U.S. DISTRICT COURT FOLLOWS TEXAS SUPREME COURT’S RULING IN K & L AUTO CRUSHERS; CONCLUDES THAT FEE SCHEDULES AND REIMBURSEMENT RATES OF PLAINTIFFS’ MEDICAL PROVIDERS ARE DISCOVERABLE

Last week, the United States District Court for the Western District of Texas concluded that the defendant in a personal-injury suit was entitled to discovery of the fee schedules and reimbursement rates of the plaintiffs’ medical providers and granted the defendant’s motion to compel. In Acuna v. Covenant Transport, Inc., No. SA-20-CV-01102-XR, 2022 WL 95241 (W.D. Tex. [San Antonio Division] Jan. 10, 2022), Theresa Acuna and Ashley Acuna (“Plaintiffs”) sued Covenant Transport, Inc. (“Covenant”) in connection with a motor vehicle collision. Through discovery, Covenant determined that Plaintiffs had health insurance but chose to self-pay instead of billing their insurance for their past medical expenses, which totaled almost $700,000.   

As such, Covenant served subpoenas on Plaintiffs’ medical providers seeking “fee schedules in effect on [the year of Plaintiffs’ treatment] for procedures provided on Plaintiffs including but not limited to, fee schedule with an insurance company, payor of insurance services, and or private pay client.” The providers subsequently filed motions to quash, contending that production of contractual fee schedules and reimbursement rates were overbroad, irrelevant, and sought the disclosure of trade secrets. In response, Covenant filed a motion to compel. 

The U.S. District Court granted Covenant’s motion to compel after concluding that Covenant was entitled to the fee schedules and reimbursement rates. The Court began its analysis by recognizing that the Texas Supreme Court, in In re K & L Auto Crushers, LLC, 627 S.W.3d 239, 258 (Tex. 2021), “recently clarified that medical providers’ negotiated rates and fee schedules with private insurers and public-entity payors are relevant and discoverable in personal-injury litigation on the issue of the reasonableness of a plaintiff's claimed damages.” The Court further reasoned that “even if the fee schedules were trade secrets, the information was nonetheless discoverable because the fee schedules were necessary for a fair adjudication of the defense that Plaintiffs’ claimed damages were not reasonable.” Further, the need for the information outweighed any potential harm to the medical providers, and any concern about confidential information or trade secrets could be adequately resolved with a protective order. Lastly, the Court reasoned that the request for documents did not impose an undue burden on the providers as they were operating under letters of protection, which gave them a direct financial stake in the resolution of Plaintiffs’ claims.