SUPREME COURT OF TEXAS EXTENDS NORTH CYPRESS TO PERSONAL-INJURY CASES

Last week, the Supreme Court of Texas extended the holding in North Cypress (i.e., that a hospital’s reimbursement rates and costs of services are discoverable in suits concerning the reasonableness of a hospital lien) to personal-injury cases.   In In Re K & L Auto Crushers, LLC., No. 19-1022, 2021 WL 2172535 (Tex. May 28, 2021, mem. op.), Plaintiff was injured in a motor vehicle collision with a tractor-trailer.  Plaintiff’s medical providers charged him a total of about $1.2 million for surgeries and related treatment. In an effort to dispute the reasonableness of the medical charges, Defendant K & L Auto (“K & L”) served subpoenas on Plaintiffs’ healthcare providers, seeking production of documents related to (1) the amounts the providers charged insurance companies, federal insurance programs, and in-network healthcare providers for the services, materials, devices, and equipment billed to Plaintiff as of the date of Plaintiff’s treatment, (2) the amounts the providers paid for the devices and equipment billed to Plaintiff, and (3) the providers’ chargemaster (full) rates for the devices and equipment billed to Plaintiff and how the providers determined those rates. In response, Plaintiff and the providers filed motions to quash the subpoenas based on relevancy grounds, among others.

The trial court sustained the providers’ objections and quashed the subpoenas. K & L subsequently filed a petition for writ of mandamus, which was ultimately granted by the Supreme Court of Texas.

 On mandamus, the court extended the holding in In re N. Cypress Med. Ctr. Operating Co., Ltd., 559 S.W.3d 128 (Tex. 2018) — that a hospital’s reimbursement rates and costs of services were discoverable in a suit concerning the reasonableness of a hospital lien — to the context of personal-injury cases.  The court concluded that “the negotiated rates the providers charged to private insurers and public payors for the medical services and devices provided to [Plaintiff], and the costs the providers incurred to provide those services and devices, [were] at least relevant to whether the chargemaster rates the providers billed to [Plaintiff] for the same services and devices [were] reasonable.”  The court held that the information sought was relevant, and the trial court abused its discretion by denying the discovery requests. The court reasoned that “the reasonableness of the claimant's medical expenses is as germane in a personal-injury case as it is in a suit to challenge the validity of a medical lien.” The court further reasoned that the discovery requests were sufficiently narrowed and targeted to information regarding the negotiated rates and costs for the same or similar services and devices for which Plaintiff was billed.