize of winning a World Series after a long, long, long time of losing has already been taken by the Boston Red Sox.  The Sox grabbed the brass ring back in 2004, breaking the curse of the Bambino, and that ship sailed with them.  At this point, the Cubs’ winning it all would simply be “same show, second act.”  Big deal, nothing to see here, everyone move along.  But as the perennial also-rans, the Cubs have a unique charm (as exemplified by what is, quite possibly, the least-threatening mascot in all of major professional sports).  Everyone wants to be there when the drought finally ends, and no one wants to be seen as a bandwagon fan who didn’t suffer through the bad times before getting to enjoy the good.  So they buy the t-shirt now.  And another one next year.  And then a cap.  And then one of those big, foam “we’re number one” hand thingies, and . . . well, you get the picture.

In short, winning it all could be disastrous for the Cubs as a business, and you have to wonder if the folks in charge know this.  How many fans would take a “now, I can die in peace” approach and simply switch off their TV sets?  After the initial rush of t-shirt sales, how many would decide that there’s nothing left to see?

I’ll be the first to admit this is a very cynical view of baseball, but as a Houston Astros fan, I’ve been subjected to plenty of reasons for cynicism, of late—a meddling owner who seemed to care more about the bottom line than the long-term health of the club; a series of inept general managers; etc.  I admit I’m jaded, and I’ll be disappointed if I don’t hear from a few Cubs fans telling me how wrong I am.  But when your club has a sweetheart TV deal allowing it to be seen coast-to-coast, one of the great venues in all of sports, and a fanbase that supports you win or lose, the yearly celebration of mediocrity is a rather odd thing unless it’s done for a purpose.  I won’t go so far as to suggest that Steve Bartman was a plant, but you just couldn’t script things much better.  As long as the goat lives on, the Cubs’ mystique will, too.


This is getting ridiculous….

Friday, July 1st, 2011

The definition of what constitutes “health care” for purposes of the Texas Medical Liability law just keeps on growing.  When you go to the doctor, and he makes a decision on how to treat you, there’s not anyone who can argue with a straight face that that’s not health care.  When you’re a patient at a hospital, and the nursing staff puts an IV in your arm and gives you medicine, same thing.  But now, any stay in a hospital, any visit to a doctor’s office, would appear to be “health care” by virtue of the latest opinion out of the Texas Supreme Court, Omaha Healthcare Center LLC v. Wilma Johnson.

In that case, the titular appellee, Wilma Johnson, sued on behalf of her deceased sister Classie Mae Reed, who died as a result of a bite from a brown recluse spider sustained while a resident of a nursing home run by Omaha Healthcare. Johnson sued for negligence, claiming the nursing home breached a duty to inspect, clean and use proper pest-control measures to thwart spider and insect infestations.  Viewing her case as a straight negligence case, instead of a health care liability claim covered by the expert report requirements of the Texas Medical Liability statutes, Johnson’s attorney did not serve the sort of expert report—detailing the standard of care, breach of the standard, and causation information—that the medical liability law requires in such a case.  Omaha moved to dismiss the case on the grounds of Johnson’s failure to provide the report.  The trial court denied the motion, and the Texarkana court of appeals agreed that this was the correct decision.  But the Texas Supreme Court disagreed.

Writing for a seven-justice majority, Hon. Phil Johnson noted that “the underlying nature of [Wilma Johnson’s] claim was that Omaha should have but did not exercise the care required of an ordinarily prudent nursing home to protect and care for Reed while she was confined there.”  But this begs the question, “what does a nursing home do that is not the ‘ordinary activity of a nursing home’?”  If everything it does is toward the ultimate goal of patient care, can it ever perform acts that are outside that scope and that are, thus, not “health care”?

In a dissent, Hon. Debra Lehrmann, joined by Hon. David Medina, called out the majority.  Noting that the Court has not—at least, not explicitly—stated that all injuries occurring in a health care setting are necessarily subject to the Medical Liability law, Justice Lehrmann suggested the Court’s decision does just that.  By bringing pest control—yes, pest control—within the ambit of “health care,” the Court changed the focus of the statute from the activity of the actor to the status of the actor.  As Justice Lehrmann noted, under the majority’s holding, a medical expert—someone with appropriate experience working in nursing homes—would need to testify concerning the proper standards of pest control for nursing homes as it relates to providing a safe environment.

But isn’t providing a safe environment a goal of every business, health-related or not?  What makes nursing homes, hospitals, and doctor’s offices so special?  The answer is—as is so often the case—our Texas Legislature at work, stacking the deck to favor those who they believe should win lawsuits, rather than leaving that decision to the juries properly empowered to decide.  Courts—even our highest—have little discretion when the Legislature tells them what to do.  But, Justice Lehrmann’s dissent injects a welcome note of common sense to the debate.  One can only hope that it is heeded at some point.