Tx Court Recognizes Right to Use Medical Billing Experts to Challenge Reasonableness of Medical Expenses

The extent to which defendants were entitled to use medical billing experts to challenge the reasonableness of claimed medical expenses was unclear until a recent decision of the Texas Supreme Court. In a case involving Allstate Indemnity Co., the court made clear that a Texas procedural rule does not supplant the right to call medical billing experts as trial witnesses.

In 1979, the Texas legislature passed a law to “streamline” the proof of medical expenses in civil cases. The law has been modified several times since it was first enacted. The current version of that law is found in section 18.001 of the Texas Civil Practice and Remedies Code. 

The law allows a party (usually a plaintiff) to file and serve an affidavit stating that specified medical services were provided, that they were necessary, and that the charge for those services was reasonable at the time and in the place where the services were delivered. The affidavit must be signed by the person who provided medical services or by the person in charge of the medical records that show the services provided and the charges made.

If the opposing party (usually a defendant) contests the reasonableness of the charges or the necessity of the services provided, that party must serve a “contravening” affidavit. The contravening affidavit must provide notice of the party’s basis for disagreeing with the facts alleged in the affidavit filed by the plaintiff.

The contravening affidavit “must be made by a person who is qualified, by knowledge, skill, experience, training, education, or other expertise, to testify in contravention of all or part of any of the matters contained in the initial affidavit.” In other words, if the contravening affidavit contests the necessity of the services rendered, it will probably need to be signed by a doctor who practices in the appropriate specialty. If the affidavit contests the reasonableness of the charges for medical services, it will probably need to be signed by a medical billing expert.

When a plaintiff files a timely affidavit and the defendant does not file a contravening affidavit, the plaintiff’s affidavit is sufficient proof that the medical bills were reasonable and that medical services were necessary. Plaintiffs still need to prove the cause of their injuries, but they do not need to introduce expert evidence that the treatment of those injuries was necessary and provided at a reasonable price.

When the defendant files a contravening affidavit that meets the requirements of the statute, the rules change. The plaintiff’s affidavit can no longer use used as evidence of the reasonableness of medical billings or the necessity of services. Instead, the plaintiff must introduce expert testimony of reasonableness and necessity.

A treating physician can usually testify that services were necessary. Whether a treating physician can testify that charges were reasonable is doubtful. 

In most cases, physicians only know the amounts they charge for particular services. They are not often familiar with the usual and customary rates charged for similar services in their community. While a doctor may be willing to testify on direct examination that the billing is consistent with the amounts charged by peers in the community, cross-examination often exposes the doctor’s inability to name other physicians who charge the same rates for the same procedures.

Medical billing experts are in the best position to provide expert testimony that billings are reasonable. By the same token, when a defendant wants to controvert the reasonableness of a billing, the defendant will generally need to rely on a medical billing expert to analyze the billings and testify that they are not reasonable.

Norma Alaniz purchased an auto insurance policy from Allstate that included underinsured motorist coverage. When Allstate did not pay her claim, she sued for breach of contract, among other legal theories. Among other damages, Ms. Alaniz wanted to recover her necessary and reasonable medical expenses.

Pursuant to Texas law, Ms. Alaniz filed affidavits from a hospital and several clinics, an orthopedic surgeon, radiologists, physical therapists, and a pharmacy. The hospital, the orthopedist, and one of the physical therapy facilities collectively billed $37,000, representing the bulk of Ms. Alaniz’s medical expenses.

Allstate served a counter-affidavit from an expert in medical billing and coding. The expert analyzed the Current Procedural Terminology (CPT) codes in the billings to determine whether the providers used the correct codes for billing. She identified a number of billing errors.

Allstate’s expert then used an online database to determine the median charge for the rendered services in the zip code where the services were provided. Based on that methodology, she formed the opinion that some of the charges were excessive. The expert attached a comprehensive report to her affidavit, detailing excessive charges and billing errors.

The trial judge recognized that the expert was highly qualified in medical coding and auditing but determined that she did not meet the qualifications demanded by Texas law. According to the judge, only a healthcare provider who works in the same field of medicine can make a judgment about the reasonableness of medical billing.

The judge also concluded that the expert failed to explain why a charge that exceeded the median was unreasonable. The court therefore struck the counter-affidavit and prohibited the expert from testifying.

The Texas Supreme Court disagreed. It ruled that the expert had years of experience reviewing healthcare bills and that her work experience allowed her to develop an understanding of medical documentation and medical billing practices. The court recognized that doctors often have no understanding of the reasonableness of medical charges. An expert who relies on databases to compare charges at a regional level may be better positioned to express an opinion about the reasonableness of a billing.

The supreme court also rejected the trial judge’s holding that the expert’s conclusions were unreliable because deviation from a median does not prove that a medical billing is excessive. The court concluded that the counter-affidavit did not need to meet a test of reliability. Reliability of expert opinions is a standard for the admissibility of expert opinions, not a standard for rejecting a counter-affidavit.

Finally, the supreme court overturned several lower court decisions holding that the failure to file a proper counter-affidavit precludes a defendant from challenging the reasonableness of medical expenses with expert testimony. The statute does not allow the exclusion of testimony. The supreme court chided the lower courts for turning the statute into a “death penalty” on the issue of medical expenses.

The Texas Supreme Court recognized the value of medical billing experts as well as the right of litigants to challenge the reasonableness of medical charges at trial. The bottom line is that a qualified medical billing expert who uses a reasonable methodology will always be allowed to testify in a Texas trial when a plaintiff seeks to recover medical expenses.