the medical providers’ full bill. The Court noted that the plaintiff’s recovery would similarly be limited if he was covered by private insurance. Just as Medicare negotiated for a discounted rate for medical charges, private insurance companies negotiate with medical providers for a rate that is typically not as low as the Medicare rate but is less than the provider’s full rate. Therefore, when plaintiff’s medical expenses are paid by private insurers, the plaintiff can only recover the charges according to the private insurer’s rate, and not the provider’s full rate. Additionally, the Court held that because a claimant can only recover medical expenses paid or to be paid by or for the plaintiff, only evidence of recoverable medical expenses is admissible at trial. Thus, juries are not provided evidence of the amount discounted or written off due to the lower rates charged to government or private insurers. To the extent that juries use the amount of medical expenses to guide the amount of non-economic damages to award, the Court’s holding may have the effect of reducing awards for non-economic damages accordingly. To avoid the risk of a reduced recovery created by Haygood, Ms. C seeks to persuade her medical providers not to submit their charges to Medicare. She prefers for the jury to determine her medical damages and non-economic damages based on some amount greater than Medicare’s conditional payments. Because she is indigent, she cannot personally pay the medical damages. However, as discussed below, she may be able to obtain letters of protection or a hospital lien for amounts greater than Medicare’s discounted rate. A. Ms. C’s recovery may be increased by circumventing Haygood and Medicare benefits with letters of protection. Ms. C’s recovery may be increased if she enters into letters of protection with her medical providers in lieu of the medical providers submitting their bills to Medicare for payment. A letter of protection is a document sent by an attorney on a client’s behalf to a health-care provider
when the client needs medical treatment, but does not have insurance. Generally, the letter states that the client is involved in a court case and seeks an agreement from the medical provider to treat the client in exchange for deferred payment of the provider’s bill from the proceeds of settlement or award; and typically, if the client does not obtain a favorable recovery, the client is still liable to pay the provider’s bills. Through letters of protection, the medical providers and Ms. C’s attorney can negotiate the amount of the medical expenses. Pursuant to Haygood, Ms. C’s attorney understands that her potential recovery likely depends on the amount of admissible medical expenses and that to be admissible, the expenses must have been paid or must be paid by or for Ms. C. Under these circumstances, the medical providers and Ms. C’s interests are aligned: the medical provider wants to be paid as much as possible up to what is reasonable; and Ms. C wants to submit to the jury and recover as much as possible up
to what is reasonable. At minimum, both prefer to recover an amount greater than Medicare’s discounted rate. Ms. C’s attorney should be aware that letters of protection may spawn independent litigation. Texas courts apply contract formation principles, especially offer and acceptance elements, in determining the enforceability of letters of protection.28 One court concluded that the parties’ letter of protection was enforceable because the medical provider’s solicitation of a letter of protection for performing a surgery on the injured claimant constituted an offer and sending the medical provider the letter of protection in response to the medical provider’s request constituted acceptance of the offer. Another court concluded that the parties’ letter of protection was not enforceable because there was no evidence of an offer and acceptance.29 In that case, a personal injury attorney sent an unsolicited letter of protection to his client’s medical provider, but the medical provider never communicated an acceptance to the attorney. After the client’s
Defending Texans Since 1994 Former Assistant United States Attorney Former Assistant District Attorney Founding Member of the National College of DUI Defense of Counsel Williams Kherkher LLP Law Offices of Ned Barnett
Gulf Freeway Office: 8441 Gulf Freeway, Suite 600 • Houston, Texas 77017 Downtown Office: 440 Louisiana, Suite 800 • Houston, TX 77002
713-222-6767 • www.nedbarnettlaw.com
Board Certified in Criminal Law by the Texas Board of Legal Specialization thehoustonlawyer.com
March/April 2012
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