You Get What You Don’t Pay For: A Look at Paid vs. Incurred and the Admissibility of Unrecoverable Medical Expenses

David R. Iler

Nicole Mitchell1

The adoption of Section 41.0105 drastically changed the face of tort litigation by limiting plaintiffs’ recovery of medical expenses to only those expenses that were actually paid or incurred as a result of any negligence.2 The first courts have recently construed section 41.0105, giving litigators some guidance on how section 41.0105 impacts parties in tort litigation.3 Though these recent opinions give guidance as to which expenses are recoverable under the statute, little guidance is available for what evidence of medical expenses is admissible at trial in light of section 41.0105.

I. Background of Texas Civil Practice & Remedies Code § 41.0105

Section 41.0105 sets forth new law regarding the recovery of medical bills.4 This new law limits the recovery of medical and health care expenses to those expenses that are actually paid or incurred by or on behalf of the claimant.5 Section 41.0105 provides:

In addition to any other limitation under law, recovery of medical or health care expenses incurred is limited to the amount actually paid or incurred by or on behalf of the claimant.6

This new law changes a claimant’s potential recovery. Recognizing this change, the Texas Pattern Jury Charge (”PJC”) for personal injury damages was amended to address recovery of past medical expenses in cases filed after September 1, 2003. If there is an issue about whether past medical expenses were paid or incurred, section 8.2 of the PJC offers the following damages element: “Medical care expenses in the past actually paid or incurred by or on behalf of Paul Payne.”7

Litigants often disagree about the meaning of “actually paid or incurred.”8 Defendants argue that the section limits recoverable medical bills to only those expenses actually paid or actually incurred by the claimant or his insurer. In other words, write-offs or adjustments are not recoverable. Plaintiffs respond that this interpretation violates the collateral source rule. Instead, plaintiffs argue that the disjunctive “or” in the phrase means a claimant may recover either what he actually paid or what he was charged.

II. Recent Case Law Interpreting Section 41.0105

A. Mills v. Fletcher: Limitation of Recoverable Medical Expenses

This year, the San Antonio Court of Appeals interpreted the statute to preclude a plaintiff from recovering expenses that have been adjusted or written-off.9 In Mills v. Fletcher, Fletcher recovered $1,551.00 from Mills for past medical expenses arising out of a personal injury lawsuit.10 Mills argued that Fletcher’s award should be reduced because some of the expenses were written-off pursuant to an agreement with Fletcher’s insurance company.11 So, Mills argued, the adjusted amounts were neither “actually paid” nor “actually incurred” as required by the statute.12 Fletcher responded that he “incurred” the full amount of his medical bills regardless of whether he ultimately had to pay the full amount.13

Using principles of statutory construction, the court determined that because the statute used the word “incurred” twice,14 and the second “incurred” was modified by “actually,” the Legislature intended for the second “incurred” to mean something different than the first “incurred.”15 The court determined that by using “actually” to modify the second “incurred,” the Legislature intended to expressly limit medical expenses.”16 In other words, the phrase “medical or healthcare expenses incurred” addresses the global idea of a claimant’s medical expenses generally whereas the phrase “actually incurred” addresses the smaller idea of those expenses incurred after adjustments.17 Accordingly, the court concluded that a plaintiff is unable to recover expenses that have been adjusted or written-off.18

Much of the pre-Mills commentary centered on the legislative history of the statute. However, the court noted that given the plain meaning of the language in the statute, it did not need to consider the legislative history in its construction.19

Mills argued that the court’s interpretation contradicts the collateral source rule.20 Certainly, adjustments and write-offs are a benefit a patient receives only as a result of obtaining insurance; and denying the plaintiff these costs clearly gives the defendant the benefit of the plaintiff’s insurance.21 Although the court recognized that its interpretation violated the collateral source rule; it also noted that the Legislature has the power to enact a statute that abrogates this rule.22

B. Goryews v. Murphy Exploration: Adopting Mills and Negating the Collateral Source Rule

The Southern District of Texas adopted the holding in Mills.23 In Goryews v. Murphy Exploration & Prod. Co., the plaintiff was awarded $181,870.24 for past medical expenses for injuries sustained while working on defendant’s offshore oil platform.24 The court agreed with the San Antonio Court of Appeals’ statutory interpretation and reduced plaintiff’s past medical expenses to those actually paid or incurred.25

The plaintiff in Goryews argued, as did the plaintiff in Mills, that this interpretation violated the collateral source rule.26 The Goryews court reasoned that while under its interpretation, a defendant clearly benefits from adjustments by plaintiff’s insurer, the policy behind tort damages is to make a plaintiff whole.27 A plaintiff is never obligated to pay expenses that have been written-off or adjusted.28 Accordingly, if he is allowed to recover those expenses, he receives the windfall, thus undermining the “make-whole principle.”29

III. Admissibility and the Lingering Problem With the Courts’ Interpretation

Although litigators now have guidance from the courts about what expenses are recoverable under the statute, an unsettled problem remains — what evidence of medical bills is admissible? Both Mills and Goryews dealt with the situation where a plaintiff was awarded the full amount of past medical expenses and the defendant sought to have those expenses reduced pursuant to the statute.30 But defendants who have sought to have these unrecoverable expenses excluded in the first place are sometimes met with opposition from the courts.

A. Getting to Show the Jury What You Did Not Pay For

Of course, evidence that is not relevant is not admissible.31 Evidence of damages that are not recoverable is not relevant. Adjusted and written-off medical expenses are not recoverable.32 Accordingly, it would seem clear that this evidence is inadmissible.

The few courts to date to address this issue, however, have allowed unredacted medical bills to go to the jury.33 In Coppedge v. KBI, Inc., the plaintiff’s minor child was injured while skeet shooting.34 Plaintiff sued the shotgun manufacturer.35 Defendant filed a motion in limine requesting the court prohibit plaintiff from introducing evidence of medical expenses except for those expenses that were actually paid or incurred, and also to allow defendant to introduce evidence showing the amounts actually paid or incurred by plaintiff.36

The court focused its holding on what evidence of past medical expenses was admissible.37 The court held that “[s]ection 41.0105 speaks not to the admissibility of medical records, but to the recovery of plaintiff . . . .”38 The court further opined that introducing adjusted bills might infer the existence of insurance, which is inadmissible.39 Accordingly, the court allowed the plaintiff to admit evidence of the unrecoverable medical expenses. The court stated that if plaintiff ultimately prevailed and was awarded expenses that were unrecoverable, defendant could move for a reduction pursuant to the statute.40

In a subsequent case out of the Eastern District of Texas, Judge Schell adopted the court’s holding in Coppedge and denied defendant’s motion to exclude evidence of medical expenses not actually paid or incurred.41

B. Allowing Unredacted Medical Bills Invites Reversible Error

On its face, the option given to the defendant in Coppedge seems to be the easiest way to deal with paid vs. incurred. The Coppedge court recognized the potential problem with redacting bills and giving those bills to a jury. Obviously, bills reflecting an adjusted-down number could infer the existence of insurance.42 However, this solution does not address the bigger problem of what might happen if the jury is given the entire bill.

1. How Error Occurs

Imagine, for example, a plaintiff has two medical bills. Bill A totals $40,000, but only $20,000 was actually paid or incurred. Bill B also totals $40,000, but only $20,000 was actually paid or incurred. The jury receives unredacted bills totaling $80,000.

Section 41.0105 is easy to apply if the jury awards $80,000 for past medical expenses. The court needs only reduce the award to the recoverable amount of $40,000. But what happens if the jury awards $40,000 in past medical expenses? Now the court is faced with having to guess why the jury made the award it did. Either the jury decided the plaintiff should only recover half of each bill, or the jury decided the plaintiff should only recover all of Bill A or all of Bill B. When a court has to guess at the intent of the jury, the potential for harmful error is present.

This situation is analogous to the presumption of harm when a jury answers affirmatively to broad form questions that are based on a mixture of valid and invalid legal theories.43 In the hypothetical, the jury could have based its award on proper damage amounts (those actually paid or incurred) or on improper amounts (all expenses in Bill A). The court has no way of knowing and cannot determine if the appropriate award should be $20,000 or $40,000.

Like in Crown Life Insurance Co. v. Casteel, the jury award could be based on valid or invalid legal theories, and defendant has no way to demonstrate harm because he cannot prove that the award was based on invalid legal theories.44 Accordingly, an appellate court would have to presume harm thus requiring a new trial.

2. Avoiding Error

This harmful scenario should never be an issue. In light of the case law interpreting section 41.0105, adjusted or written-off medical expenses are unrecoverable. At some point, the court is going to have to decide the maximum a plaintiff can recover pursuant to the statute. The better practice is to make that decision before submitting the case to the jury. This way, a jury never has the opportunity to base its decision on improper damage amounts. There is no potential for harmful error.

To avoid error, a defendant should file a motion in limine requesting the court to prohibit plaintiff from offering evidence of medical expenses not actually paid or incurred because this evidence is irrelevant and the damages are unrecoverable.

Parties can overcome the inference of insurance by simply redacting all amounts on a bill and putting one final dollar amount at the bottom of each bill. This practice is common in situations where some expenses on a medical bill are recoverable and some are not. For example, a plaintiff is hospitalized as a result of injury and while in the hospital she receives her regularly scheduled diabetes medicine. This particular expense is not related to her injuries and thus is not recoverable.

Plaintiff would simply submit the redacted bills to the jury and then regardless of the amount awarded, the court never has to guess at whether the jury considered improper damages in making its award.

IV. Conclusion

Section 41.0105 limits a plaintiff’s recovery to those expenses actually paid or actually incurred by or on behalf of the claimant.45 Those amounts that are adjusted down or written-off as a result of agreements between a medical care provider and an insurance company or worker’s compensation carrier are not recoverable.46 Because these amounts are unrecoverable, they are irrelevant and should be inadmissible.

In order to avoid potential harmful error, the best practice is for courts to limit plaintiff’s evidence of damages to that amount actually recoverable under the statute. This insures that a jury will not rely on improper damage amounts when making its decision in a case.


Cite as: David R. Iler & Nicole Mitchell, You Get What You Don’t Pay For: A Look at Paid vs. Incurred and the Admissibility of Unrecoverable Medical Expenses, TEXSUPP (2008), available at

http://www.TexSupp.com/2008/02/16/you-get-what-you-dont-pay-for-a-look-at-paid-vs-incurred-and-the-admissibility-of-unrecoverable-medical-expenses/.


  1. David R. Iler is a partner in Fulbright & Jaworski’s Houston office. Mr. Iler is a member of the firm’s health litigation practice group and the pharmaceutical and medical device litigation practice group. Mr. Iler received his law degree from Baylor University in 1985. Nicole Mitchell is an associate in Fulbright & Jaworski’s Houston office. Ms. Mitchell is a member of the firm’s health litigation practice group. Ms. Mitchell received her law degree from Baylor University in 2006. [back]
  2. Tex. Civ. Prac. & Rem. Code Ann. § 41.0105 (Vernon 2008).[back]
  3. Mills v. Fletcher, 229 S.W.3d 765, 769–70 (Tex. App.—San Antonio 2007, no pet.); Coppedge v. K.B.I., Inc., No. 9:05-CV-162, 2007 WL 1989840, at *1–3 (E.D. Tex. July 3, 2007); Goryews v. Murphy Exploration & Prod. Co., No. V-06-01, 2007 WL 2274400, at *3–5 (S.D. Tex. Aug. 8, 2007). [back]
  4. Tex. Civ. Prac. & Rem. Code Ann. § 41.0105 (Vernon 2008).[back]
  5. Id.[back]
  6. Id. [back]
  7. Comm. on Pattern Jury Charges, State Bar of Tex., Texas Pattern Jury Charges: General Negligence & Intentional Personal Torts PJC 8.2 (2006).[back]
  8. See generally Jim M. Perdue, Jr., TTLA Submission: Maybe It Depends on What Your Definition of “Or” Is?—A Holistic Approach to Texas Civil Practice and Remedies Code § 41.0105, the Collateral Source Rule, and Legislative History, 38 Tex. Tech L. Rev. 241 (2006); see also Chris C. Miller, Reduction of Medical Expense Damage Award, Houston Law., July/Aug. 2007, available at http://www.thehoustonlawyer.com/aa_july07/page50.htm. [back]
  9. 229 S.W.3d 765, 768–70 (Tex. App.—San Antonio 2007, no pet.)[back]
  10. Id. at 767.[back]
  11. Id.[back]
  12. Id.[back]
  13. Id. at 767–68.[back]
  14. The section states: “In addition to any other limitation under law, recovery of medical or health care expenses incurred is limited to the amount actually paid or incurred by or on behalf of the claimant.” Tex. Civ. Prac. & Rem. Code Ann. § 41.0105 (Vernon 2008) (emphasis added).[back]
  15. Mills, 229 S.W.3d at 768.[back]
  16. Id.[back]
  17. Id.[back]
  18. Id. at 769.[back]
  19. Id. at 769.[back]
  20. Id.[back]
  21. Id. at 769, n.3.[back]
  22. Id.[back]
  23. No. V-06-01, 2007 WL 2274400, at *4 (S.D. Tex. Aug. 8, 2007).[back]
  24. Id. at *1.[back]
  25. Id. at *4.[back]
  26. Id. at *5.[back]
  27. Id. [back]
  28. Id.[back]
  29. Id. [back]
  30. Id.; Mills v. Fletcher, 229 S.W.3d 765, 767 (Tex. App.—San Antonio 2007, no pet.). [back]
  31. Tex. R. Evid. 402.[back]
  32. Mills, 229 S.W.3d at 769.[back]
  33. Coppedge v. K.B.I., Inc., No. 9:05-CV-162, 2007 WL 1989840, at *3 (E.D. Tex. July 3, 2007). To be fair, it appears that the defendant did not make a relevance argument, but focused its argument on inadmissibility based solely on section 41.0105.[back]
  34. Id. at *1.[back]
  35. Id.[back]
  36. Id. at *2. [back]
  37. Id. at *3.[back]
  38. Id.[back]
  39. Id.[back]
  40. Id.[back]
  41. Del Carmen Contreras v. KV Trucking, Inc., No. 4:04-CV-398, 2007 U.S. Dist. LEXIS 70140, at *5–6 (E.D. Tex. Sept. 21, 2007). [back]
  42. Id.[back]
  43. Crown Life Ins. Co. v. Casteel, 22 S.W.3d 378, 388 (Tex. 2000) (“Accordingly, we hold that when a trial court submits a single broad-form liability question incorporating multiple theories of liability, the error is harmful and a new trial is required when the appellate court cannot determine whether the jury based its verdict on an improperly submitted invalid theory.”) [back]
  44. See id.[back]
  45. Tex. Civ. Prac. & Rem. Code Ann. § 41.0105 (2008).[back]
  46. Mills v. Fletcher, 229 S.W.3d 765, 769–70 (Tex. App.—San Antonio 2007, no pet.)[back]