Jaime Guzman v. Melvin Jones , 804 F.3d 707 ( 2015 )

Case: 15-40007 Document: 00513242104 Page: 1 Date Filed: 10/22/2015
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 15-40007 United States Court of Appeals
Summary Calendar Fifth Circuit
FILED
October 22, 2015
JAIME GUZMAN; DERRICK LAMBERT, Lyle W. Cayce
Clerk
Plaintiffs–Appellees,
v.
MELVIN JONES; CELADON TRUCKING SERVICES, INCORPORATED,
Defendants–Appellants.
Appeal from the United States District Court
for the Southern District of Texas
Before HIGGINBOTHAM, ELROD, and SOUTHWICK, Circuit Judges.
JENNIFER WALKER ELROD, Circuit Judge:
Melvin Jones and Celadon Trucking Services appeal the district court’s
denial of their motion for new trial. They argue that the district court erred by
admitting evidence of Jaime Guzman’s medical expenses and refusing to
provide an adverse jury instruction in their favor based on spoliation of
evidence after Guzman underwent back surgery prior to a requested medical
examination. Because the district court did not abuse its discretion in
admitting evidence of the medical bills and in refusing spoliation sanctions, we
AFFIRM.
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No. 15-40007
I.
This law suit arises from a motor vehicle accident between a truck driven
by Jones and owned by Celadon and another vehicle driven by Jaime Guzman.
All parties agree that Jones was at fault for the accident and that Celadon is
vicariously liable because the accident occurred in the scope of Jones’
employment. A trial took place solely to determine the amount of damages. The
jury returned an award of $1,314,000 to Guzman, of which $104,000 reflected
past medical expenses. An additional $20,500 was awarded to co-plaintiff
Derrick Lambert. Appellants do not contest that award.
During trial the district court allowed Guzman to present evidence of his
medical bills. These bills showed the amounts charged to Guzman by his
various medical providers. Although one bill indicates that Guzman may have
been eligible for workers’ compensation, no bill shows any reduction in charges
provided as part of insurance coverage. The parties agree that, at the time of
the accident, Guzman was not actually a Medicaid participant and received no
benefits from the program toward his medical expenses, nor did he receive any
workers’ compensation payments. Prior to trial, Appellants moved to exclude
the bills, arguing that Guzman was eligible for Medicaid and workers’
compensation based on his employment status and his income levels. The
district court denied Appellants’ motion.
During discovery, on May 9, 2011, Appellants sent Guzman’s counsel an
e-mail indicating that they wanted Guzman to undergo an independent
medical examination 1 to support Appellants’ contention that his injuries were
1 Although the phrase “independent medical examination” (“IME”) might suggest an
examination by a court-appointed physician, in Texas, an IME is simply an examination by
a physician upon another party’s motion; it does not entail the court’s appointment of an
independent physician. Under Rule 204.1 of the Texas Rules of Civil Procedure, a party may
move to compel another party to submit to a medical examination, and the court may issue
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not a result of the accident. Guzman’s counsel provided Appellants’ counsel
with a draft order agreeing to the examination. The draft order was unsigned
and had blank spaces in which Appellants’ counsel could enter the examining
physician and date of examination. On May 27, Guzman disclosed to
Appellants during his deposition that he intended to undergo back surgery. On
June 21, Appellants’ counsel sent Guzman’s counsel a signed proposed order
for an independent medical examination. On June 23, Guzman scheduled his
surgery, which then took place on June 27. On June 29, Guzman’s counsel
signed and returned the proposed order, which was never filed with the court.
Guzman underwent the examination on July 26. Guzman’s medical records,
including scans taken prior to his surgery, were provided to Appellants’
examiner. Following the examination, Appellants moved for sanctions against
Guzman, alleging that his surgery constituted spoliation of evidence, and they
requested a jury instruction of an adverse inference in their favor. The district
court denied both motions.
II.
We review district court rulings on the admissibility of evidence for
abuse of discretion. Arthur J. Gallagher & Co. v. Babcock, 703 F.3d 284, 293
(5th Cir. 2012). When the question of admissibility first involves a legal
determination, this court begins by reviewing the underlying legal analysis de
novo. Global Petrotech, Inc. v. Engelhard Corp., 58 F.3d 198, 201 (5th Cir.
1995).
In 2003, Texas enacted an omnibus tort reform bill and approved,
through voter referendum, a state constitutional amendment to alter the
an order granting that motion if certain conditions are met. See Tex. R. Civ. P. 204.1. This
is colloquially referred to as an “IME.”
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state’s treatment of tort liability in a broad range of areas. Act of June 2, 2003,
78th Leg. R.S., ch. 204, 2003 Tex. Sess. Law Serv. Ch. 204 (H.B.4)(West); Tex.
Const. art. III, § 66. As part of that reform, the legislature passed and the
governor signed into law a provision that “[i]n 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 § 41.0105 (West). The precise meaning of § 41.0105 has
been the topic of considerable debate. 2
The Supreme Court of Texas addressed § 41.0105 directly in Haygood v.
De Escabedo, 356 S.W.3d 390 (Tex. 2012). Aaron Haygood was injured in a car
accident caused by Margarita de Escabedo. Haygood, 356 S.W.3d at 392.
During his trial, Haygood introduced several medical bills totaling
$110,069.12. Id. These bills, however, were an inaccurate reflection of his
actual personal liabilities because he was a participant in Medicare Part B. Id.
As the Supreme Court of Texas explained:
Charges for health care, once based on the provider’s costs and
profit margin, have more recently been driven by government
regulation and negotiations with private insurers. A two-tiered
structure has evolved: “list” or “full” rates sometimes charged to
uninsured patients, but frequently uncollected, and
reimbursement rates for patients covered by government and
private insurance. . . . [F]ew patients today ever pay a hospital’s
full charges, due to the prevalence of Medicare, Medicaid, HMOs,
and private insurers who pay discounted rates. Hospitals, like
health care providers in general, feel financial pressure to set their
full charges as high as possible, because the higher the full charge
the greater the reimbursement amount the hospital receives since
2 See, e.g., Jim M. Perdue, Jr., 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); Michael S. Hull et al.,
House Bill 4 and Proposition 12: An Analysis with Legislative History, Part Three, 36 Tex.
Tech. L. Rev. 169, 318 (2005).
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reimbursement rates are often set as a percentage of the hospital’s
full charge. . . . Providers commonly bill insured patients at list
rates, with reductions to reimbursement rates shown separately
as adjustments or credits. Portions of bills showing only list
charges are admitted in evidence, with proof of reasonableness
coming from testimony by the provider, or more often, by affidavit
of the provider . . . .
Id. at 393–94 (footnotes, alteration, and internal quotation marks omitted). In
Haygood, the plaintiff entered into evidence bills showing the list prices of the
treatments he had received even though the amounts actually paid by
Medicare and Haygood were only one-fourth of that amount. Id. at 392, 394.
Because of the reimbursement rates mandated by law through Medicare, the
various providers treating Haygood were only entitled to a maximum of
$27,739.43. Id. at 392. In response, Haygood argued that the reduction in his
bill fell under the collateral source rule, the common law principle that
precludes any reduction in a tortfeasor’s liability because of benefits received
by the plaintiff from a third party. Id. at 392, 394–96. The Supreme Court of
Texas, however, concluded that the text of § 41.0105 “limits a claimant’s
recovery of medical expenses to those which have been or must be paid by or
for the claimant.” Id. at 398. Because neither Haygood nor Medicare was under
any obligation to pay the amounts entered into evidence, the court reversed
the award and capped his damages at the total amount owed by Haygood and
Medicare. Id. at 399–400.
The present case raises a different question than that answered in
Haygood: whether an uninsured plaintiff who may have been eligible for
insurance benefits but did not have insurance at the time of his injury or
treatment is barred from presenting evidence of the list prices he was charged
by the hospital and is obligated to pay.
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Appellants argue here that Guzman’s debt to his medical providers is not
“actually incurred” because Guzman may have been charged a different rate
had he participated in an insurance program. That argument is unconvincing;
here, Guzman has actually incurred his billed obligations because he received
the medical care, was billed for it, has provided no payments to cover it, and
could be subject to suit for non-payment in the full amount billed. The amount
he might have owed under different circumstances has no bearing on what
Guzman actually owes now. Appellants’ reliance on Haygood is misplaced. The
decision in Haygood prohibits a plaintiff from introducing evidence of, or
recovering damages in excess of, the reduced rate negotiated between his
insurer and his medical provider because that is the most the medical provider
can take from the plaintiff. Haygood, 356 S.W.3d at 395, 399 (“[W]e hold that
only evidence of recoverable medical expenses is admissible at trial.”). Haygood
gives no indication, however, that such a limitation is required by § 41.0105
when the plaintiff does not benefit from a reduced rate but merely may be
eligible for insurance or public benefits that would have reduced his rates.
The Supreme Court of Texas has not yet considered the precise issue
raised in this case. In such a situation, which calls for an “Erie guess,” see
Kreiser v. Hobbs, 166 F.3d 736, 739 (5th Cir. 1999), Erie R.R. Co. v. Tompkins,
304 U.S. 64 (1938), the Fifth Circuit “may look to the decisions of intermediate
appellate state courts for guidance.” Howe v. Scottsdale Ins. Co., 204 F.3d 624,
627 (5th Cir. 2000). The decision of such a court provides “a datum for
ascertaining state law which is not to be disregarded by a federal court unless
it is convinced by other persuasive data that the highest court of the state
would decide otherwise.” Labiche v. Legal Sec. Life Ins. Co., 31 F.3d 350, 352
(5th Cir. 1994) (quoting Comm’r v. Estate of Bosch, 387 U.S. 456, 465 (1967)).
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Here, we find persuasive the rulings of Texas’ intermediate courts declining to
extend the limitations imposed in Haygood.
In Big Bird Tree Service v. Gallegos, the Dallas Court of Appeals
permitted an uninsured plaintiff to recover his billed medical expenses even
though the hospital waived his charges through its own charitable program
because the hospital was under no contractual obligation to provide for the
plaintiff’s care and reserved the right to collect from the plaintiff if he prevailed
in his suit. 365 S.W.3d 173, 177 (Tex. App.—Dallas 2012, pet. denied). In
another case, the Fourteenth Court of Appeals in Houston allowed recovery for
the billed medical expenses of an uninsured plaintiff. Metro. Transit Auth. v.
McChristian, 449 S.W.3d 846, 854 (Tex. App.—Houston [14th Dist.] 2014, no
pet.). Writing for that court, Justice Boyce carefully explained:
[S]ection 41.0105 addresses the difficulty in determining
reasonable expenses for necessary medical care when “[h]ealth
care providers set charges they maintain are reasonable while
agreeing to reimbursement at much lower rates determined by
insurers to be reasonable, resulting in great disparities between
amounts billed and payments accepted.” The difficulty highlighted
in Haygood does not arise in this case given the uninsured status
reflected in McChristian’s medical records; bills showing no
adjustments . . .; and McChristian’s testimony that the bills are his
responsibility and remain unpaid. This record offers no basis for a
conclusion that the medical expenses at issue here included list
price charges for which the service providers billed but had “no
right to be paid.”
Id. (quoting Haygood, 356 S.W.2d at 391, 396) (citations omitted). There are no
meaningful distinctions between Guzman’s situation and McChristian’s.
Guzman was actually billed the amounts awarded by the jury for his medical
expenses, and he remains under a legal obligation to pay the billed amounts to
his medical providers. Reduced prices that he may have received had he
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participated in health benefits or insurance programs for which he may have
been eligible are irrelevant according to Texas law. As Texas law permits
consideration of Guzman’s medical bills, the district did not err—and most
certainly did not abuse its discretion—in allowing evidence of Guzman’s
medical bills into the trial.
III.
A trial court’s decision on a motion for sanctions for spoliation of evidence
during discovery is reviewed for abuse of discretion. Sierra Club, Lone Star
Chapter v. Cedar Point Oil Co., 73 F.3d 546, 569 (5th Cir. 1996). Spoliation of
evidence “is the destruction or the significant and meaningful alteration of
evidence.” Rimkus Consulting Grp., Inc. v. Cammarata, 688 F. Supp. 2d 598,
612 (S.D. Tex. 2010). We permit an adverse inference against the spoliator or
sanctions against the spoliator only upon a showing of “bad faith” or “bad
conduct.” Condrey v. SunTrust Bank of Georgia, 431 F.3d 191, 203 (5th Cir.
2005) (internal quotation marks omitted). A party’s duty to preserve evidence
comes into being when the party has notice that the evidence is relevant to the
litigation or should have known that the evidence may be relevant. Rimkus,
688 F. Supp. 2d at 612. Bad faith, in the context of spoliation, generally means
destruction for the purpose of hiding adverse evidence. See Mathis v. John
Morden Buick, Inc., 136 F.3d 1153, 1155 (7th Cir. 1998).
The district court acknowledged that Guzman may have been under a
duty to preserve. At the time he scheduled the surgery, his counsel knew of
Appellants’ desire to conduct an independent medical examination. The
district court concluded, however, that even if Guzman had been under a duty
to preserve evidence, his conduct did not merit sanctions or adverse
instructions because Appellants produced no evidence suggesting bad faith.
Guzman’s disclosure of his intent to have surgery during his deposition
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suggests he was not seeking to deceive Appellants. After Appellants received
this disclosure in the deposition, they made no request to be informed of his
surgery date, nor did they ask that he delay surgery pending his examination.
Only after the examination was completed did Appellants assert that the
surgery had meaningfully altered evidence.
While the timing of Guzman’s surgery may seem strange, there is no
evidence to suggest that he acted in a manner intended to deceive Appellants
or that he undertook the surgery with the intent of destroying or altering
evidence. The district court concluded that the timing of Guzman’s surgery
alone was insufficient to demonstrate he had acted in bad faith. We find no
reason to conclude that the district court abused its discretion in denying the
motion for adverse instructions based on spoliation of evidence.
IV.
The district court’s judgment is AFFIRMED as remitted. 3
3 The jury awarded $1,314,000 in damages, of which $104,000 compensated for past
medical damages. The award for medical damages, apparently due to a slight typographical
error, exceeded the evidence that Guzman introduced into trial. Guzman agrees that a
remittitur is appropriate under these circumstances. See Brunnemann v. Terra Int’l, Inc., 975
F.2d 175, 177 (5th Cir. 1992); McDonald v. Bennett, 674 F.2d 1080, 1092 (5th Cir. 1982).
Accordingly, the judgment is hereby remitted to $1,313,047.20.
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