St. Mary's Law Journal


The language of the Texas Civil Practice and Remedies Code § 41.0105 is by no means clear. Most Texas practitioners refer to it as the “paid-or-incurred statute.” This is due to the statue stating that recovery of medical or health care expenses are limited to the amount actually paid or incurred by or on behalf of the claimant. Yet, Texas trial lawyers and judges are perplexed by what the statute truly means. Causing further concern, most Texas practitioners do not appear to understand how the statute should be applied. At the center of the debate lies the collateral-source rule and whether it survived the enactment of § 41.0105. The dispute suggests that while the common law rule may not have been completely codified, the statute does have an adverse effect on it in some way. The collateral-source rule provides that payments made to the injured party from a collateral source are not credited against the tortfeasor’s liability. This is true even if the collateral source payments cover most or all of the injured party’s expenses. The purpose of the collateral-source rule is to prevent the wrongdoer from becoming a third-party beneficiary of insurance benefits—ensuring it is the plaintiff who receives a windfall, not the tortfeasor. By staying in line with Texas common law, Tex. Civ. Prac. & Rem. Code § 41.0105 should not prohibit plaintiffs from recovering medical expenses which have been adjusted by medical providers or written off pursuant to a third-party payor. Considering the plain language of the statute, statutory aids, precedents, and the collateral-source rule, proper construction for § 41.0105 is simple: medical expenses can be either actually paid or incurred, either by the plaintiff or on behalf of the plaintiff. The statute merely recognizes the different ways medical expenses are incurred.


St. Mary's University School of Law