Pay Now or Pay Later? Supreme Court Adds Clarity Around Negligence Awards
By Joey Berlin Texas Medicine July 2022

Case by case, courts are clarifying a piece of Texas’ tort reform law that’s meant to keep physicians from paying part of a medical negligence award in one prohibitive and devastating gulp. 

Several times in the past eight years, patients who won medical liability lawsuits have sought to have their damages for future medical expenses paid mostly or all in a lump sum. Texas’ 2003 tort reforms, however, require courts to spread at least part of a future medical award into periodic payments – i.e., installments – if the physician in the case requests it. The recent legal tangles have mostly centered on how a court should decide to structure those payments. 

The Texas Supreme Court ruled on the latest of these cases in April when it decided partially in favor of Valley Regional Medical Center in Brownsville. 

Using the logic it adopted in a similar case in May 2020, the Supreme Court’s April decision rejected the original arrangement that required Valley Regional to pay the vast majority of future medical expenses immediately. In part, justices said the district court that decided on that payment structure “point[ed] to no evidence that could justify the division between periodic payments and a lump sum.” It sent the case back to the district court to “allow it to render a judgment that complies with the periodic-payments” law. 

Committed to defending tort reform, the Texas Medical Association previously weighed in on Regent Care of San Antonio v. Detrick, the 2020 decision the Supreme Court used in the Valley Regional case as a guidepost for periodic-payment law. 

A $10 million decision 

In 2016, according to court documents, Ana Ramirez sued Valley Regional Medical Center on behalf of her child (named A.M.A. in court documents), claiming a delay in care by nurses had caused her child’s cerebral palsy. 

Before the trial began, Valley Regional asked the court to structure any future medical damages that might be awarded as periodic payments. Under Texas law, if a physician defendant makes that request, the court must grant it by ordering the award to be paid in installments “in whole or in part.” 

 The jury in the case awarded the mother and child $10.3 million total, the vast majority of it for medical expenses to cover her child’s future care: more than $9 million for future medical costs up to age 18, and more than $1.2 million for future health care as an adult. 

After trial, each side presented evidence on the child’s life expectancy: The child’s  expert said it was 32 years, while Valley Regional’s expert said it was “likely up to seven or eight years old, but that he was ‘highly unlikely’ to live past age 10.” The district court signed off on A.M.A.’s final proposal on how to structure the future medical payments: five payments of $604,000 between the child’s fourth and eighth birthdays, and a single, immediate payment of $7.3 million to a special-needs trust. 

Valley Regional appealed that decision to the 13th Court of Appeals without success, then took the case to the state Supreme Court. Thomas Nye, an attorney for Valley Regional, declined comment for this story. 

Rely on evidence 

To reach its decision in the Valley Regional case, the Supreme Court went back to its reasoning in Regent Care v. Detrick. (See “Dulling the Pain of Future Damages,” September 2020 Texas Medicine, pages 44-45, www.texmed.org/futuredamages.) 

Although the court had ruled against Regent Care – a skilled nursing facility that was trying to avoid paying more than 90% of a $3 million award in a lump sum – the decision gave physicians clarity on how to obtain periodic payments in future cases. TMA had supported Regent Care with a friend-of-the-court brief written to the Supreme Court. 

The trial court in that case had ordered Regent Care to pay $256,358 in installments, and the rest to be paid in one lump sum. Justices found that because Regent Care hadn’t supplied any evidence supporting its periodic-payment request – such as damage amounts in future values – the trial court had no choice but to structure the payments the way it had.  

So that decision from the high court gave physicians and hospitals in future cases a roadmap on what they need to do for a court to grant their request for periodic payments: present evidence. 

Fast-forward to April 2022: In front of the Supreme Court in the Valley Regional Case  was the district court’s decision to award periodic payments only up until A.M.A.’s eighth birthday, with more than $7 million going to a special-needs trust in one payment. 

Justice Evan A. Young wrote that the law “makes it essential that the trial court rely on and point to probative evidence” on how it structures payment installments, and did not find such evidence in this case. He identified several problems with the trial court’s structure for the payments, including that it:  

•  Contradicted the jury’s verdict by only requiring payment installments up to A.M.A.’s eighth birthday, whereas the jury had “awarded a far larger amount to last until his 18th birthday (then proceeded to assume at least some expenses beyond that time),” Justice Young wrote. “The verdict contemplates the need to go beyond age 8.” 

•  Reflected “no evidence that could justify the division between periodic payments and a lump sum.” While the trial court can order only part of the award to be paid in installments, “only a particular kind of evidence unlocks that discretion, which is not unfettered.” One example would be showing that a lump-sum payment “is warranted to meet expenses soon after trial.” But, “we see nothing ... that shows how the evidence justifies the way the trial court ordered the periodic payments to be structured,” wrote Justice Young. 

As a result, the Supreme Court sent the case back to the trial court to restructure the future medical award. The court denied other contentions by Valley Regional. At press time, both sides had asked for more time to file a request for the Supreme Court to rehear the case. 

Greg White, an attorney for A.M.A. and Ms. Ramirez, told Texas Medicine one of the big problems with the Supreme Court decision is it seems to be saying, “[I]f the jury is presented with evidence that the injured party will live, [for example], for 10 years, then the payments have to be split over 10 years. Well, that’s not how life works,” he said, saying attorneys work on a contingency fee in personal-injury cases. 

“You can’t tell the lawyer that you’ve got to wait for 10 years before you get paid, for two reasons,” Mr. White added. “One, who would take that case, and [wait to] be paid 10 years into the future? Secondly, wouldn’t that make you worry that lawyers are now trying to make it look like people are going to have a shorter life expectancy? That’s counter [to] what you would think that people would hope for. ... You don’t want to incentivize that, or even make that kind of risk.” 

R. Brent Cooper, a Dallas attorney for the Texas Alliance for Patient Access, said the high court’s decision “gave us a lot of very good instruction ... on how it’s going to work” and said it was a positive outcome for both physicians and hospitals. 

Because the periodic-payment law says a request for installment payments must be granted “in whole or in part,” “it’s been suggested by some plaintiffs’ lawyers that you award a dollar in future [medical installments], 25 cents a year, whatever. The Supreme Court, in the Valley Regional case, has tried to disavow that notion,” Mr. Cooper said. “It said [the award has] somehow got to be related, connected to the life-care plan that’s being presented and that was adopted by the jury.”