§ 72.004.Offset for Medical Expenses Paid

Two rules in one short section, and they work together.

Subsection (a): the owner or operator or his liability insurance carrier is entitled to an offset against any award made to the guest on a liability claim, equal to the amount paid by any of them for medical expenses of the guest.

The purpose is to make early payment safe. Without an offset, a driver or insurer who paid a passenger’s hospital bill immediately after a collision would be paying twice — once for the treatment and again in any judgment that included the same expenses. The rational response would be to pay nothing until the case ended.

Given that the guest is by definition a close relative, that would be a bad outcome for everyone.

Subsection (b) closes the door the first subsection opened. Naming the liability insurance carrier in subsection (a) invites the argument that the carrier is a proper party, so the section says expressly that it does not authorize a direct action against a liability insurance carrier.

Texas does not generally permit a direct action against a liability insurer before judgment against the insured, and this provision keeps that rule intact.

The offset is measured by amounts paid, not by amounts billed or incurred, so it tracks what left the payer’s hands.

Read it alongside the general damages provision on evidence of medical expenses paid, which reflects the same concern that an award should correspond to real economic loss.