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Chapter 74: Mapping the Medical Malpractice Minefield Scoresby v. Santillan. Resetting the Bar for the Chapter 74 Medical Liability Reports Swinging the Hammer: OSHA’s Response to ‘Recalcitrant Employers’ Tort Recovery for Medicare Beneficiaries Houston Bar Foundation Recognizes Outstanding Efforts by Volunteers




Volume 49 – Number 5

March/April 2012

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contents Volume 49 Number 5

March/April 2012



FEATURES 74: Mapping 10 Chapter the Medical Malpractice Minefield

By Robert W. Painter

v. Santillan: 16 Scoresby Resetting the Bar for

the Chapter 74 Medical Liability Reports By Scott Benjamin Novak

the Hammer: 20 Swinging OSHA’s Response to



‘Recalcitrant Employers’ By John S. Gray

Recovery for Medicare 24 Tort Beneficiaries: Procedures,

Pitfalls and Potential Values By Caroline C. Pace

Bar Foundation 30 Houston Recognizes Outstanding Efforts by Volunteers

The Houston Lawyer


The Houston Lawyer (ISSN 0439-660X, U.S.P.S 008-175) is published bimonthly by The Houston Bar Association, 1300 First City Tower, 1001 Fannin St., Houston, TX 77002-6715. Periodical postage paid at Houston, Texas. Subscription rate: $12 for members. $25.00 non-members. POSTMASTER: Send address changes to: The Houston Lawyer, 1300 First City Tower, 1001 Fannin, Houston, TX 77002. Telephone: 713-759-1133. All editorial inquiries should be addressed to The Houston Lawyer at the above address. All advertising inquiries should be addressed to: Quantum/SUR, 12818 Willow Centre Dr., Ste. B, Houston, TX 77066, 281-955-2449 ext 16,, e-mail: Views expressed in The Houston Lawyer are those of the authors and do not necessarily reflect the views of the editors or the Houston Bar Association. Publishing of an advertisement does not imply endorsement of any product or service offered. ©The Houston Bar Association, 2012. All rights reserved.


March/April 2012

Join the Houston Bar Association’s 100 Club The Houston Bar Association 100 Club is a special category of membership that indicates a commitment to the advancement of the legal profession and the betterment of the community. The following law firms, corporate legal departments, law schools and government agencies with five or more attorneys have become members of the 100 Club by enrolling 100 percent of their attorneys as members of the HBA. Firms of 5-24 Attorneys Abraham, Watkins, Nichols, Sorrels, Agosto & Friend Adair & Myers PLLC Ahmad, Zavitsanos, Anaipakos, Alavi & Mensing P.C. Ajamie LLP Allen Boone Humphries Robinson LLP Andrews Myers, P.C. Bair Hilty, P.C. Baker Williams Matthiesen LLP The Bale Law Firm, PLLC Barrett Daffin Frappier Turner & Engel, LLP Bateman/Pugh, PLLC Bell, Ryniker & Letourneau, P.C. Berg & Androphy Bingham, Mann & House Blank Rome LLP Brewer & Pritchard PC Buck Keenan LLP Burck, Lapidus, Jackson & Chase, P.C. Bush & Ramirez, L.L.C. Butler I Hailey Caddell & Chapman Cage Hill & Niehaus, L.L.P. Campbell & Riggs, P.C. Chernosky Smith Ressling & Smith PLLC Christian Smith & Jewell, L.L.P. Conley Rose P.C. Connelly • Baker • Wotring LLP Cozen O’Connor Crady, Jewett & McCulley, LLP David Black & Associates De Lange Hudspeth McConnell & Tibbets LLP Devlin Naylor & Turbyfill PLLC Diamond McCarthy LLP Dinkins Kelly Lenox Lamb & Walker, L.L.P. Dobrowski, Larkin & Johnson LLP Dow Golub Remels & Beverly, LLP Doyle Restrepo Harvin & Robbins, L.L.P. Drucker, Rutledge & Smith, L.L.P. Ebanks Horne Rota Moos LLP Edison, McDowell & Hetherington LLP Ellis, Carstarphen, Dougherty & Griggs P.C. Ewing & Jones, PLLC Faubus & Scarborough LLP Fernelius Alvarez PLLC Fibich Hampton Leebron Briggs Josephson, LLP Fisher, Boyd, Brown & Huguenard, LLP Fisher & Phillips LLP Fizer Beck Webster Bentley & Scroggins, P.C. Fleming, Nolen & Jez, L.L.P. Frank, Elmore, Lievens, Chesney & Turet, L.L.P. Fullenweider Wilhite PC Funderburk & Funderburk, L.L.P. Galloway Johnson Tompkins Burr & Smith Germer Gertz, L.L.P. Givens & Johnston PLLC Goldstein & Lipski, PLLC Gordon & Rees LLP Greer, Herz & Adams, L.L.P.

Hagans Burdine Montgomery & Rustay, P.C. Harris, Hilburn & Sherer Harrison, Bettis, Staff, McFarland & Weems, L.L.P. Hays McConn Rice & Pickering, P.C. Hicks Thomas LLP Hirsch & Westheimer, P.C. Hogan Lovells US LLP Holm I Bambace LLP Hunton & Williams LLP Jackson Gilmour & Dobbs, PC Jackson Lewis LLP Jenkins Kamin, L.L.P. Johnson DeLuca Kurisky & Gould, P.C. Johnson Radcliffe Petrov & Bobbitt PLLC Johnson, Trent, West & Taylor, L.L.P. Jones, Walker, Waechter, Poitevent, Carrere & Denegre, L. L. P. Joyce, McFarland + McFarland LLP Kane Russell Coleman & Logan PC Kelly, Sutter & Kendrick, P.C. Kroger | Burrus LeBlanc Bland P.L.L.C. Legge Farrow Kimmitt McGrath & Brown, L.L.P. Linebarger Goggan Blair & Sampson LLP Liskow & Lewis Lorance & Thompson, PC MacIntyre & McCulloch, LLP McGinnis Lochridge & Kilgore LLP McLeod Alexander Powel & Apffel PC MehaffyWeber PC Miller Scamardi & Carraba Mills Shirley L.L.P. Morris Lendais Hollrah & Snowden Munsch Hardt Kopf & Harr, P.C. Murray | Lobb PLLC Myers Doyle Nathan Sommers Jacobs Ogden, Gibson, Broocks, Longoria & Hall, LLP Ogletree, Deakins, Nash, Smoak & Stewart, P.C. Okin Adams & Kilmer LLP Olson & Olson LLP Pagel Davis & Hill PC Perdue Brandon Fielder Collins & Mott Perdue Kidd & Vickery Phelps Dunbar LLP Phillips, Akers & Womac, PC Pillsbury Winthrop Shaw Pittman LLP Ramey, Chandler, McKinley & Zito Ramsey & Murray PC Roach & Newton, L.L.P. Roberts Markel Weinberg PC Ross, Banks, May, Cron & Cavin, P.C. Royston, Rayzor, Vickery & Williams, L.L.P. Rusty Hardin & Associates, P.C. Rymer, Moore, Jackson & Echols, P.C. Schiffer Odom Hicks & Johnson PLLC Schirrmeister Diaz-Arrastia Brem LLP Schwartz, Junell, Greenberg & Oathout, LLP

Schwartz, Page & Harding L.L.P. Shannon Martin Finkelstein & Alvarado, P.C. Shepherd, Scott, Clawater & Houston, L.L.P. Shipley Snell Montgomery LLP Short Carter Morris, LLP Singleton Cooksey LLP Smith Murdaugh Little & Bonham, L.L.P. Smyser Kaplan & Veselka, L.L.P. Sprott, Rigby, Newsom, Robbins & Lunceford, P.C. Steele Sturm P.L.L.C. Stevenson & Murray Strong Pipkin Bissell & Ledyard, L.L.P. Stuart & Associates P.C. Sutton McAughan Deaver, PLLC Tekell, Book, Allen & Morris, L.L.P. Thompson & Horton LLP Thompson, Coe, Cousins & Irons, LLP Tucker, Taunton, Snyder & Slade, P.C. Ware, Jackson, Lee & Chambers, L.L.P. Watt Beckworth Thompson Henneman & Sullivan LLP Weycer Kaplan Pulaski & Zuber, P.C. White Mackillop & Gallant P.C. Williams, Birnberg & Andersen, L.L.P. Williams Kherkher Hart Boundas LLP Williams Morgan & Amerson, P.C. Willingham, Fultz & Cougill, LLP Wilson, Cribbs & Goren, P.C. Wilson, Elser, Moskowitz, Edelman & Dicker Wong, Cabello, Lutsch, Rutherford & Brucculeri, P.C. Wright Abshire, Attorneys, PC Wright & Close, L.L.P. Yetter Coleman LLP Ytterberg Deery Knull LLP Zimmerman, Axelrad, Meyer, Stern & Wise, P.C. Zukowski, Bresenhan & Sinex, L.L.P. Firms of 25-49 Attorneys Adams & Reese LLP Akin Gump Strauss Hauer & Feld LLP Baker & McKenzie LLP Beck Redden & Secrest, L.L.P. Beirne, Maynard & Parsons, L.L.P. Chamberlain Hrdlicka White Williams & Aughtry Coats I Rose Cokinos Bosien & Young Gibbs & Bruns LLP Hoover Slovacek LLP Jones Day Littler Mendelson, PC Seyfarth Shaw LLP Firms of 50-100 Attorneys Baker Hostetler LLP Gardere Wynne Sewell LLP Jackson Walker L.L.P. Martin, Disiere, Jefferson & Wisdom, L.L.P.

Morgan, Lewis & Bockius LLP Porter Hedges LLP Thompson & Knight LLP Winstead PC Firms of 100+ Attorneys Andrews Kurth LLP Baker Botts L.L.P. Bracewell & Giuliani LLP Fulbright & Jaworski L.L.P. Haynes and Boone LLP Locke Lord LLP Vinson & Elkins LLP Corporate Legal Departments Anadarko Petroleum Corporation AT&T Texas BP CenterPoint Energy El Paso Corporation Kellogg Brown & Root Inc LyondellBasell Industries MAXXAM Inc Newfield Exploration Company Petrobras America Inc. Plains Exploration & Production Co. Pride International Inc. Rice University Sysco Corporation Texas Children’s Hospital Total E&P USA Inc. University of Houston System Law School Faculty South Texas College of Law Thurgood Marshall School of Law University of Houston Law Center Government Agencies City of Houston Legal Department Harris County Attorney’s Office Harris County District Attorney’s Office Harris County Domestic Relations Office Metropolitan Transit Authority of Harris County Texas Port of Houston Authority of Harris County Texas

contents Volume 49 Number 5

March/April 2012



departments Message 6 President’s Our Challenge, Our Charge By Denise Scofield the Editor 8 From To Mandate, or Not to Mandate,

That is The Question

By Tamara Stiner Toomer the Bar 33 AtJudicial Portrait

Retirement Ceremony



Spotlight 34 Committee Membership, Member

Benefits, and Pictorial Roster Committee By Nick Nicholas

Profile in Professionalism 35 ACarol Vance Retired Partner, Bracewell & Giuliani LLP Former Harris County District Attorney the Record 36 OffVivienne Schiffer:

Preserving History through Fact, Fiction, and Film By Polly Graham

Reviews 37 Media Spinning the Law: Trying Cases

in the Court of Public Opinion Reviewed by Don Rogers

Trends 37 Legal Supreme Court Ruling Threatens

Groundwater Regulation By Val Perkins

The Post-Wal-Mart v. Dukes World: Class Actions with a Twist By N. Jill Yaziji

The Houston Lawyer

40 Placement Service 41 Litigation MarketPlace


March/April 2012

Equal Access


What does it take to become an “Equal Access Champion”? The firms and corporations listed below have signed 5-year commitment forms that indicate they will uphold a pledge to provide representation in a certain number of cases each year, based on the number of attorneys in the firm or legal department. The goal is to provide pro bono representation in at least 1,500 cases through the Houston Volunteer Lawyers Program each year, and to increase that goal each year. For more information contact Kay Sim at (713) 759-1133.

Large Firm Champions Andrews Kurth LLP Baker Botts L.L.P. Bracewell & Giuliani LLP Fulbright & Jaworski L.L.P. Locke Lord LLP Vinson & Elkins LLP Corporate Champions Baker Hughes Incorporated BP CenterPoint Energy, Inc. ConocoPhillips Continental Airlines, Inc. Exxon Mobil Corporation Marathon Oil Company Port of Houston Authority Rosetta Resources Inc. Shell Oil Company Intermediate Firm Champions Beirne, Maynard & Parsons, L.L.P. Gardere Wynne Sewell LLP Haynes and Boone, L.L.P. King & Spalding LLP Thompson & Knight LLP Mid-Size Firm Champions Akin Gump Strauss Hauer & Feld LLP Adams & Reese LLP Baker Hostetler LLP Chamberlain, Hrdlicka, White, Williams & Aughtry Greenberg Traurig, LLP Jackson Walker L.L.P. Jones Day Morgan, Lewis & Bockius LLP

Porter Hedges, L.L.P. Strasburger & Price, L.L.P. Susman Godfrey LLP Weil, Gotshal & Manges Winstead PC Small Firm Champions Abraham, Watkins, Nichols, Sorrels, Agosto & Friend Beck, Redden & Secrest, L.L.P. Gibbs & Bruns LLP Hays, McConn, Rice & Pickering, P.C. Hughes Watters Askanase LLP Johnson DeLuca Kurisky & Gould, P.C. Kroger | Burrus Schwartz, Junell, Greenberg & Oathout, L.L.P Sutherland Asbill & Brennan LLP Weycer, Kaplan, Pulaski & Zuber, P.C. Yetter Coleman LLP Boutique Firm Champions Blank Rome LLP Coane & Associates Connelly • Baker • Wotring LLP Edison, McDowell & Hetherington LLP Fullenweider Wilhite PC Funderburk & Funderburk, L.L.P. Hicks Thomas LLP Jenkins & Kamin, L.L.P. Ogden, Gibson, Broocks, Longoria & Hall, L.L.P. Squire, Sanders & Dempsey L.L.P. Strong Pipkin Bissell & Ledyard, L.L.P. Wilson, Cribbs & Goren, P.C.

Solo Champions Law Office of O. Elaine Archie Basilio & Associates, PLLC Peter J. Bennett Law Office of J. Thomas Black, P.C. Law Office of Fran Brochstein Law Office of David Hsu Brogden Law Office of Robbie Gail Charette Chaumette, PLLC Law Office of Papa M. Dieye The Ericksen Law Firm Frye & Cantu, PLLC Fuqua & Associates Terry L. Hart Law Office of James and Stagg, PLLC Katine & Nechman L.L.P. The Keaton Law Firm, PLLC Gregory S. Lindley Law Office of Maria S. Lowry Martin R. G. Marasigan Law Offices The Law Office of Evangeline Mitchell, PLLC Morley & Morley, P.C. Bertrand C. Moser Pilgrim Law Office Robert E. Price W. Thomas (Tommy) Proctor Law Offices of Judy Ritts Cindi L. Robison Scardino & Fazel Shortt & Nguyen, P.C. Jeff Skarda Teal & Associates Tindall & England, P.C. Diane C. Treich Norma Levine Trusch

president’s message

By Denise Scofield Morgan, Lewis & Bockius LLP

Our Challenge, Our Charge

The Houston Lawyer


contributors, it simply is not enough. he obligation to provide leEach year we face the same challenge — gal assistance to low income too little money, too few volunteers, and Houstonians is one that the too many clients. Houston Bar Association has Many of our members are familiar taken seriously for thirty with the funding crisis facing legal aid years. Our award-winning programs at the federal, state and private program, the Houston Volunteers Lawyer levels. As financial support shrinks, the Program, was founded in 1981. The HVLP need for services contindelivers free legal servicPlease call Alissa Rubin ues to expand. Accordes to low-income resiat the HVLP at 713.228.0735 ing to the Texas Access dents of Harris County to Justice Commission, by linking qualified apto take a case or volunteer more than six million plicants with attorneys at a clinic. You can also people currently qualify who volunteer their register to volunteer online for legal assistance in time on a pro bono baat, and you can Texas; however, there sis. Volunteer attorneys now even search through the is approximately one assist clients who meet HVLP’s waiting cases — and legal aid lawyer for evthe HVLP’s eligibility ery 11,512 Texans who standards and who have accept — using its new qualify. Here in Housbeen screened and inonline portal, which can be ton, the HVLP currently terviewed by HVLP staff found at has 117 cases that are members on legal issues Instructions for accessing open and waiting for a ranging from family law, and using the portal are on volunteer to step forlandlord-tenant, conthe HVLP’s website. ward. sumer or bankruptcy, Please email Kay Sim at To meet the needs in probate, veterans’ disHouston, the HBA unability, and the like. The the HBA ( derstands the charge: to Harris County attorneys to contribute to the raise additional funds who serve as HVLP volHarvest Party. and to recruit more unteers each make a difvolunteers. To make our financial target, ference in the lives of low-income clients, the HBF hosts the Harvest Party every their families and communities by providfall, proceeds of which benefit the HVLP. ing access to the justice system. Over the next several months, HBA and While the HVLP receives generous supHBF board members again will be workport from the Houston Bar Foundation, ing the phones and pounding the pavethe Texas Access to Justice Foundation, ment asking for your help. We are not Lone Star Legal Aid, Ryan White Title I, professional fund-raisers, and our “ask” City of Houston, Hamman Foundation, may not always be eloquent, but our inHouston Endowment, as well as private 6

March/April 2012

tention is sincere — without your donations, fewer people who need our help will receive it. During 2011, many of our members answered the call, and we raised over $561,000. Unfortunately, we need to do better. We are heartened that we can. Last year, the Dallas Bar Association raised over $800,000 with a smaller population of lawyers than that of the Houston area. When you receive a phone call, e-mail or letter asking you to support our efforts, I hope you will heed the call and contribute whatever you can. Funding is only part of the equation. A robust pool of volunteers is the other critical piece. If you have not taken a case through the HVLP or provided advice and counsel at one of the HVLP’s many legal clinics, I encourage you to do so. The HVLP continues to refine its model to make it as easy as possible on the volunteer lawyer. If you take a case, you can rest assured that your client has been pre-screened through a rigorous intake process and that you will receive the mentoring and assistance you need along the way from a lawyer who specializes in the area in which your client needs help. You also can rest assured that the Houston judiciary are strong supporters of the HVLP and will recognize your service. Under the direction of the HVLP’s outstanding new executive director, Alissa Rubin, the HVLP will only continue to improve the volunteer experience. There just is no better feeling than helping someone who cannot navigate the justice system without you. I really did not plan to take on a pro bono case this year

because of the varied responsibilities of serving as bar president, but when asked to take a very compelling family law case, I somewhat reluctantly agreed. Yesterday, several of my firm’s associates and I spent the afternoon in an evidentiary hearing assisting a woman who has been emotionally and financially abused and her six-yearold son. Our judge was well-prepared, organized, and balanced in approach. Our amicus lawyer was a superb advocate for the child. Opposing counsel were cordial and professional. Five witnesses, some of whom were strangers to my client, took time out of their work days to appear in court on her behalf. My associates received valuable experience by examining witnesses and arguing motions. And, at the end of the day, our client received the relief she truly needs in order to start her life anew. If I had not said yes when asked to take the case, yesterday may not have been her day in court. Please help us give more indigent Houstonians their day in court. gary 13710



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March/April 2012


from the editor

By Tamara Stiner Toomer McGuireWoods LLP

Associate Editors

Julie Barry Attorney at Law

Keri Brown Baker Botts L.L.P.

Angela L. Dixon Attorney at Law

The Houston Lawyer

Robert W. Painter Painter Law Firm PLLC

Don Rogers Harris County District Attorney’s Office


March/April 2012

To mandate, or not to mandate, that is the question


hat would this medical, health and safety issue of The Houston Lawyer (THL) be if I did not discuss the contentious health care legislation that is currently gripping the nation? Pending before the U.S. Supreme Court is the question of whether certain provisions of the Patient Protection and Affordable Care Act (“PPACA”), that was passed by a divided Congress and signed into law by President Barack Obama on March 23, 2010, is constitutional. Of particular significance is the constitutionality of the PPACA’s key provision—the “individual mandate”—which requires individuals not covered by employer- or government-sponsored insurance plans to purchase some form of minimal health insurance or face a penalty. While the Act encompasses other reforms, such as increased coverage of persons with pre-existing conditions, no other provision has been more controversial or sparked more debate than the individual mandate. Numerous lawsuits challenging the PPACA have been filed by individuals, organizations and attorneys general of multiple states, where the constitutionality of the individual mandate is the key issue in every case. As of January 2012, two of four federal appellate courts have upheld the Act, a third declared the individual mandate unconstitutional, while a fourth ruled the federal Anti-Injunction Act prevents the issue from being decided until taxpayers begin paying penalties in 2015. (I really, really love Wikipedia and lifted every word of this last sentence from the website—

tion_and_Affordable_Care_Act). Two years after the passage of the PPACA, the heavily contested mandate provision has finally arrived at the front steps of the U.S. Supreme Court. From March 26-28, 2012, the Court heard six hours of oral argument in Department of Health and Human Service v. Florida, 11-398 (2012) and related cases. At issue not only is the constitutionality of the individual mandate, but whether the remainder of the legislation must also be overturned if the individual mandate is invalidated. There is definitely no lack of opinions from analysts and other commentators on how the Court will rule. The PPACA, if upheld, will implement sweeping health care reform; thus, every 24 hour news cycle, political blog, and newspaper headline has referenced some aspect of the Supreme Court case and analyzed what’s at stake for those who fall on either side of the political aisle. The widespread attention given to the healthcare legislation highlights the importance medical, health and safety laws have in our everyday lives. In this issue of THL, both Scott Novak and Robert Painter explore the impact of Chapter 74 of the Texas Civil Practice and Remedies Code on medical malpractice claims since the law took effect over eight years ago. John Gray chips in with his article on OSHA’s tougher enforcement policies in the context of worksite safety. Completing the suite of articles is Caroline Pace’s piece that examines tort recovery for Medicare beneficiaries. Lastly, a big round of applause for Robert Painter and John Gray who pulled double duty by also serving as guest editors for the current issue. As always, I hope you enjoy reading this issue. Until next time...



Denise Scofield

Alistair B. Dawson



Brent Benoit

David A. Chaumette

First Vice President

Past President

Laura Gibson

T. Mark Kelly

Second Vice President

M. Carter Crow

DIRECTORS (2010-2012)

Benny Agosto, Jr. Warren W. Harris

Todd M. Frankfort John Spiller

Hon. David O. Fraga Neil D. Kelly

DIRECTORS (2011-2013) Jennifer Hasley Daniella D. Landers

editorial staff Editor in Chief

Tamara Stiner Toomer Associate Editors

Julie Barry Angela L. Dixon Don Rogers

Keri D. Brown Robert W. Painter

Sharon D. Cammack Don D. Ford III Sammy Ford IV Polly Graham John S. Gray Al Harrison Farrah Martinez Judy L. Ney Edward J. (Nick) Nicholas Caroline C. Pace Benjamin K. Sanchez Joy E. Sanders Hannah Sibiski Gary A. Wiener N. Jill Yaziji

Editorial Board

Managing Editor

Tara Shockley

HBA office staff Membership and Technology Services Director

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Kay Sim Administrative Assistant

Ronald Riojas

Ashley G. Steininger

Membership Assistant

Administrative Assistant

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Ariana Ochoa

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Claire Nelson

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March/April 2012


Chapter 74:

Mapping the Medical Malpractice Minefield

By Robert W. Painter


n 2003, enactment of Chapter 74 of the Texas Civil Practice & Remedies Code dramatically reshaped the practice of medical malpractice law in Texas by introducing new damages limits and a procedural minefield to prosecute these complex cases. Now, in the eight-plus years since Chapter 74 went into effect, attorneys can benefit from a growing body of case law that can act as a map to this minefield.

Chapter 74 has a comprehensive scope The requirements of Chapter 74 apply to all “health care liability claims,” which is defined more expansively than just traditional medical malpractice claims.1 Health care liability claims also include any other type of claim against a health care provider or physician related to safety, professional or administrative service. Whether the claim arises from alleged malpractice or premises liability, plaintiffs must comply with the requirements of Chapter 74. Statutes of limitations and repose The statute of limitations for health care liability claims is two years from the occurrence of the breach or tort or from the date the medical or health care treatment at issue was completed.2 Minors under 12 years old when the cause of action accrues have until their 14th birthday to file the claim, subject to a 10 year statute of repose.3 The Supreme Court has consistently held that the discovery rule does not apply to health care liability claims.4 A pre-suit notice letter is required Section 74.051 requires 60 days’ written notice of a health care liability claim, by certified mail return receipt requested, to each potential defendant before filing a lawsuit.5 The notice letter should provide a reasonably detailed explanation of the potential claim and must be accompanied by a statutory form for release of protect-

ed health information.6 Sending a notice letter to any potential defendant tolls the statute of limitations for 75 days for all potential defendants.7 Filing a lawsuit triggers strict deadlines for plaintiffs After providing the requisite notice and then filing a health care liability claim, the plaintiff has 120 days to serve an expert report with accompanying curriculum vitae on every defendant. For each defendant, the 120 day deadline starts from the first pleading naming that defendant, i.e., if a defendant is not named until the first amended petition, the 120 day clock starts ticking on the date the first amended petition was filed.8 If a plaintiff fails to serve an expert report within the 120 day deadline, upon motion of the defendant, the trial court must dismiss the case with prejudice and award reasonable attorney’s fees and costs to the defendant.9 Texas courts strictly construe the 120 day deadline. If a plaintiff nonsuits a health care liability claim against a defendant and then re-files the suit within the statute of limitations period, the 120 day deadline relates back to the date the original suit was filed.10 The Texas Supreme Court has even enforced the 120 day deadline when a plaintiff filed a motion for service of a defendant by publication within the 120-day period, but the order was not granted and publication not completed during the mandatory period.11 Defense objections to Chapter 74 expert reports are also time limited When served with a Chapter 74 expert report from a plaintiff, a defendant has 21 days to file objections to the sufficiency of the report, or the objections are waived.12 Defense objections typically focus on qualifications of the expert or the opinions themselves. Analyzing the expert’s qualifications The statute defines the necessary qualifications of an expert witness in a suit

against a physician,13 in a suit against a health care provider14 and for providing causation testimony in a health care liability claim.15 The qualifications must be stated in the report and cannot be inferred.16 In a suit against a physician, a Chapter 74 expert must be a physician who: • is practicing medicine when the testimony is given or was practicing medicine when the claim arose; • has knowledge of accepted standards of care for the medical issue involved in the claim; and • is qualified on the basis of training and experience to offer opinions on the standards of care. The court will consider whether the physician has board certification or other substantial training or experience relevant to the claim and whether the physician was actively practicing medicine at the time the claim arose or when the Chapter 74 report was written. For claims against a health care provider, the expert must: • be practicing health care in a field of practice that involves the same type of care or treatment as that of the defendant; • have knowledge of accepted standards of care for the medical issue involved in the claim; and • be qualified on the basis of training and experience to offer opinions on the standards of care. For causation testimony in a case against a physician or health care provider, the expert must be a physician who otherwise qualified under the Texas Rules of Evidence. If the suit is against a dentist, either a dentist or physician may offer causation testimony, if otherwise qualified under the Texas Rules of Evidence. In trial practice, most objections to qualifications focus on whether the expert is qualified to offer opinions concerning the particular medical issue relevant to the case. The courts have provided some guidance on how plaintiffs should go about qualifying their Chapter

March/April 2012 2011


74 experts. To qualify as an expert in a case, the physician does not need to practice in the same specialty as the defendant to offer standard of care or causation testimony, as long as the expert’s report establishes knowledge, skill, experience, training or education regarding the specific medical issue at issue in the case.17 When the expert report states that the subject of expert testimony is substantially developed in more than one field, testimony can come from a qualified expert in any of those fields.18 A physician can qualify to offer testimony on the nursing standard of care if the report affirmatively states that the physician is familiar with the nursing standard of care applicable to the particular issue in the case.19 The key consideration for qualification is tying the expert’s knowledge and experience to the facts of the case and ensuring that the report accurately reflects it. Sufficiency of the expert’s opinions Chapter 74 requires an expert report to


March/April 2012

provide a fair summary of the expert’s opinions regarding applicable standards of care, how the standard of care was not met by the defendant and proximate causation.20 It is important for experts to define each of these requirements separately. For example, the expert report must describe the standard of care separately from breach of the standard of care.21 In other words, before discussing breach of the standard of care (i.e., what a physician or health care provider should not have done), the expert report must first affirmatively state what standard of care applies. When assessing the adequacy of an expert report on each element, courts look for clear, fact-based explanations that relate to the facts of the case.22 The report does not have to marshal all of the plaintiff’s proof, but must adequately address each of the required elements.23 The report does not need to contain as much information as would be offered in support of a motion for summary judgment or at trial.24 Yet, the opinions in the report

must be thorough enough to be self-contained because courts must only consider the four corners of the Chapter 74 report. Courts may not rely on inferences when determining whether the expert’s opinions are sufficient under the statute.25 Of course, how much explanation is necessary is a subjective determination, so it is no surprise that perhaps the most frequent objection to the sufficiency of Chapter 74 expert opinions is that they are conclusory. It is well-established that a report that merely states conclusions about standard of care, breach and causation is defective.26 The courts have given some latitude to experts, so long as their reports connect the dots: • “That the chain of events leading from [a defendant’s] actions to [the plaintiff’s] injuries has many links does not render [the expert’s] opinions insufficient [if the expert] explains and supports each step.”27 • The fact that an expert assigns identical opinions regarding standards of

care, deviation from the standards of care and proximate causation to multiple defendants does not render the report insufficient, so long as the report states that the same duty applies to each defendant.28 • A Chapter 74 expert may rely on unsworn statements of the plaintiff in forming opinions.29 • The 14th Court of Appeals in Houston has held that an expert physician could testify as to what care a reasonable physician would have provided in response to notification by the nursing staff of certain clinical findings.30 • Although it is a good idea for an expert to rule out pre-existing injuries and other possible causes, some appellate courts have held that this is not required. The key considerations for the sufficiency of expert opinions are ensuring that the expert sets forth each required element, applies the discussion to the specific facts of the case and leaves no

analytical gaps.31 Discretionary 30-day extension period If the trial court determines that a plaintiff made an objective good faith effort to comply with Chapter 74,32 but the expert report is insufficient, the court has the discretion to grant one 30-day extension to allow the plaintiff to cure any deficiencies.34 The plaintiff may use the same or different expert to cure any Chapter 74 report defects in the 30-day extension period.34 The Supreme Court has stated that trial courts should err on the side of granting extensions and must do so if the deficiencies are curable.35 In the 2011 Scoresby case, the court held: While the Act thus contemplates that a document can be considered an expert report despite its deficiencies, the Act does not suggest that a document utterly devoid of substantive content will qualify as an expert report. Based on the Act’s text and stated purposes, we hold that a document qualifies as

an expert report if it contains a statement of opinion by an individual with expertise indicating that the claim asserted by the plaintiff against the defendant has merit. An individual’s lack of relevant qualifications and an opinion’s inadequacies are deficiencies the plaintiff should be given an opportunity to cure if it is possible to do so. This lenient standard avoids the expense and delay of multiple interlocutory appeals and assures a claimant a fair opportunity to demonstrate that his claim is not frivolous.36 Conclusion Chapter 74 is a procedural minefield and plaintiff’s attorneys who are not attentive to its detailed requirements can see their cases blow up right in front of their eyes. As the case law has developed since 2003, the appellate courts have interpreted the “good faith” requirement for a Chapter 74 expert report to be a bit easier to satisfy. When a trial court finds any deficiencies, though, the penalty for not remedying

March/April 2012


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them via a new or amended report within 30 days remains severe—dismissal and attorney’s fees. Robert W. Painter is a trial attorney with Painter Law Firm PLLC, where he represents plaintiffs in medical malpractice matters. He is an associate editor of The Houston Lawyer. Endnotes TEX. CIV. PRAC. & REM. CODE § 74.001(13). Id. at § 74.251(a). 3. Id. at § 74.251(a)-(b). 4. Morrison v. Chan, 699 S.W.2d 205, 208 (Tex. 1985) (discussing predecessor statute, TEX. REV. CIV. STAT. ANN. art. 4590i). 5. TEX. CIV. PRAC. & REM. CODE § 74.051. 6. Id. at §§ 74.051, 74.052. 7. Id. at § 74.051(c). 8. Kingwood Specialty Hosp., Ltd. v. Barley, 328 S.W.3d 611 (Tex. App.—Houston [14th Dist.] 2010, no pet.). 9. TEX. CIV. PRAC. & REM. CODE § 74.351(b). 10. Mokkala v. Mead, 178 S.W.3d 66, 76 (Tex. App.— Houston [14th Dist.] 2005, pet. denied). 11. Stockton v. Offenbach, 336 S.W.3d 610, 617-18 (Tex. 2011). 12. TEX. CIV. PRAC. & REM. CODE § 74.351(a). 13. Id. at § 74.401. 14. Id. at § 74.402. 15. Id. at § 74.403. 16. Salais v. Texas Dept. of Aging & Disability Svcs., 323 S.W.3d 527, 536 (Tex. App.—Waco 2010, pet. 1. 2.

denied). v. Williamson, 111 S.W.3d 113, 121 (Tex. 2003); Broders v. Heise, 924 S.W.2d 148, 152 (Tex. 1996); Blan v. Ali, 7 S.W.3d 741, 745 (Tex. App.— Houston [14th Dist.] 1999, no pet.). 18. Thomas v. Alford, 230 S.W.3d 853, 857 (Tex. App.—Houston [14th Dist.] 1999, no pet.). 19. San Jacinto Methodist Hosp. v. Bennett, 256 S.W.3d 806, 814 (Tex. App.—Houston [14th Dist.] 2008, no pet.); cf., Simonson v. Keppard, 225 S.W.3d 868 (Tex. App.—Dallas 2007, no pet.). 20. TEX. CIV. PRAC. & REM. CODE § 74.351(r)(6). 21. Strom v. Memorial Hermann Hosp. Sys., 110 S.W.3d 216, 223 (Tex. App.—Houston [1st Dist.] 2003, pet. denied). 22. American Transitional Care Ctrs. of Texas, Inc. v. Palacios, 46 S.W.3d 873, 879 (Tex. 2001). 23. Id. at 878-79. 24. Thomas, 230 S.W.3d at 856. 25. Id. at 878. 26. Memorial Hermann Healthcare Sys. v. Burrell, 230 S.W.3d 755, 760 (Tex. App.—Houston [14th Dist.] 2007, no pet.). 27. Methodist Hosp. v. Shepherd-Sherman, 296 S.W.3d 193, 200 (Tex. App.—Houston [14th Dist.] 2009, no pet.). 28. Bennett, 256 S.W.3d at 817. 29. Gannon v. Wyche, 321 S.W.3d 881, 888-92 (Tex. App.—Houston [14th Dist.] 2010, pet. denied). 30. Id. at 199-200. 31. See, e.g., Whisenant v. Arnett, 339 S.W.3d 920, 926 (Tex. App.—Dallas 2011, no pet.). 32. Scoresby v. Santillan, 346 S.W.3d 546, 549 (Tex. 2011). 33. TEX. CIV. PRAC. & REM. CODE § 74.351(c). 34. Danos v. Rittger, 253 S.W.3d 215, 215 (Tex. 2008). 35. Scoresby, 346 S.W.3d 546, 549. 36. Id. 17. Roberts

March/April 2012


By Scott Benjamin Novak

Scoresby v. Santillan:

Resetting the Bar for the Chapter 74 Medical Liability Reports


s Chapter 74 enters its eighth year, the minimal requirements for an expert report with respect to medical liability slowly but surely have become defined by the judiciary. While attorneys on both sides of the docket quarrel over these minimum standards, all would concur that, until recently, there has been frustratingly little guidance regarding the threshold requisites for a 30-day extension to cure a deficient expert report. Since the inception of Chapter 74 in 2003, one oft-used argument against the granting of a 30-day extension to cure a defective report was that a timely served report providing grossly insufficient consideration of the applicable standard of care, breach and/ or causation could be so deficient as to be tantamount to no report at all.1 In Scoresby v. Santillan, the Texas Supreme Court reassessed the minimal requirement for the curative extension while simultaneously commenting on whether a report may be so deficient as to be “no report at all.”2 This opinion not only changes the landscape of interlocutory appeals, it also affects how defense attorneys approach timely yet materially deficient reports, and the response to such objections by the plaintiff’s bar. The Rise of the Interlocutory Appeal Under House Bill 4 Under the MLIIA (the Medical Liability and Insurance Improvement Act), which predated House Bill 4 and is often referred to as “tort reform,” there was no interlocutory appeal from the denial of a motion to dismiss a health care liability claim for failure to comply with expert report requirement. It was not until 2008 that the Supreme Court made clear that mandamus was the proper review mechanism under that statute.3 In adopting the Medical Liability Act in 2003 under House Bill 4, the Texas Legislature explicitly permitted interlocutory

appeal from an order denying all or part of the relief sought by a motion under § 74.351(b), except that an appeal may not be taken from an order granting an extension under § 74.351.4 Because of the disparate way that interlocutory appeals have been considered and/or dismissed among Texas courts, attorneys on both sides of the docket have been understandably puzzled by the uncertain accessibility to appellate review of when a report, though timely, is arguably so deficient as to fall well short of the “good faith effort” standard set by Palacios and enter the murky quagmire of “no report at all,” thereby rendering a trial court’s refusal to dismiss an arguable abuse of discretion. Applying the “Good Faith Effort” Standard Pre-Scoresby The touchstone of the oft-cited “good faith effort” standard is well known: an expert report represents a good faith effort to comply with § 74.351 if it provides enough information to inform the defendant of the specific conduct called into question by the plaintiff and provides a basis for the trial court to determine that the claims made by the plaintiff have merit.5 While a report need not marshal all of the plaintiff’s proof, it must adequately address all three statutory elements—standard of care, breach and causation.6 The report must link the expert’s conclusions to the facts upon which those conclusions rest.7 It cannot, therefore, be predicated on conjecture or speculation. While it is certain than an expert report that omits one or more of the statutory requirements is not a good faith effort,8 it arguably is curable when that element, though not well defined, can be inferred through the otherwise adequate treatment of the other elements. Such technical defects are generally not an adequate basis for dismissal. That said, a recurrent dispute among practitioners is when a report is so devoid of consideration of the standard of care, breach, or causation (or completely omits a discussion of the defendant healthcare provider) as to fail in

its intended purpose under Palacios and subject the plaintiff’s claim to dismissal under § 74.351(b). This divergence has yielded copious interlocutory appeals, many of which are brought in the absence of an extension to cure and resulting in a remand with instructions for same. Often times, this costly maneuver merely delays an inevitable second appeal following the granting of an extension to cure and service of a modified report or supplement designed to address the complained-of shortfalls. The question then arises as to when an appeal made before the opportunity to cure is premature or, alternatively, allowable due to material deficiencies rendering the report effectively absent to the appealing defendant. In Ogletree v. Matthews, the Texas Supreme Court held a defendant may not immediately seek interlocutory review when a trial court both denies a motion to dismiss and grants a 30-day extension to cure a deficient report.9 The Supreme Court based its decision on the provision in Chapter 74 of the Texas Civil Practice and Remedies Code that expressly prohibits an interlocutory appeal from a trial court’s order granting a 30-day extension to cure a deficient report.10 The Court reasoned, “[i]f a defendant could immediately (and prematurely) appeal, the court of appeals would address the report’s sufficiency while its deficiencies were presumably being cured at the trial court level, an illogical and wasteful result.”11 Accordingly, “when a[n expert] report has been served, the actions denying the motion to dismiss and granting an extension are inseparable,” and permitting appeal from denial of the motion to dismiss would render meaningless the legislative ban on interlocutory appeals from orders granting extensions to cure a deficient report.12 Though recognizing the possibility of a report that was so deficient as to render it no report at all (qualified by Justice Willett as a “rare bird”) thereby arguably conferring immediate interlocutory jurisdiction, the Court provided no guidance as to what standard should be applied in determining the minimal

threshold. Both Chapter 74 and Texas Supreme Court precedent distinguish deficient reports (which are subject to a 30-day extension to cure) and absent reports (either late-served or, alternatively, so deficient as to be no report at all).13 Because appellate review is unavailable when the trial court grants an extension to cure and denies a motion to dismiss due to an arguably inadequate report, it is necessary to understand the recognized minimum requisites for a first-attempt report before challenging such a ruling on appeal. Lowering the Bar – an Attempt to Avert Redundant Interlocutory Appeals On July 1, 2011, the Supreme Court issued the Scorseby opinion, addressing whether a report so devoid of consideration of the requisite elements could meet minimal standards and therefore be amenable to an extension to cure.14 In Scoresby, a minor underwent surgery to remove growths in his sinus cavity.15 The plaintiff, the minor’s father, asserted an incision was made too far into the child’s brain, lacerating a blood vessel and requiring further surgery and ultimately resulting in brain damage and partial paralysis.16 The report, authored by a neurologist, “described the injury to [the child’s] brain, ascribed it to the Physician’s breach of the standards of care, and stated that their breach caused [the child’s] partial paralysis and other lingering debilities.”17 The defendants challenged the report as being fundamentally deficient and appealed the trial court’s order allowing a 30 day extension to cure its deficiencies on grounds that the report was so deficient as to be no report at all. The Supreme Court held the report was deficient because “it did not state the standard of care but only implied that it was inconsistent with the Physician’s conduct.”18 Nevertheless, the Court held the report passed muster in that “there [was] no question that in [the neurologist’s] opinion, [the plaintiff’s] claim against the Physicians [had] merit” and the report implicated the defendant

March/April 2012


sicians.19 The Court concluded that a 30day extension to cure deficiencies in an expert report was within the trial court’s discretion and may, as a matter of law, be granted if the report is timely served, contains the opinion of an individual with expertise that the claim has merit, and implicates the defendant’s conduct.20 Though acknowledging the implications of this minimal standard, the Court explicitly asserted its utility in avoiding “multiple interlocutory appeals” by effec-

tively setting a minimal requirement “to give a claimant the opportunity provided by the Act’s 30-day extension to show that a claim has merit.”21 Consequently, assuming a report is served timely, is authorized by a qualifying expert and implicates the defendant healthcare provider, “all deficiencies, whether in the expert’s opinions or qualifications, are subject to being cured before an appeal may be taken from the trial court’s refusal to dismiss the case.”22 The Court




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reasoned such reports are “readily”23 curable, thereby allowing an opportunity to repair deficiencies which, in the Court’s estimation, both avoids the waste of multiple appeals and supports the Act’s primary directive – to weed out frivolous claims.24 Conversely, the Court acknowledged that reports which are not “readily” curable represent either frivolous or premature claims. A Lower Standard – Not a Subterranean One It should be pointed out that the Scoresby Court does not suggest that a document utterly devoid of substantive content can meet the minimum standards and thus be amenable to resurrection by cure. While the Court set the bar low for a report to rise to the level of “some report” (versus “no report at all”), the bar is not, as Justice Willett states in his concurrence, “subterranean.” That is to say, the Court in Scoresby acknowledged that the intrinsic deficiency of a report that fails to tie a defendant doctor to the alleged malpractice could result in the creation of the proverbial “rare bird” referred to by Justice Willett in Ogletree.25 Such a deficient document would render a trial court’s denial of a motion to dismiss and/ or granting of a 30-day extension to cure an abuse of discretion; such an order, under Scoresby, would be immediately appealable. Practice Tips The Scoresby holding has wide-ranging implication. It operates to reduce the number of interlocutory appeals by proscribing premature appeals taken before a 30 day extension is granted and in appreciably broadening the criterion upon which such an extension will be granted. The holding simultaneously telegraphs to the lower courts that the threshold for an initial expert report should be liberally construed for purposes of granting the extension to cure. Practitioners on the defense side should, as a matter of course, suggest the 30-day extension to cure to the trial court if the expert report satis-

fies the minimal requirements set out in Scoresby, with the caveat that objections should be explicitly made to all deficiencies to avoid waiver in the event an appeal is forthcoming. This not only avoids multifarious appeals, but also procedurally disposes of an appellate remand with instructions to consider a 30-day extension to cure, which would gratuitously prolong the interlocutory timetable. Further, a plain reading of Scoresby does not appear to disallow appeals from the granting of an extension to cure when the subject report is wholly devoid of any discussion of the defendant healthcare provider or is authored by a patently unqualified expert. Plaintiff’s counsel should not be emboldened by Scoresby to the extent they fail to implicate a defendant healthcare provider or, alternatively, utilize an unqualified expert. Further, if objections are made and a 30-day extension granted, the amendments should be substantial and material, taking into account all objections made by the defense. In addition, an order granting the extension that explicitly articulates what parts of the report were found deficient and noted by the court to require additional consideration should be provided to the trial court.


See 262 S.W.3d 316, 321 (Tex. 2007).

implicated”.). at 557. 17. Id. 18. “Readily” is defined by in the Merriam-Webster dictionary as “without hesitating,” “willingly” (as the first definition) and “without much difficulty,” “easily” as the second definition. 19. Id. at 556. 20. Id. at 549 (“While the Act thus contemplates that a document can be considered an expert report despite its deficiencies, the Act does not suggest that a document utterly devoid of substantive content will qualify as an expert report.”). 21. Id. at 550. 22. Id. 23. Id. at 557. 24. Id. 25. Id.

10. Id. at 320-21 (citing TEX. CIV. PRAC. & REM. CODE

16. Id.

ANN. §§74.351(c), 51.014(a)(9) (Vernon 2008)). 11. Id. 12. Id. at 321. 13. See Ogletree v. Matthews, 262 S.W.3d 316, 319-21

(Tex. 2007) (statute distinguishes between absent reports, as to which dismissal is mandated, and timely served but deficient reports, as to which court may order 30-day extension to cure deficiency). 14. See Scoresby v. Santillan, 2011 Tex. LEXIS 516, 54 Tex. Sup. Ct. J. 1413 (Tex. 2011) (Justice Johnson, joined by Justice Wainwright, dissenting.). 15. Id. (“We conclude that a thirty-day extension to cure deficiencies in an expert report may be granted if the report is served by the statutory deadline, if it contains the opinion of an individual with expertise that the claim has merit, and if the defendant’s conduct is

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Scott Benjamin Novak, of Lorance & Thompson, P.C., is a trial attorney who represents clients in personal injury, malpractice and commercial matters at the trial and appellate levels. Endnotes 1.

2. 3. 4.

5. 6. 7.


If an expert report is deemed to have not been served within the period specified by the statute because elements of the report are found deficient, the court may grant one 30-day extension to the claimant to cure the deficiency. TEX. CIV. PRAC. & REM. CODE § 74.351(c). See Scoresby v. Santillan, 346 S.W.3d 546 (Tex. 2011). See In re McAllen Med. Ctr., Inc., 275 S.W.3d 458, 46162 (Tex. 2008). See TEX. CIV. PRAC. & REM. CODE § 51.014(a)(9); Act of June 2, 2003, 78th Leg., R.S., ch. 204, § 1.03, 2003 TEX. GEN. LAWS 847, 849. See Am. Transitional Care Ctrs. of Tex. v. Palacios, 46 S.W.3d 873, 879 (Tex. 2001). Id. at 878. See Jelinek v. Casas, 328 S.W.3d 526, 539 (Tex. 2010) (quoting Bowie Mem’l Hosp. v. Wright, 79 S.W.3d 48, 51–52 (Tex. 2002)). See Palacios at 879.

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March/April 2012


By John S. Gray


Swinging the Hammer:

OSHA’s Response to ‘Recalcitrant Employers’

hen the Obama Administration came into power in 2009, its new Secretary of Labor, Hilda Solis, and Acting Assistant Secretary for Occupational Safety and Health (OSHA), Jordan Barab, proclaimed, “There is a new Sheriff in town... Make no mistake about it, the Department of Labor is back in the enforcement business. We are serious, very serious.” To demonstrate their seriousness, Secretary Solis quickly ordered an enforcement blitz by OSHA SWAT teams at Texas construction sites to combat what she called the state’s “dubious distinction of having the most worker fatalities in the nation” following a spike in on-the-job construction deaths in Texas that caught the attention of federal investigators.1 With the tone set, OSHA has left no doubt about what direction the agency has taken under President Obama. Toward that goal, OSHA implemented a new program in 2010 to begin cracking down on employers that it regards as egregiously negligent under the aegis of its Severe Violator Enforcement Program (SVEP). This program focuses on employers with a history of OSHA violations that demonstrate that they do not take their safety compliance obligations seriously; therefore, those employers are being targeted for very aggressive enforcement in order to get the message. SVEP is a sweeping change to OSHA’s enforcement policy because it authorizes OSHA inspectors to ratchet up inspections and remedial pressure at work sites where what OSHA terms “high gravity serious violations” have occurred. Its purpose, according to the agency, is to “concentrate” enforcement resources on inspecting “recalcitrant employers who endanger workers by demonstrating indifference to their responsibilities under the law.”2 The centerpiece of OSHA’s SVEP is its log, a national list of the names and in-

spection details of employers that OSHA is targeting for follow-up inspections to ensure their compliance with the law. As of the last quarterly update in October 2011, OSHA labeled 163 employers with the dishonorable title of “severe violator,” including twelve located in the greater Houston area.3 Noticeably absent from the list, however, are employers in the 21 states that run their own OSHA programs to conduct inspections in private sector workplaces. Getting on OSHA’s List Statistically speaking, it is not easy to get on SVEP’s log. OSHA inspects less than one percent of the nation’s worksites in any given year; of the violations found and cited, only about four percent are classified as serious enough to warrant the severe violator designation. To underscore this point, consider that a serious violation that contributed to a worker’s death, maiming or brain damage is not serious enough to place the employer on SVEP’s log. Candidates for placement on SVEP’s log are employers who have placed their employees in danger by committing willful, repeated, or failure-to-abate violations in one or more of the following workplace circumstances: • A fatality or catastrophe (three or more hospitalizations) situation; • Exposing employees in industry operations or processes to the most severe occupational hazards and those identified as “high emphasis hazards”;4 • Exposing employees to the potential release of a highly hazardous chemical and associated dangers;5 or • An enforcement action considered to be egregious.6 Some on OSHA’s SVEP log, such as the company that constructs underground water and sewer mains that had been cited eight times for placing its employees at risk because it chooses to ignore OSHA’s trenching and excavation safety standards,7 are likely OSHA’s most egregious violators.

But they are not alone. While SVEP focuses on companies whose employees are potentially exposed to hazards associated with certain types of work (construction, on-shore maritime activities, petrochemicals and many other activities), any unfortunate company can end up on SVEP’s log if one or more of its employees suffers a fatality or catastrophic accident as a result of a violation. For example, the list has included such notable names as Kraft Foods Global, Tyson Foods, SeaWorld of Florida and U.S. Minerals. Seeing SeaWorld on the SVEP log may be surprising, but OSHA contends that SeaWorld willfully exposed “its employees to struck-by and drowning hazards when interacting with killer whales” following its investigation into the 2010 tragic death of a trainer. Perhaps OSHA’s concern stems from the fact that the same killer whale was also involved in two other human deaths: another trainer’s death in Canada in 1991 and the 1999 death of a man who sneaked into SeaWorld’s killer whale area.8 Consequences of Being on OSHA’s List It can be costly for businesses that find themselves placed on OSHA’s SVEP list. Companies who wish to avoid the stigma and penalties associated with SVEP should ensure that their employees follow OSHA guidelines and have an appreciation of what will put the company at risk for landing in SVEP and the consequences of being on the list. To assure the future compliance with OSHA’s safety rules for those placed on the list, SVEP has teeth and those teeth can bite deep. The teeth take the form of enhanced scrutiny, notoriety and, if necessary, court action. For example, the program mandates “enhanced follow-up inspections” even after cited violations have been corrected because OSHA is looking for other, similar violations at the site. When the SVEP employer has multiple facilities, if OSHA has “reasonable grounds to believe that compliance problems identified in the initial inspection may be indicative of a broader pattern

of non-compliance, OSHA will inspect related worksites of the same employer.” As part of the SVEP inspections, OSHA personnel are specifically required to investigate the corporate structure and to investigate the company’s safety “culture,” to learn the company’s decisionmaking process, to understand company-wide safety programs and determine if insurance company recommendations or independent safety audits have been “ignored,” and to ascertain management and employee commitment to safety.9 To increase community awareness of the safety problems at the SVEP employer’s facility, OSHA can mail citation and penalty notices to both the company’s national headquarters and to unions representing its workers. OSHA may also send a letter “to the company President expressing OSHA’s concern with the company’s violation” and may seek a meeting to address safety and health compliance. OSHA officials may also issue press releases about SVEP cases and seek to involve corporate officers to address the health and safety problems. To ensure future compliance, the program also authorizes OSHA to use a variety of “enhanced settlement provisions” listed in the program directive. Finally, OSHA can seek federal court enforcement under Section 11(b) of the OSH Act compelling an employer’s compliance with a final order of the Occupational Safety and Health Review Commission (this includes both settlements between the company and OSHA as well as adjudications of fault).10 This means that employers subject to SVEP provisions may be required to “hire a qualified safety and health consultant to develop and implement an effective and comprehensive safety and health program” at the work site. Other settlement provisions may include: • Applying an OSHA settlement agreement company-wide; • Installing interim abatement controls (if OSHA does not believe that final abatement can occur in a short period of time);

March/April 2012


• Providing OSHA with a list of a company’s current and future jobsites indicating to OSHA the specific protective measures to be used for each current or future jobsite; • Submitting quarterly filings of logs of work-related injuries and illnesses to OSHA along with consent that OSHA may inspect the jobsite based on information contained in these filings; • Notifying OSHA “of any serious injury or illness requiring medical attention and to consent to an inspection;” and • Providing employer consent to entry of a court enforcement order under Section 11(b) of OSHA.11 These provisions can make resolving an SVEP-related citation more difficult. In addition to enhanced settlement provisions described above, OSHA is also ramping up fines and penalties. For example, a recent court case, Nat’l Ass’n of Home Builders v. OSHA, No. 09 1053 (slip op.) (D.C. Cir. Apr. 16, 2010), upheld a 2008 rulemaking12 that authorizes OSHA to apply per-instance, employeeby-employee, citations under specified OSHA standards instead of the usual single citation for each employer when OSHA determines that the employer’s behavior is willful and egregious. This is significant because it allows OSHA to get around a significant statutory limitation on its enforcement authority: the size of its fines. Generally, the OSH Act penalties for serious violations are limited to $7,000, and repeat and willful violation penalties are capped at $70,000. OSHA has long viewed these fines as too small to adequately deter employers from allowing unsafe working conditions to persist in the workplace.13 Assessing per-instance penalties allows OSHA to multiply its existing $7,000/$70,000 maximum over all of the employees or instances, thereby producing enormous fines. This new method, coupled with ongoing efforts to statutorily increase the penalty cap from $7,000 to $12,000 and from $70,000 to $120,00014 will further 22

March/April 2012

permit this enforcement-minded Administration to issue large fines, particularly in connection with its new authority under SVEP. To appreciate the costly implications – financial and otherwise – of being added to SVEP’s list, consider the example of a Galveston, Texas, manufacturer of abrasive blasting and roofing materials. According to an OSHA press release, inspectors cited its Galveston facility for 38 violations and issued $273,000 in fines for willfully exposing its workers to multiple safety and health hazards that could cause possible injury and death from falls, explosions, fires and unsafe machinery. If that were not enough, OSHA then inspected the manufacturer’s facility in Illinois, citing that facility for willfully exposing workers to dangerously high levels of hazardous dust and not providing workers with adequate breathing protection and training. That inspection resulted in 28 violations and $396,000 in fines. OSHA then inspected the company’s other facilities and re-inspected facilities for a total of five inspections in nine months, including three at one plant. From these new inspections, OSHA issued an additional $735,000 in fines for a grand total of $1.4 million in proposed penalties for 140 citations in those nine months.15 Getting off OSHA’s List The SVEP Directive does not address indepth how employers can be removed from SVEP’s list. It simply states that a workplace will be removed from SVEP’s list if OSHA and the company have entered into a settlement agreement (informal or formal) “in which the citation that qualified the establishment for the SVEP designation is deleted, or if there has been an Administrative Law Judge, Review Commission, or court decision that has vacated such a citation.”16 In the case of Kraft Foods Global discussed above, Kraft and OSHA entered into an informal settlement agreement in 2011 in which OSHA agreed to convert the violation from the “repeat” to the

“serious” category, thereby reducing the penalty from $38,500 to $7,000. Other companies have been removed from SVEP’s list following (1) informal settlements, (2) an administrative law judge’s decision, and (3) an OSH Review Commission (OSHRC) decision. In each case, the repeat violations were either deleted or converted to just serious violations.17 While companies can have themselves removed from the list, they are best advised to take measures to stay off OSHA’s SVEP list in the first place. Take-Away Messages for Business OSHA has publically stated that deterrence through disincentives is SVEP’s core concept and it is trying many new tactics in SVEP investigations. The legal, financial and public costs of fighting that quantity of citations should get the attention of all employers. The best approach to SVEP is to avoid doing anything that might cause OSHA to relegate the company to the ranks of SVEP. Such steps might include: • Rigorously maintaining safety standards; • Focusing on two key risks: Those risks that employees actually face on a routine frequent basis and those risks that present the most exposure to serious injuries or death; • Responding to OSHA inspections and complaints promptly and effectively by ensuring that a plan is in place and understood by the personnel responsible for managing OSHA inspections; the plan should be written in a manner designed to minimize the possibility of a significant enforcement action and it should also state how each issued OSHA citation is properly analyzed to determine both its validity and its potential effect on the company and its other facilities; • Training employees in safety standards and monitoring compliance; and • Keeping up-to-date with OSHA regulations.

John S. Gray is a partner in the environmental section at Gardere Wynne Sewell LLP. He is a member of The Houston Lawyer editorial board and served as editor in chief in 2010-2011. Endnotes 1.





L.M. Sixel, OSHA Takes Hard Look at Texas Construction, HOUS. CHRON., July 16, 2009. There were 67 construction industry fatalities in 2008 and by July 2009 there had already been 33. U.S. Secretary of Labor Hilda L. Solis Unveils Texas Construction Safety Initiative at Conference of American Society of Safety Engineers, OSHA News Release, U.S. Dept. of Labor, No. 09-0751-DAL (June 29, 2009). OSHA News Release, U.S. Dept. of Labor, No. 10538-NAT, US Department of Labor’s OSHA Takes Action to Protect America’s Workers with Severe Violator Program and Increased Penalties, (Apr. 22, 2010). See OSHA SVEP Log (updated Oct. 3, 2011) (adding an additional 25 employers). The list of 163 employers comprised of companies in 30 states, including 21 employers in Texas, 12 of whom are located in the greater Houston area. High-emphasis hazards cover a wide range of workplaces and have been defined by OSHA as hazards involving any of the following: falls covered under general industry standards, construction industry standards, shipyard standards, marine

6. 7.


terminal standards, and longshoring standards; amputations; combustible dust; crystalline silica; lead; excavation/trenching; shipbreaking and grain elevators. See Severe Violator Enforcement Program (SVEP), OSHA Instruction, U.S. Dept. of Labor, Directive CPL 02 00 149, 5-9 (June 18, 2010) [hereinafter SVEP Directive] Id. at 9 (specifically referring to petroleum refinery hazards covered by 29 CFR § 1910.119). Id. at 2. OSHA News Release, U.S. Dept. of Labor, No. 11985-BOS, US Department of Labor’s OSHA Proposes $354,000 in Fines Against Recidivist Massachusetts Contractor for Cave-in Hazards in Cambridge and Framingham, P. Gioioso & Sons Inc. Repeatedly Cited for Unprotected Trenches and Excavations (July 11, 2011). Jason Garcia, SeaWorld Trainers’ Safety Questioned by OSHA During Hearing, ORLANDO SENTINEL, Sept. 19, 2011. To defend its citation, OSHA has to convince the administrative law judge that (1) SeaWorld’s killer whale practices put trainers in danger, and (2) SeaWorld was aware of the dangers but disregarded them. To win its appeal, SeaWorld has to convince the judge that (1) it can manage the risks of having trainers work with killer whales, (2) it makes every effort to do so, and (3) the trainer’s death was an isolated, unforeseeable tragedy. Tim Zimmermann, OSHA Goes After SeaWorld: Is Working Closely with Killer Whales in a Marine Park Dangerous for Trainers?, OUTSIDE, Nov. 14, 2011,

available at html?page=all. 9. SVEP Directive at Appendix B. 10. Id. at 10-19. 11. Id. at 18-19. 12. Clarification of Employer Duty to Provide Personal Protective Equipment and Train Each Employee, 73 FED. REG. 75,568 (Dec. 12, 2008) (codified at 29 C.F.R. parts 1910, 1915, 1917, 1918 and 1926). 13. OSHA Administrative Penalty Information Bulletin, U.S. Dept. of Labor, available at http://www. (also noting in SVEP, “Where circumstances warrant, at the discretion of the Area Director, high gravity serious violations related to standards and hazards identified in the SVEP will not normally be grouped or combined, and may be cited as separate violations, with individual proposed penalties”). 14. See Protecting America’s Workers Act S. 1166, 112th Cong. §310 (2011). 15. US Minerals: 5 cases, 140 Citations, 1.4M Fine (Dec. 8, 2010) available at http://www.protectivecoatings. com/news/?fuseaction=view&id=4756; New OSHA Case Pushes U.S. Minerals Fine to $1M+ (Dec. 6, 2010) available at news/?fuseaction=view&id=4740. 16. SVEP Directive at 19. 17. Celeste Monforton, OSHA Adds 25 Employers to Severe Violators List, 163 Employers Named in Total, SCIENCEBLOGS (Oct. 20, 2011).


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March/April 2012


By Caroline C. Pace

Tort R Recovery for Medicare Beneficiaries:

ecent federal and Texas court decisions directly and indirectly impact tort recovery for Medicare beneficiaries. These holdings highlight some of Medicare’s inherent features, but do not provide a full context of how to navigate claims through this jurisprudence and related statutes. Thus, rather than review the holdings in isolation, this article reviews new case law against the backdrop of Medicare’s procedures and leverage points and illustrates the case law with the fact pattern below. Fact pattern: You represent Ms. Claimant (“Ms. C”), a personal injury plaintiff. She is indigent and has no private insurance coverage. Three months ago, Ms. C sustained serious injuries while she was a passenger in a taxi when the taxi and an 18-wheeler collided. As a result of the accident, she was hospitalized for two months. Also, she has received some out-patient care and needs future medical care. At the time of the incident she was 64 years and 11 months old. Considering tort recovery under federal and Texas law, determine the applicable procedures, pitfalls and the potential value of her recovery.

Procedures, Pitfalls and Potential Values

I. Understanding Medicare’s procedures and points of leverage impacts the potential value of Ms. C’s recovery. First, Ms. C’s attorney must determine whether health care providers have submitted her bills for a Medicare conditional payment. The attorney should contact the Medicare Coordination of Benefits Contractor (“COB”) if the claimant is currently a Medicare beneficiary. Although Ms. C was not a beneficiary at the time of the incident, Medicare has an interest in Ms. C’s future injury-related expenses.1 To protect Medicare’s future

interest, the claimant’s attorney should contact the COB if the settlement is expected to be in excess of $250,000 and the claimant has a “reasonable expectation” of becoming a Medicare beneficiary within 30 months.2 The failure to consider Medicare’s future interest could result in the denial of future Medicare benefits for services linked to the injury until the entire settlement amount is exhausted.3 Pursuant to the Medicare Secondary Payer Act (“MSP”), Medicare is prohibited from paying medical expenses to the extent a “primary payer” is responsible for paying the claims.4 Primary payers include worker’s compensation plans, automobile or liability plans (including self-insured, third-party tortfeasors)5 or private health care plans.6 If the primary payers do not pay “promptly,” i.e., within 120 days, health care providers may choose to submit bills to the agency charged with the administration of Medicare, the Center for Medicare and Medicaid Services (“CMS”), and CMS may make a Medicare conditional payment.7 Under this fact pattern, the potential “primary payers” are alleged third-party tortfeasors—the taxi driver individually, the taxi driver’s employer, if any, the 18-wheeler driver, individually, and the 18-wheeler driver’s employer—and it has only been 90 days since the accident. If after 120 days, Ms. C’s health care providers choose to bill Medicare conditionally, those providers must accept payment for their services at Medicare’s “reasonable charge,” which may be 25-35 percent of the health care providers’ full rates.8 Upon receipt of a submitted bill, Medicare may conditionally pay the provider subject to reimbursement by the primary payers. CMS has both subrogation rights and the right to bring an independent action to recover its conditional payment and double damages plus interest from any “primary payer” or anyone who receives a third party payment9 (e.g., a personal injury plaintiff’s attorney).10 CMS maintains this right against primary payers (e.g., the tortfeasors) even if the primary payer already paid the beneficiary with

proceeds to fully reimburse Medicare.11 After the claimant’s attorney makes initial contact with the COB, the COB assigns jurisdiction to a private organization, the Medicare Secondary Payer Recovery Contractor (“MSPRC”), to determine the amounts of the conditional payments and to seek reimbursement. MSPRC will send the claimant and her attorney a “Rights and Responsibilities” (“RAR”) which will include the contact information for the assigned MSPRC. Within 65 days from the date on the RAR letter, the assigned MSPRC will automatically generate a “Conditional Payment Letter” (“CPL”) which lists the charges submitted by claimant’s medical providers.12 Ms. C and her attorney should review the list and notify the MSPRC of any health services that are unrelated to injuries alleged in the litigation. Also, Ms. C’s attorney should consider that the CPL is not final and may not include all charges, especially if Ms. C is still receiving medical treatment and if the injuries occurred within the last two years. The MSPRC will send updated lists of charges, and settlement negotiations may need to be delayed to wait for newer charges or at least should account for these additional charges. In addition to reimbursement rights, Medicare has an interest in all judgments, settlements and awards involving future medical costs.13 Thus, if Ms. C’s recovery includes funds for future medical expenses, the funds should be “set aside” to pay for future expenses related to the claims alleged and released. Although the CMS does not require liability settlements or awards to include a Medical Set Aside (“MSA”) allocation (except in workers’ compensation cases), proceeds must be available for future medical expenses for injuries related to the accident. Otherwise, Medicare may deny future benefits for these medical services until the entire settlement amount is exhausted.14 When needed, MSAs should be part of the settlement agreement and can be funded by depositing a lump sum or structured settlement in an interest bear-

ing account. In addition to considering the present value of the future medical expenses, the attorney or a structured settlement consultant should consider the claimant’s financial condition. For example, because Ms. C is indigent, she needs Medicaid benefits. Therefore, she may need a Special Needs Trust or Pooled Trust Account with a subaccount for an MSA because funds used to establish an MSA are an “available resource” that may disqualify Ms. C from receiving benefits under Medicaid’s needs-based program. After the matter has settled, the claimant’s attorney should send MSPRC a packet with a request for a Final Demand Letter, the claimant’s attorney’s fees and litigation costs, and the settlement terms and release. The claimant’s attorney should escrow the settlement proceeds while the final demand is being determined.15 After the MSPRC issues a final demand and the funds have been disbursed, Medicare requires reimbursement of its conditional payments within 60 days16 and may charge interest until the reimbursement is made.17 Thus far, Ms. C’s attorney knows that she is eligible for Medicare benefits and is aware of the inherent pitfalls and points of leverage provided by the MSP statute. Next, the attorney must use this awareness and Texas jurisprudence to avoid additional pitfalls so that the attorney can ascertain the potential values of Ms. C’s recovery. A. Ms. C’s recovery can be increased by obtaining a compromise or hardship waiver that reduces Medicare’s claim for reimbursement. As mentioned above, Medicare’s reimbursement claim is limited to Medicare payments for medical services resulting from the incident and should not include charges relating to a pre-existing condition.18 Ms. C’s attorney can notify the MSPRC of any unrelated charges and can appeal extra charges.19 Also, her attorney can contact CMS to request to compromise the amount of Medicare’s claim for reimbursement. CMS will grant a

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promise when the amount of recovery is too small to pursue the claim, and it is in the best interests of Medicare.20 Additionally, the claimant’s attorney can seek a waiver of some or all of the amount of Medicare’s claim for reimbursement on the ground of hardship.21 In determining whether to grant the waiver, CMS will consider Ms. C’s expenses, her age, assets, income, and any impairments.22 B. Ms. C cannot increase her recovery by applying comparative fault principles to reduce Medicare’s claim for reimbursement. If Ms. C seeks 100 percent of her medical expenses, she may be obligated to reimburse 100 percent of Medicare’s claim, even if her recovery is limited by comparative fault principles. Similar to the facts in Ms. C’s case, a recent case involved a Medicare beneficiary and multiple tortfeasors. In that case, the plaintiff was injured by a utility truck that was swerving to avoid a collision with an unidentified motorist.23 Medicare made a conditional payment of all of the plaintiff’s medical


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expenses. After the plaintiff sued the utility company, making a claim for all of its damages, the parties settled the suit for 10 percent of the plaintiff’s medical expenses because the parties attributed 90 percent of the fault for the accident to the unidentified motorist. The settlement agreement included a full release of all claims against the utility company. The court, interpreting 42 U.S.C. § 1395y(b)(2)(B)(ii), determined that the plaintiff’s reimbursement obligation to Medicare remained unchanged even though the Plaintiff’s settlement was a reduced amount that reflected the tortfeasor’s percentage of fault. Thus, if a claimant alleges that a tortfeasor is responsible for all of his medical expenses, Medicare is entitled to be reimbursed for all of its conditional payment even if the settlement amount is reduced by comparative fault principles. C. Ms. C cannot increase her recovery by classifying settlement proceeds as noneconomic damages to reduce Medicare’s claim for reimbursement.

The parties’ allocation of settlement proceeds between medical expenses and non-economic damages does not impact the value of Medicare’s claim for reimbursement. The determinative factor is whether the claim for medical expenses is released. In Benson v. Sebelius, the court held that because the parties’ settlement agreement includes a release for claimant’s medical damages, Medicare is entitled to the entire settlement award up to the full reimbursement of its conditional payment, even though a portion of the settlement monies compensates non-medical damages.24 However, where plaintiffs do not seek to recover any medical expenses in their wrongful death claims, Medicare is not entitled to seek reimbursement out of settlement proceeds.25 II. Ms. C may increase her recovery by circumventing Haygood v. Escabedo. In Haygood v. Escabedo, the plaintiff Haygood was a Medicare beneficiary. He sustained injuries due to a car accident and received medical services for his injuries. His medical providers cumulatively billed $110,069.12, representing the medical providers’ full rates for their services. The providers submitted their charges to Medicare, and Medicare’s conditional payment totaled $27,739.43 for full satisfaction of the medical services. Medicare only pays what it deems to be “reasonable costs” which are discounted to be as low as 25-35 percent of the full rates established by health care providers for the services.26 The parties asked the Texas Supreme Court to interpret § 41.0105 of the Texas Civil Practice & Remedies Code, which provides that “recovery of medical or health care expenses incurred is limited to the amount actually paid or incurred by or on behalf of the claimant.”27 In interpreting the statute, the Court limited expenses that are “actually paid or incurred” to expenses “which have been or must be paid by or for the claimant.” Thus, Haygood’s recovery of medical expenses is limited to the amount of Medicare’s conditional payments, not the amount of

the medical providers’ full bill. The Court noted that the plaintiff’s recovery would similarly be limited if he was covered by private insurance. Just as Medicare negotiated for a discounted rate for medical charges, private insurance companies negotiate with medical providers for a rate that is typically not as low as the Medicare rate but is less than the provider’s full rate. Therefore, when plaintiff’s medical expenses are paid by private insurers, the plaintiff can only recover the charges according to the private insurer’s rate, and not the provider’s full rate. Additionally, the Court held that because a claimant can only recover medical expenses paid or to be paid by or for the plaintiff, only evidence of recoverable medical expenses is admissible at trial. Thus, juries are not provided evidence of the amount discounted or written off due to the lower rates charged to government or private insurers. To the extent that juries use the amount of medical expenses to guide the amount of non-economic damages to award, the Court’s holding may have the effect of reducing awards for non-economic damages accordingly. To avoid the risk of a reduced recovery created by Haygood, Ms. C seeks to persuade her medical providers not to submit their charges to Medicare. She prefers for the jury to determine her medical damages and non-economic damages based on some amount greater than Medicare’s conditional payments. Because she is indigent, she cannot personally pay the medical damages. However, as discussed below, she may be able to obtain letters of protection or a hospital lien for amounts greater than Medicare’s discounted rate. A. Ms. C’s recovery may be increased by circumventing Haygood and Medicare benefits with letters of protection. Ms. C’s recovery may be increased if she enters into letters of protection with her medical providers in lieu of the medical providers submitting their bills to Medicare for payment. A letter of protection is a document sent by an attorney on a client’s behalf to a health-care provider

when the client needs medical treatment, but does not have insurance. Generally, the letter states that the client is involved in a court case and seeks an agreement from the medical provider to treat the client in exchange for deferred payment of the provider’s bill from the proceeds of settlement or award; and typically, if the client does not obtain a favorable recovery, the client is still liable to pay the provider’s bills. Through letters of protection, the medical providers and Ms. C’s attorney can negotiate the amount of the medical expenses. Pursuant to Haygood, Ms. C’s attorney understands that her potential recovery likely depends on the amount of admissible medical expenses and that to be admissible, the expenses must have been paid or must be paid by or for Ms. C. Under these circumstances, the medical providers and Ms. C’s interests are aligned: the medical provider wants to be paid as much as possible up to what is reasonable; and Ms. C wants to submit to the jury and recover as much as possible up

to what is reasonable. At minimum, both prefer to recover an amount greater than Medicare’s discounted rate. Ms. C’s attorney should be aware that letters of protection may spawn independent litigation. Texas courts apply contract formation principles, especially offer and acceptance elements, in determining the enforceability of letters of protection.28 One court concluded that the parties’ letter of protection was enforceable because the medical provider’s solicitation of a letter of protection for performing a surgery on the injured claimant constituted an offer and sending the medical provider the letter of protection in response to the medical provider’s request constituted acceptance of the offer. Another court concluded that the parties’ letter of protection was not enforceable because there was no evidence of an offer and acceptance.29 In that case, a personal injury attorney sent an unsolicited letter of protection to his client’s medical provider, but the medical provider never communicated an acceptance to the attorney. After the client’s

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March/April 2012


case settled, the personal injury attorney notified the medical provider that the provider would not be receiving any funds because the settlement produced a negative recovery after the settlement amount was reduced by case expenses and attorney’s fees. The court held that the absence of an acceptance within a reasonable time renders the letter of protection unenforceable. Ms. C’s attorney also should be aware that allegations of misleading letters of protection have been the subject of many formal complaints against authoring attorneys.30 B. Ms. C’s recovery may be increased by circumventing Haygood and Medicare benefits with hospital liens. Hospitals are not required to submit bills for emergency care to Medicare,31 and in any event, no medical provider can submit bills to Medicare before the expiration of 120 days. In this fact scenario, the hospital has not submitted its bill to Medicare because it has been less than 120 days. To

increase Ms. C’s recovery, her attorney should encourage the treating hospital to file a hospital lien in lieu of submitting its bills to Medicare for payment. Chapter 55 of the Texas Property Code grants hospitals a lien on any cause of action against a tortfeasor and belonging to an accident victim who receives medical treatment within 72 hours of the accident.32 In a recent case, the court decided that when a Medicare patient is injured and is treated for emergency care by a hospital, the hospital can opt to not bill Medicare but rather file a lien against the patient’s personal injury cause of action. Pursuant to Haygood, if the hospital files a hospital lien rather than submitting the bill to Medicare for conditional payment, then the patient can proffer evidence of and recover the full amount of the hospital lien, rather than proffering evidence of and recovering Medicare’s discounted rate. The patient must satisfy the hospital lien out of any recovery.33 Thus, Ms. C’s attorney should negotiate the value of the

hospital lien prior to entering into settlement negotiations and the negotiated value should be contingent on resolving Ms. C’s claim through settlement. In the event of a trial, the entire amount of the hospital lien is admissible. This evidence would likely lead to a higher recovery than evidence limited to Medicare’s discounted rate. III. Conclusion In summary, an attorney’s understanding of Medicare’s procedures, points of leverage, and pitfalls may impact the recovery available for a Medicare beneficiary. When representing these claimants, challenge the CPL charges, seek waivers or compromises, avoid applying comparative fault principles when providing a full release, understand when the allocation of medical and non-economic damages impacts Medicare’s claim; and circumvent Haygood by entering into letters of protection or by encouraging hospitals to file liens.


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March/April 2012


Caroline Pace is an associate with Kane Russell Coleman & Logan PC and a member of The Houston Lawyer editorial board.

20. 42 U.S.C. § 1395y(b)(2)(B)(v); 42 C.F.R. § 411.28(b).

29. Physical Therapy, Inc. v. Cruse, 165 SW 3d 21, 26 (Tex.

21. 42 U.S.C. § 1395y(b)(2)(B)(v); 42 C.F.R. § 411.28(a).

App.—Houston [14th Dist.] 2005, no pet.). e.g., Brown v. Comm’n for Lawyer Discipline, 980 SW 2d 675, 682 (Tex. App.—San Antonio 1998, no pet.); Bellino v. Comm’n for Lawyer Discipline, 124 S.W.3d 380 (Tex. App.—Dallas 2003, pet. denied). 31. Compare Speegle v. Harris Methodist Health Sys., 303 S.W.3d 32, 36 (Tex. App.—Ft. Worth 2009, pet. denied) (holding that health care provider is not required to bill Medicare, although it is required to pay other Medicaid and private insurance companies) with TEX. CIV. PRAC. & REM. CODE § 146.002 (c) (proving that health care service provider is required to timely bill a third party payor). 32. TEX. PROP. CODE § 55.002(a). 33. Speegle, 303 S.W.3d at 36.

22. MSP Manual, Pub. 100-5, Ch. 7, §§ – 50.7.3.

30. See,

23. Hadden v. U.S., 661 F.3d 298, 300-02 (6th Cir. 2011). 24. 771 F. Supp. 2d 68, 75 (U.S.D.C. 2011).

Endnotes 1.

See 42 U.S.C. § 1395y(b)(2)(B)(ii).

Examples of a “reasonable expectation” of becoming a Medicare beneficiary within 30 months include, but are not limited to, the following circumstances: (1) The individual has applied for Social Security Disability Benefits; (2) the individual has been denied Social Security Disability but anticipates appealing that decision, has appealed, or re-filed; or (3) the individual is 62 years and 6 months old. 4-22-03 CMS Memorandum. 3. See 42 U.S.C. § 1395y(b)(2)(A)-(B); 7-23-01, 4-22-03, and 5-23-03 CMS Memoranda. 4. 42 U.S.C. § 1395y; 42 C.F.R. § 411.20 et seq. 5. In the tort liability context, third-party tortfeasors are included under “self-insured plan” to the extent that they carry their own risk (e.g. by failing to obtain insurance) in whole or part, 42 U.S.C. § 1395y(b)(2) (A), but the tortfeasor’s insurer or the tortfeasor itself (if self-insured) does not become a primary payer until a judgment in favor of the claimant it entered or a settlement reached. 42 U.S.C. § 1395y(b)(2) (B); Benson v. Sebelius, C.A. No. 09 1931, (U.S.D.C. Mar. 24, 2011) (“[I]f a third party is responsible for injuring a qualified individual and Medicare pays for the resulting medical treatment, the payment is considered conditional and repayment to Medicare is required.”). 6. See 42 U.S.C. § 1395y(b). 7. 42 C.F.R. §§ 411.25(b) and 411.50(b). 8. See, e.g., Haygood v. Escabedo, 356 S.W.3d 390-92 (Tex. 2011). 9. See 42 U.S.C. § 1395y(b)(2)(B); 42 C.F.R. §§ 411.37(a), 411.24(2)(g). 10. Whether a plaintiff’s attorney who receives fees for the recovery of medical expenses from a thirdparty who is responsible for medical expenses conditionally paid by Medicare can be liable for reimbursing Medicare is unsettled law. See Medicare and Medicaid Claims, Pi-Yi Mayo and Bryn Poland, 9-12, State Bar of Texas, Advanced Personal Injury Course 2011, Chapter 1.1 (September 2011) Center for Medicare Advocacy, Inc., discussing The 2009 Medicare Handbook, 9-16 (2009) and U.S. v. Harris (C.A. No. 5:08CV102, (N.D.W.V. Nov. 13, 2008); Haro v. Sebelius, 789 F. Supp. 2d 1179 (D. Ariz. 2011); see generally 42 C.F.R. § 411.37(c) (attorney’s fees authorized by this statute via a procurement cost offset cannot be used to satisfy CMS’s reimbursement claim because they are the attorney’s property). 11. 42 U.S.C. § 1395y(b)(2)(B)(i)-(iv). 12. The attorney can also contact the assigned MSPRC in writing and request a CPL. 13. See 42 U.S.C. § 1395y(b)(2)(B)(ii). 14. Id. § 1395y(b)(2)(A)-(B). 15. See Wilson v. State Farm Mut. Auto. Ins. Co., No. 3:10-CV-256-H, 2011 WL 2378190, (W.D. Ky. June 15, 2011). 16. Haro, 789 F. Supp. 2d 1179 (holding Medicare may not charge interest or to initiate collection proceedings on this claim if not paid within 60 days while an appeal or an application for waiver of the MSP claim is pending). 17. 42 U.S.C. § 1395y(b)(2)(B)(ii); 42 C.F.R. § 411.24(h) and (m). 18. 42 C.F.R. §§ 411.21, 411.24(c). 19. 42 U.S.C. § 1395; 42 C.F.R. § 411.28(c). 2.

25. Denekas v. Shalala, 943 F Supp. 1073 (S.D. Iowa 1996);

Bradley v. Sebelius, 621 F.3d 1330, 1337-40 (11th Cir. 2010) (holding that Medicare is only entitled to reimbursement of the portion of the settlement proceeds that accounts for the estate’s claim because the surviving children’s wrongful death claims did not seek medical expenses). 26. See Haygood, 356 S.W.3d at 392. 27. TEX. CIV. PRAC. & REM. CODE § 41.0105. 28. Hays & Martin, LLP v. Ubinas-Brache, 192 S.W. 3d 631 (Tex. App.—Dallas 2006, pet. denied).

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March/April 2012


Houston Bar Foundation Recognizes Outstanding Efforts by Volunteers T he Houston Bar Foundation marked its 29th year of service with an Annual Meeting and Luncheon held February 23 at The Houston Club. The luncheon not only commemorated the installation of new officers, but also recognized the contributions of volunteers who provide pro bono legal representation and other services to the community. The keynote speaker was Dr. Ronald DePinho, president of the M.D. Anderson Cancer Center, who spoke on advancements in cancer research and quality of life issues. Bob McAughan, formerly with Locke Lord LLP and now with Sutton, McAughan & Deaver, took office as 2012 Chair of the Houston Bar Foundation, succeeding William C. (Bill) Lowery, retired former vice president, general counsel and corporate secretary of Shell Oil Company, who will continue to serve on the board as immediate past chair. Other new officers are Melanie Gray of Weil, Gotshal & Manges LLP, vice chair, and Thomas M. Roche of Exxon Mobil Corporation, treasurer. Serving as directors are Christopher J. Arntzen of CenterPoint Energy; Glenn A. Ballard, Jr. of Bracewell & Giuliani LLP; Craig Glidden of LyondellBasell Industries; Chris Popov of Vinson & Elkins LLP; Gregory Ulmer of Baker Hostetler LLP; and John Eddie Williams of Williams Kherkher. Lowrey presented the Foundation’s annual awards for pro bono service through the Houston Volunteer Lawyers Program (HVLP), volunteer mediation services through the Dispute Resolution Center (DRC), and legal writing in The Houston Lawyer, the HBA’s professional journal.

Presentation of James B. Sales ProBono Leadership Award Stewart W. Gagnon, a senior partner at Fulbright & Jaworski L.L.P., was named the third recipient of the James B. Sales ProBono Leadership Award. Throughout his career, Gagnon has been a champion of access to justice for all Texans, particularly in the realm of family law, where he has worked tirelessly to promote pro bono legal services for those who cannot afford legal representation. His efforts have included promoting and testifying for pro bono legislation; leadership roles in the Texas Access to Justice Commission, the Houston Bar Foundation and Gulf Coast Legal Foundation (now Lone Star Legal Aid); as well as personally Photos by Temple Webber representing hundreds of pro bono clients. 30

March/April 2012

Bob McAughan takes office as 2012 Foundation Chair.

Stewart Gagnon, right, accepts the third annual James B. Sales ProBono Leadership Award from 2011 Foundation Chair Bill Lowrey.

Harry Beaudry, chair-elect, left, and Andrew C. Gratz, chair, of the HBA Corporate Counsel Section present $10,000 to the Foundation for the 27th John J. Eikenburg Law Week Fun Run. The section’s contribution put the event over the $1 Million mark in contributions over the lifetime of the race to THE CENTER, making independent lives possible for people with developmental challenges.

Ellyn Josef and Mark Kelly accepted the award for Vinson & Elkins LLP, one of two large firms recognized for Outstanding Contribution to HVLP

Susan Barrington Sanchez accepted the award on behalf of Exxon Mobil Corporation for Outstanding Contribution to HVLP by a Corporate Law Department.

Darin Brooks, David Walton and Joseph Cohen accepted the award on behalf Beirne, Maynard & Parsons, L.L.P. for Outstanding Contribution to HVLP by an Intermediate Firm.

Kathy Garber accepted the award for Strasburger & Price LLP for Outstanding Contribution to HVLP by a Mid-size Firm.

Richard A. Schwartz and James C. Marrow accepted the award for Schwartz, Junell, Greenberg & Oathout, LLP for Outstanding Contribution to HVLP by a Small Firm.

Susan Bickley accepted the award for Blank Rome LLP for Outstanding Contribution to HVLP by a Boutique Firm.

Photo by Sheila Hansel

Keynote speaker Dr. Ronald DePinho.

Tonja De Sloover and Barclay Nicholson accepted the award for Fulbright & Jaworski L.L.P, one of two large firms recognized for Outstanding Contribution to HVLP.

March/April 2012


Robert G. Devlin [left] and Peter J. Bennett [right] were recognized for Outstanding Contribution to HVLP by a Solo Practitioner.

Raymond C. Kerr, right, received the award for Longevity of Exemplary Service to the Dispute Resolution Center. He is pictured with DRC executive director, Nick Hall.

Francine Barton received the award for Outstanding Contribution to the Dispute Resolution Center.

The Hon. Mark Davidson was recognized as the author of the Outstanding Legal Article published in The Houston Lawyer.

Keep It Local! HBA/CLE Online Programming The Houston Bar Association offers its own online CLE programs for Harris County attorneys. Visit the HBA website,, and select the RED Online CLE button on the right hand side of the homepage. HBA members receive a 20% discount on all HBA-sponsored programs. There are more than 80 audio and video programs available. 32

March/April 2012

More reasons to use HBA/CLE Online Programming: 1. Support your bar association’s programming 2. Receive an HBA member discount 3. All programs are accredited by the State Bar of Texas 4. Programs are available 24/7 5. There is no need to leave your office/home 6. A wide variety of legal topics available by expert speakers 7. Both audio and video presentations are available 8. The site is user-friendly 9. There are no late fees 10. No dress code required! If you have questions, please contact the HBA/CLE Department at 713-759-1133 or email

at the bar

Judicial Portrait

Retirement Ceremony

A portrait of the Hon. Susan S. Soussan was unveiled on March 1, 2012 in a special ceremony honoring her service on the 270th District Court. Judge Soussan is pictured here with her husband, Henri A. Soussan, and her daughter, Nicole S. Soussan of Baker Botts L.L.P.

Representatives from Child Advocates, Inc. were among those honoring the Hon. Ellen Shelton, left, upon her retirement as Associate Judge of the 312th District Court. The Hon. David Farr, judge of the 312th District Court, presided over the March 30, 2012 ceremony.

alternative dispute resolution MEDIATION, ARBITRATION, SPECIAL JUDGE

(Chap.151, CPRC)

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• Former District Judge • Board Certified Civil Trial Law — Texas Board of Legal Specialization • Adjunct Professor of Law Details at:

ADR That Preserves Your Right of Appeal —Chap. 151, CPRC A faster, cheaper and more predictable ADR alternative to arbitration. Read more at (Publications) • 713.907.9700 1-800.792.4444 • 5009 Caroline Suite 100B, Houston, TX 77004

March/April 2012



Membership, Member Benefits, and Pictorial Roster Committee By Nick Nicholas

The Houston Lawyer


lthough all HBA committees serve the needs of Houston’s legal community, there is one committee with the specific goal of bringing all together into the Houston Bar Association. This is no small task given the number of practicing attorneys in the Houston area and the diverse fields in which they practice. At the HBA, this task falls to the Membership, Member Benefits, and Pictorial Roster Committee, which is currently chaired by Alistair Dawson, a partner at Beck, Redden & Secrest, L.L.P. The committee tries to fulfill its goal in three separate but equally important ways. First, membership promotion, which includes monitoring and reporting membership statistics to the HBA Board, conducing three membership drives each year, and finding other ways to convince non-members to join. However, membership promotion involves much more than just increasing membership numbers. It also involves making Houston area attorneys, members and non-members alike, aware that the HBA provides numerous opportunities for attorneys to get more involved in their profession and the Houston community, and that they should take full advantage of these opportunities. By doing so, the committee hopes to convey the message that the benefits of HBA membership far outweigh the annual membership dues. 34

March/April 2012

Second, the committee oversees the HBA’s Member Benefits program, which includes reviewing and approving discounts on products and services, as well as special offers for sports and performing arts events. The committee also ensures

that the benefits program includes opportunity for professional improvement through participation in the HBA committees, substantive law sections, mentor programs, and the Houston Lawyer Referral Service. This year, the committee has been working on setting up a system to allow HBA members to pay their dues by credit card. All of these efforts support

the core message that the benefits from HBA membership far outweigh the cost. A complete list of HBA member benefits can be found at, under the menu item “Join the HBA.” Finally, the committee oversees the creation and publication of the HBA’s annual Pictorial Roster. This arduous task begins with the selection of a cover that reflects Houston at that time, be it the host of the G7 conference or the builders of a new courthouse, and ends with committee members proofing each and every entry before it is sent to the publisher for printing and distribution. Although the roster’s intended purpose is to provide the contact information for all HBA members, it also serves the important communal purpose of allowing us the opportunity to make a pictorial record of who we – the current Houston legal community – are as a whole. In essence, it is our group picture in front of the courthouse. Through its efforts in each of these areas, the committee hopes to fulfill its one goal of bringing Houston’s legal community together through a premier bar association that provides its members with numerous opportunities for professional and personal success, and that helps all of us become better lawyers and better Houstonians. Nick Nicholas is senior counsel at Jackson Walker L.L.P. and a member of The Houston Lawyer editorial board.

A Profile in professionalism


Carol Vance Retired Partner, Bracewell & Giuliani LLP Former Harris County District Attorney

t’s Not Over When the Fat Lady Sings What will you do with your life when you eventually hang it up? Most lawyers I know have been blessed with interesting work, daily challenges and financial rewards. Even so most of us look forward to being free of time sheets, deadlines and daily responsibilities of practicing law. My dream was to move on a golf course in the Hill Country, shoot my age and watch the sun set over a glass of Chardonnay. On the way to my Utopia the unexpected happened. Back in the nineties when I was chairing the Texas Board of Criminal Justice and pushing volunteerism, I decided to give prison ministry a go. Being that we lawyers spend our lives explaining tedious laws, organizing diffi-

cult cases or complex business deals, and educating jurors and clients along the way, I found I had the ability to teach inmates life skills. The experience was satisfying. In my retirement I still have my share of fun with family, golf, tennis, and reading and writing; but traveling to two or three prisons a week is a highlight of my life. I also learned that God’s plan for my life did not end with retirement. Yes, the fat lady can sing all she wants, but life is not over. Using our sunset days to reach out to others in need may be our highest ethic, not to mention a deep joy. As these years race by, contemplate your retirement and think about what you might do that has eternal significance.

March/April 2012



Vivienne Schiffer:

Preserving History through Fact, Fiction, and Film By Polly Graham

The Houston Lawyer


s a young girl, Houston attorney Vivienne Schiffer watched as flames consumed her brick schoolhouse in Rowher, a tiny farming community in the Arkansas Delta with a population of 86. More than two decades earlier, the building stood among hundreds of new structures built as part of the ninth Japanese American internment camp to open in the United States during World War II. The fire destroyed an important vestige of a painful piece of American history that Vivienne has dedicated her life to sustaining through her literature and filmmaking. Camp Nine is Vivienne’s beautifully-written debut novel inspired by the Rowher camp. By intertwining fact and fiction, the story breathes life into the history of the internment of Japanese Americans in Arkansas. It is narrated by Chess Morton, who recalls, with the acquired perspective of age, a time when nearly ten thousand peaceful prisoners arrived in her insulated farming community. Chess interacts with a rich cast of characters, including her strikingly beautiful widowed mother who is driven to help families at the camp, a gentle Japanese American wife who struggles to keep her family together, a brutal local farmhand, and a blind singer of the delta blues. These personalities will draw you into a story that is hard to put down. Although these unique characters are only fiction, they are inspired by Vivienne’s personal experiences growing up in rural Arkansas in a time she describes as the tail end of a lost way of life. Much of Vivienne’s inspiration comes from her mother, Rosalie Santine Gould, a first generation Italian-American. The Rowher camp was located on a portion of the Gould family farm. As the mayor of nearby McGehee, Arkansas, Rosalie championed the preservation of memories from the Rowher 36

March/April 2012

Camp—even in the face of death threats from hostile residents. Vivienne has followed in her mother’s footsteps. After finishing Camp Nine, she began creating a documentary entitled: “Relocation, Arkansas.” The film focuses on her mother’s efforts to preserve the history of the Rowher site. Filming has led her from the national archives in Washington, where research uncovered the personal files of every individual who was incarcerated at Rowher, to meetings with survivors in Sacramento, and an interview with President Clinton at his headquarter in New York. In the course of filming, Vivienne has been able to provide information and records to the Rowher families. A preview of the captivating documentary is available at Novelist and filmmaker only begin to skim the surface of Vivienne’s remarkable accomplishments. A mother of four, Vivienne has practiced law in Houston for over 28 years, becoming a senior corporate and securities partner at Thompson & Knight before deciding to become of counsel in order to devote more time to her writing. While she was a senior partner, Vivienne received her professional certification in screenwriting and was accepted into the prestigious screenwriting MFA program at UCLA. Since that time, she has received national recognition for her work. Vivienne is an inspiration to any young lawyer looking for a model of hard work, dedication to the legal profession, and a true passion for life. Polly Graham is an associate in the appellate section at Haynes and Boone, LLP and a member of The Houston Lawyer editorial board.

Media Reviews

Spinning the Law: Trying Cases in the Court of Public Opinion By Kendall Coffey Prometheus Books 2010 404 pages


Reviewed by Don Rogers he Constitution guarantees litigants the right to a fair trial, but at the same time guarantees the right of freedom of the press. Those rights often conflict, and, when that happens, a litigant’s right to a fair trial may be jeopardized. In his foreword to this book, Alan M. Dershowitz aptly describes the challenge that conflict presents to lawyers as follows: “Clients, whether civil or criminal, are increasingly brought to trial not only before a judge in robes and a jury of peers but also in the court of public opinion, where every citizen gets to ‘cast a vote’ on the legal and moral aspects of the case... A good ‘all purpose’ lawyer must learn the very different rules of the court of public opinion and must develop the skills with which to win in that important forum as well.” As the title suggests, this book, writ-

ten by Kendall Coffey, a former U.S. Attorney, legal commentator, and partner at the firm Coffey Burlington in Miami, Florida who has handled many highly publicized cases, addresses public relations and media strategies that lawyers can use to “spin” a case, and try it in the so-called court of public opinion. As Coffey points out, “spinning” a case requires the use of various strategies to shape favorable public opinion toward the case and/or client that may not only increase the odds of winning the case but also deflect or minimize collateral damage caused to the client’s good name and reputation by its underlying circumstances. The book presents many different examples of media management successes and failures from recent high profile civil and criminal cases, including those involving Al Gore, O. J. Simpson, Scott Peterson, Kobe Bryant, Michael Jackson, and Rod Blagojevich, all of which make for interesting reading. The final chapter, entitled “A Media Primer for Spinners,” discusses specific spinning strategies for both the print and broadcast news media and the Internet that lawyers can use to attempt to favorably shape public opinion about pending cases. Anyone involved in civil or criminal litigation will likely find the book informative, entertaining, and useful. Don Rogers is an assistant district attorney with the Harris County District Attorney’s Office, and an associate editor of The Houston Lawyer. He received his J.D. and LL.M. degrees from the University of Houston, and is board certified in Criminal Law and Criminal Appellate Law by the Texas Board of Legal Specialization.

legal trends

Supreme Court Ruling Threatens Groundwater Regulation


By Val Perkins n a much anticipated decision further enhancing the property rights of individual landowners at the expense of governmental entities, the Texas Supreme Court in a unanimous decision announced on February 24, 2012, held that “ ownership includes an interest in groundwater in place that cannot be taken for public use without adequate compensation guaranteed by Article I, § 17(a) of the Texas Constitution.” This landmark decision, Edwards Aquifer Authority and State of Texas v. Day & McDaniel, No. 08-0964 (Tex. Feb. 24, 2012), determined that two landowners who had bought a 380-acre tract of land overlying the Edwards Aquifer could not be denied the right to drill a well into and pump water from the aquifer by the Edwards Aquifer Authority (“EAA” or the “Authority”) unless they were compensated for this “governmental taking.” The EAA has been charged by the Legislature with issuing permits to authorize withdrawals of water from the Edwards Aquifer, an underground aquifer located generally in an arced curve from Brackettville, west of San Antonio, to Austin. The legislation creating the EAA specified that no water could be taken from the aquifer without an EAA-issued permit and that the EAA was to give preference to existing users and their successors and principals over newer users. Indeed, with few exceptions, the EAA Act prohibited withdrawal of water from the aquifer through any well drilled after June 1, 1993 and directed the EAA to issue permits for the withdrawal of water from the aquifer based upon “historical use” prior to that time. Day and his partner sought a permit

March/April 2012


The Houston Lawyer


to drill 700 acre-feet of water to irrigate a 300-acre tract and stock a 50-acre lake but, after several hearings, the EAA found that Day and his partner were entitled only to a permit to drill 14 acre-feet of water. After a trial court found for Day on his permitting claim but dismissed his constitutional claims, the Court of Appeals affirmed the Authority’s decision to issue the permit for 14 acre-feet but held that “... landowners have some ownership rights in the groundwater beneath their property... entitled to constitutional protection.” Thus, the court held that Day’s constitutional claims should not have been dismissed by the trial court. The Supreme Court affirmed this finding in all respects, specifying that Day, indeed, “... has a constitutionally protected interest in the groundwater beneath his property... ” and directing that the issue of the amount of damages due to Day as a result of this governmental “taking” must be determined by the trial court in further proceedings. The court held: “Whether groundwater can be owned in place is an issue we have never decided. But we held long ago that oil and gas are owned in place, and we find no reason to treat groundwater differently.” Indeed, the court’s opinion closely examines its 1948 decision in Elliff v. Texas Drilling Co., 210 S.W.2d 558 (Tex. 1948) where it restated the law regarding ownership of oil and gas in place as follows: “In our state the landowner is regarded as having absolute title and severalty to the oil and gas in place beneath his land. The only qualification of that rule of ownership is that it must be considered in connection with the law of capture and is subject to police regulations. The oil and gas beneath the soil are considered a part of the realty. Each owner of land owns separately, distinctly and exclusively all the oil and gas under his land and is accorded the usual remedies against trespassers who appropriate the minerals or destroy their market value.” Elliff at p. 561. In Day, the court holds that this state38

March/April 2012

ment of law “... correctly states the common law regarding the ownership of groundwater in place.” Finally, having found that the landowner Day possessed an ownership right in the groundwater beneath his property, the court examined whether or not the EAA could regulate Day’s drilling of that groundwater and whether its permitting process was a “taking” under the Texas Constitution. The court conducted a detailed examination of the history of groundwater regulation in Texas noting that there are currently 96 groundwater districts within the state covering all or part of 173 counties, all of which, in some fashion, regulate the drilling and use of groundwater within their boundaries. Since the court noted that the EAA’s permit issued to Day would, most likely, have the result of making it more expensive, if not impossible, for him to raise crops and graze cattle on his land, this raised the constitutional question of whether or not the governmental entity has deprived the landowner of all economically beneficial use of his property. The court held that a more complete development of the record was necessary on this issue and that it may demonstrate that the EAA’s regulations were too restrictive of Day’s groundwater rights and without justification in the overall regulatory scheme. Thus, the case was remanded to the trial court for a determination of those and other issues. The court’s decision has set off a groundswell of commentary regarding the wisdom of treating groundwater in the same legal capacity as the state has always treated oil and gas in place and whether or not, particularly in this time of drought, it is good public policy to potentially require groundwater districts and other governmental entities such as the Edwards Aquifer Authority and the Harris-Galveston Subsidence District to be required to compensate landowners for their regulation of groundwater pumping. The answers to these questions will come

only after the lower court’s consideration of the Day case and, undoubtedly, after further litigation on these issues. Without a doubt, however, the authority of governmental entities in Texas to regulate the drilling and use of groundwater has been brought into significant question by the Supreme Court’s opinion. Val Perkins, a partner in the Government Affairs Group of Gardere Wynne Sewell LLP, has 30 years experience representing clients before the Texas Legislature. He has lobbied the Legislature on a wide range of topics including water use and rights, business, construction, health care, real estate development, water and wastewater, affordable housing, special district creation and other issues.

The Post-Wal-Mart v. Dukes World: Class Actions with a Twist


By N. Jill Yaziji n a much anticipated decision just a few months ago, the U.S. Supreme Court denied class certification to past and current women employees complaining of sex-based discrimination at Wal-Mart stores nationwide. Wal-Mart Stores, Inc. v. Dukes1 was a milestone decision in the law governing employment-based class actions, with far reaching consequence on plaintiffs’ practice. The class action involved every single store of the retail giant, where 1.5 million women argued that Wal-Mart’s managers used their discretion in hiring and promoting based on a corporate culture of gender-based stereotypes. But with no stated or implicit policy of discrimination, unreliable statistical evidence, and scant anecdotal evidence, the class was doomed, and so, it seemed, all other class actions based on employment discrimination in the aftermath of that decision. So “perverse” seemed the quest for em-


ployment-based class certification in the post-Wal-Mart world, that Judge Gettleman of the Northern District of Illinois denied such status to 700 black brokers alleging racial discrimination at Merrill Lynch, while admitting that plaintiffs had a “good argument” for class action and encouraging an appeal from his denial of class certification because the issue “deserves to be put to rest one way or the other.” Not so perverse, said the Seventh Circuit Court of Appeals in McReynolds v. Merrill Lynch, ____ F.7th _____, No. 11-3639, which reversed denial of class certification in an opinion by Judge Posner issued February 24, 2012, that is sure to clarify, or at least help reorganize, the post-Wal-Mart landscape. Contra the plaintiffs’ class in Wal-Mart, the McReynolds class sought certification under Federal Rule 23(c)(4) to discover if Merrill Lynch engaged in practices that resulted in disparate impact on its black brokers, and under Federal Rule 23(b)(2) and to seek injunctive relief.2 In McReynolds, Merrill Lynch had 135 supervisors, or “complex directors,” each controlling several of the company’s 600 branch offices. Each complex director had a “good deal of autonomy,” hence the similarity to Wal-Mart, wrote the court of appeals, but “only within a framework established by

the company.” It was this “framework established by the company” that convinced the McReynolds court that this case was eligible for class action treatment. Specifically, in McReynolds two company-wide policies were at issue: the “teaming” policy and the “account distribution” policy. The teaming policy authorized brokers (not managers) to form and staff their own team; the account distribution policy required the transfer of departing brokers’ accounts to the teams with the best performance record as measured by the ability to generate revenue and retain large accounts, again a company-wide policy. Why are these policies discriminatory? The plaintiffs claimed that members of each team tend to associate with people like themselves and exclude others who are different. Yes, there is always a bottom line of performance, and all teams will most likely be colorblind toward star brokers. But when there is uncertainty as to who is effective, wrote the court of appeals, stereotypes and prejudice kick in. Likewise, if racial stereotypes made it hard for Merrill Lynch’s black employees to join the “better teams,” then the company’s financial distribution policy based on past success of brokers will inevitably play out in favor of the white brokers, since the accounts are usually distributed to the best perform-

ing teams. “A vicious cycle will set in,” the court wrote, with black brokers not being able to join “good teams, and as a result don’t generate as much revenue or attract or retain as many clients as white brokers do, then they do not do well in the competition for account distribution either.” These common questions, whether or not ultimately decided in favor of the plaintiffs, provided the class glue that Justice Scalia found missing among WalMart’s employees. In Wal-Mart, there was not a single company-wide policy, except Wal-Mart’s no-discrimination policy. This decision, then, should hardly be seen as undermining Wal-Mart. Indeed, it is the distinctions that the plaintiffs drew between themselves and the Wal-Mart class that ultimately resulted in their success in this case. Nonetheless, this case clarifies that simply alleging a localized decisionmaking process alone will not preempt the existence of company-wide policies that merit class treatment. Conversely, proving common questions of fact or law will not preempt a meritorious defense, since gaining class certification is a far cry from proving a disparate impact case. Yet, as the Seventh Circuit noted from the outset, “because class actions are cumbersome and protracted, an early appellate continued on next page

March/April 2012


placement service


The Placement Service will assist HBA members by coordinating placement between attorneys and law firms. The service is available to HBA members and provides a convenient process for locating or filling positions. 1. To place an ad, attorneys and law firms must complete a registration record. Once registration is complete, your position wanted or available will be registered with the placement service for six months. If at the end of the six-month period you have not found or filled your position, it will be your responsibility to re-register with the service in writing. 2. If you are registered, resumes will be sent out under their assigned code numbers. Once a firm has reviewed the resumes, they are to contact the placement office with the numbers they are interested in pursuing. The placement coordinator will then contact the attorney, give him/her some background information on the inquiring firm, and the attorney will then let the coordinator know if he/she wishes personal information to be released to the firm. This process will insure maximum confidentiality and get the information to the firms and attorneys in the most expedient manner. 3. In order to promote the efficiency. PLEASE NOTIFY THE PLACEMENT COORDINATOR OF ANY POSITION FOUND OR FILLED. 4. To reply for a position available, send a letter to Pplacement Coordinator at the Houston Bar Association, 1300 First City Tower, 1001 Fannin St., Houston, TX 77002 or e-mail Brooke Eshleman at Include the code number and a resume for each position. The resume will be forwarded to the firm or company. Your resume will not be sent to your previous or current employers. PLACEMENT DEADLINES Jan. 1 Jan./Feb. Issue Mar. 1 March/April Issue May 1 May/June Issue July 1 July/August Issue Sept. 1 Sept./Oct. Issue Nov. 1 Nov./Dec. Issue If you need information about the Lawyer Placement Service, please contact HBA, placement coordinator, at the HBA office, 713-759-1133.

Positions Available

5080 SEEKING ASSOCIATE LEGAL COUNSEL for Houston public pension fund. Approx. 4 years’ experience with retirement plans, employee benefits, administrative law, institutional investing or Texas local government law required. Background checks and drug testing. EOE.

2062 Very Experienced Trial Attorney intimately familiar with the mechanics and operation of the Commercial Mortgage Backed Securities (CMBS) industry, including the securitization process of commercial loans and the duties and responsibilities of Mortgage Loan Originators/Depositors, Underwriters of REMIC Trusts, 5094 ESTATE PLANNING Rating Agencies, Trustees, Ser– PROBATE ATTORNEY. vicers and Special Servicers. SUGAR LAND. Board certi- Looking for in-house position. fied attorney, 33 year Houston area practice serving Harris/ the serves you Fort Bend counties, seeking associate attorney with adEnhance your vanced estate planning and probate experience. practice


If you need information about the Lawyer Placement Service, please contact HBA, placement coordinator, at the HBA office:


legal trends

Positions Wanted

Try the HBA advantage.

from page 39...

decision whether a suit can be maintained as class action can speed the way to termination of litigation by abandonment, summary judgment, or settlement.” Hence, the far-reaching consequences of this decision on class actions practitioners on both sides of the docket. N. Jill Yaziji is the principal of Yaziji Law Firm, a firm specializing in civil litigation, and a member of The Houston Lawyer editorial board. Endnotes 1.


Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2451 (June 20, 2011). For a summary of this opinion see The Houston Lawyer, September/ October 2011, p. 44. Here, class counsel did not ask for certification under 23(b)(3) for damages, such as back pay or punitive damages, although she suggested that if the circuit court were to find class action appropriate, it should order the district court to consider on remand “the extent to which damages issues also could benefit from class treatment...”

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March/April 2012



Document Examiner

Profile for QuantumSUR


The Houston Lawyer magazine, March/April issue, 2012


The Houston Lawyer magazine, March/April issue, 2012

Profile for leosur