® Official Publication of the San Antonio Bar Association
January–February 2022
THE RETIREMENT OF
Chief Bankruptcy Judge Ronald B. King
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contents ON THE COVER 6 The Retirement of Chief Bankruptcy Judge Ronald B. King
By Eric Terry and Tony Hervol
FEATURES 14 BAMC Surprise Medical Billing: A Level 1 Nightmare
By Barry H. Beer
21 2021 Amendments to Tex. Civ. Prac. & Rem. Code ch. 38 Answer Some Questions and Raise Others
By Paul Curl
6 Retired Chief Bankruptcy Judge Ronald B. King photographed for San Antonio Lawyer by Mewborne Photography
DEPARTMENTS
BAR BUSINESS
26 Federal Court Update
5 ReflexiÓnes
By Soledad Valenciano, Melanie Fry, and Jeffrie Lewis
28 Fourth Court Update
By Chief Justice Rebeca C. Martinez
January–February 2022
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San Antonio Lawyer® 3
®
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OFFICERS / DIRECTORS President Lawrence Morales, II President-Elect Donna McElroy Treasurer Steve Chiscano Secretary Patricia "Patty" Rouse Vargas Immediate Past President Dave Evans
4 San Antonio Lawyer® | sabar.org
Directors (2021-2023) Kacy Cigarroa Tiffanie Clausewitz Grant McFarland Jaime Vasquez Directors (2020-2022) Charla Davies Charles "Charlie" Deacon Loraine Efron Nick Guinn Executive Director June Moynihan
STATE BAR / SA BAR FOUNDATION State Bar of Texas Directors Tom Crosley Santos Vargas
San Antonio Bar Foundation Chair Lawrence Morales, II
LOCAL BAR ASSOCIATIONS Association of Corporate Counsel South/Central TX Bexar County Women’s Bar Association Christian Legal Society Defense Counsel of San Antonio Federal Bar Association—San Antonio Mexican-American Bar Association—San Antonio San Antonio Black Lawyers Association San Antonio Criminal Defense Lawyers Association San Antonio Trial Lawyers Association San Antonio Young Lawyers Association TEX-ABOTA, American Board of Trial Advocates—San Antonio William S. Sessions Inn of Court
ReflexiÓnes Inform, Educate, Connect, and Serve By Lawrence Morales, II San Antonio Bar Association President
A
s the namesake of an attorney who has practiced in San Antonio for forty years, it is entirely possible that you accidentally voted for me, thinking that you were voting for my dad. This is certainly not the first time I have benefited from the reputation that Lawrence Sr. has earned during his distinguished career. As my father’s son, I had a front-row seat to the rewarding and demanding life of an attorney in our great city. I learned that while we may be one of the largest cities in the country, our bar has a unique small-town, familial quality. While zealously representing our clients, our members manage to treat each other with respect and professionalism. Our members understand that how we conduct ourselves is likely the only interaction with the justice system our clients will experience firsthand, and consequently integrity and honor are fundamental to the rule of law. As the 2021–22 SABA President, I aim to help preserve our bar’s special flavor so that one day we can pass it to the next generation fully intact. To that end, SABA is working hard to accomplish its mission to inform, educate, connect, and serve. I am thrilled to report that, despite the challenges of the COVID-19 pandemic, our membership is growing, as are the benefits we provide to our members. For example, on March 1st, SABA is moving into its new office space on the third floor of the Bexar County Archives Building at 126 East Nueva Street, which is directly across from the Bexar County Courthouse. SABA’s new home will provide members with quiet working space, away from the hustle and bustle of the courthouse hallways, and meeting areas for members to interact or host legal programs. We expect that the new space will be open to members on April 1st. SABA is also focused on creating a more inclusive bar. SABA has existed for 123 years and currently has more than 2,400 members, which makes it the oldest and largest bar association in San Antonio. However, SABA does not—and has not— adequately reflected all the vibrant and diverse communities in San Antonio. For example, of the 123 past SABA Presidents, only nine have been Hispanic, only nine have been female, only two have been African American, only one has been of Middle Eastern descent, none have been Asian American, and none of have been women of color. In addition, SABA's
Lawrence Morales, II photo by Mewborne Photography
events and publications have not always reflected these and other historically unrepresented communities. Recognizing that we must do better, on August 13, 2021, the SABA Board of Directors unanimously adopted a Diversity Plan which sets out an action plan to welcome full and equal participation of all lawyers in the San Antonio community. SABA’s Diversity Plan created the Committee on Equal Opportunity in the Legal Profession, which is co-chaired by Fourth Court of Appeals Chief Justice Rebeca Martinez and me. We thank the following attorneys who are serving on the Inaugural Equal Opportunity Committee: Edna Elizondo, Josue Galvan, Cassie Garza, Charlie Gonzalez, Alicia Grant, Daryl Harris, Justin Hill, Nicole Jackson, Eduardo Juarez, Shari Mao, Abel Martinez, Rashin Mazaheri, Tiffany Miller, St. Mary’s Law School Dean Patricia Roberts, Judge Rosie Speedlin Gonzalez, and Brian Steward. Among other things, the Equal Opportunity Committee is: (1) producing a podcast that will share the stories of local first-generation attorneys; (2) drafting a Diversity Report Card, which will track our progress on diversity, equity, and inclusion efforts; (3) developing diversity training for SABA leaders and members; (4) developing programs to identify and recruit attorneys from historically underrepresented communities to participate in SABA leadership, programs, and publications; and (5) building a program to mentor historically underrepresented youth in San Antonio who are interested in the legal profession. If you are interested in serving on the Equal Opportunity Committee, please contact me. I am excited about this bar year and serving as your president. We have plenty of great events planned, including our first Annual Clay Shoot Tournament, a SuperBar event with our amazing affinity bar associations, an in-person Law Day Luncheon, and lots of free CLEs. I hope to see you there!
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THE RETIREMENT OF
Chief Bankruptcy Judge Ronald B. King By Eric Terry and Tony Hervol
Cover and article photography by Mewborne Photography shot on location at Thomas Jefferson High School in San Antonio.
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n November 6, 2021, more than 200 attorneys, judges, court clerks, staff, family, and friends assembled to celebrate the career of one of San Antonio’s most beloved and revered jurists. After more than thirty-three distinguished years on the bench, Judge Ronald B. King, Chief United States Bankruptcy Judge for the Western District of Texas, had announced his retirement, and the community had assembled to pay tribute to him. From any guest, you would have heard glowing praise for one of the most highly respected and well-liked jurists to ever serve on the local bench. Judge King is a San Antonio original, and he is incredibly proud of where he comes from. Ronald B. King (“Ronnie”) was born in San Antonio in 1953 to Don and Elaine King. He has one sibling—an older brother, Richard. His father dropped out of St. Mary’s Law School because he needed to support his growing family. Don eventually opened his own insurance agency, and Elaine was the Executive Secretary to the CEO of the United Way. Ronnie was close to immediate and extended family, particularly his grandparents. His paternal grandmother, the first woman in Texas to join the military, lived nearby and loved to have Ronnie visit. When she retired, she bought a ranch in Wimberley. Ronnie would ride a Greyhound bus from downtown San Antonio to San Marcos to visit. He spent many happy days herding cattle, fishing, and helping his grandmother with chores. Ronnie’s family members were all active in social clubs and church activities. His parents were charter members of Oak Hills Presbyterian Church, and Ronnie spent a lot of time assisting with church activities. Elaine King was the church organist, and Ronnie gained a wonderful appreciation for music from his mother. He took lessons as a child, but found them too tedious, so he just sat down one day and played until he “got the song right.” Ronnie had an ear for music—so much so that he was able to critique Elaine’s organ playing after church services. Ronnie’s elementary school teachers marveled at his intellect but noted that he was far too social. They had him sit at the front of the room, where they could keep an eye on him. His English teacher, Ms. Donna Peacock, stated, “Judge King was Ronnie King when I first met him. He was twelve years old, cute, and smart. I was twenty-two, a first-year English teacher trying to seem smarter than my students. Ronnie and others got me through that first year with their patience, intelligence, and enthusiasm.” Ronnie attended Longfellow Junior High, where his attributes served him well. He joined a spirit organization called The Acadians and volunteered
for most of the activities of the club. He especially loved the folk singing group in which he sang and played a guitar he bought using money he earned mowing neighbors’ lawns. Ronnie and the group performed at school and all over the city. Ronnie’s classmate W.E. Moerner, who won a Nobel Prize in 2014, remembered “great times singing folk songs when [Ronnie] was playing the guitar” and described Ronnie as “a wonderful leader as well as a fun-loving guy!” As a student, Ronnie also starred in theatrical productions and worked with the stage crew when needed. Ronnie attended Thomas Jefferson High School, which was one of the most well-known high schools in the country at the time. It boasted iconic architecture and had been the location of a major motion picture in the 1940s. Ronnie was an academic honor roll student, joined the tennis team, and was a member of the “Senate”—a men’s social club of which he served as president his senior year. He played in a garage band that played gigs around town. Ronnie attended many activities, including sporting events and dances. In his senior year, he dated a girl named Cindy Sauer. Their first date was to attend a play at San Antonio College theater. Cindy would later become his wife. Ronnie obtained his undergraduate degree from Southern Methodist University, where he was a member of Phi Beta Kappa. He graduated in 1974 with high honors after only three years of attendance. He attended law school at the University of Texas and graduated with high honors in 1977. Ronnie’s first job in the legal field was as a briefing attorney for Texas Supreme Court Justice James G. Denton from 1977–78. He recalls working on seven opinions during that time, with the most notable being a significant Texas Securities Act case.1 It was during his time at the Supreme Court that Ronnie first became interested in the idea of serving as a judge, perhaps at the appellate level. After his clerkship, Ronnie returned home to San Antonio and became an associate at Foster, Lewis, Langley, Gardner & Banack, Inc., where he focused on business litigation and appellate law. Judge King credits Buddy Banack as one of his primary mentors and had the privilege of trying several large commercial litigation cases with Mr. Banack. Ronnie also represented institutional lenders holding liens on commercial real estate that found themselves as creditors in bankruptcy cases. No one at the firm had any experience in bankruptcy law. In fact, Ronnie (now Judge) King readily admits that he purposefully avoided the bankruptcy course at UT law school because he thought he would never need anything learned from the course. However, in the beginning, lawyer Ronnie got "volunteered" to
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become the firm's bankruptcy attorney simply because he knew where the bankruptcy courthouse was located. Judge King recalls that his first bankruptcy matter was handled in 1979—right after the Bankruptcy Code first became effective.2 Building a bankruptcy practice from scratch in the 1980s at a prestigious law firm was a difficult task. There were no attorneys with whom Ronnie could readily consult regarding an unfamiliar and sometimes complicated area of the area of the law and the myriad issues that were coming up with the new Code. At that time, the bankruptcy bar in San Antonio was relatively small, and newcomers sometimes found it cliquish and difficult to break into. There were only two sitting bankruptcy judges in the entire Western District, and the San Antonio division had a reputation for being a difficult place to practice. As with every other task he encountered before, Ronnie made the best of things—he worked hard and did what needed to be done.3 As loan defaults rose during the 1980s, Ronnie’s now sizeable bankruptcy practice became an important asset to the firm. In 1982, he made partner and began to envision his career as an appellate lawyer, and perhaps an appellate judge. In 1988, Bankruptcy Judge R. Glen Ayers, Jr. announced he would be retiring from the bench to re-enter private practice. An opportunity then arose for Ronnie, but perhaps the timing was not right. He was only thirty-four years old, and he would be competing against many experienced and qualified candidates. Further, the proposed pay for the job was not good, and certainly much less than he was making as a partner at Foster Lewis. After careful reflection and consultation with his family, Ronnie decided that this was what he really wanted to do in his legal career. He took a chance and submitted his application. During the interview process, Ronnie’s two greatest traits stood out— his extraordinary intelligence and humility. Judge King recalls being queried by the three-judge committee with questions such as “Are you sure you want this job?” and “Do you know how little the job pays?” 8 San Antonio Lawyer® | sabar.org
When asked why he thought he would make a good judge, he said, “I thought I could do a good job at it and that I would be fair and objective.” As he had done many times in his life before, Ronnie won over the committee with his intellect and personality and was offered the position notwithstanding his young age. On September 30, 1988, Judge King became the Western District’s newest Bankruptcy Judge, and at the age of thirty-five, he was the youngest judge on the federal bench. Judge King was promised a formal investiture for a later date, but for some reason, it never got scheduled. He did not let that slow him down. He called his dear friend, District Judge Ed Prado, to swear him in. Over the decades that Judge Prado served on the District Court and the Fifth Circuit Court of Appeals, he had many chances to "grade" his friend's work. “Judge King gained an excellent reputation for being a fair and very knowledgeable judge. . . . He made my job of reviewing appeals from his court very easy. All the judges knew that if it was an appeal from Judge Ron King, chances were it was done correctly and was an easy affirmance,” recalled Prado. After being sworn in, Judge King was allowed one week to move into his chambers and then was handed one of the busiest dockets in the country. There were only three judges in the Western District at the time, and Judge King was initially assigned one-half of the cases filed in San Antonio plus all of the cases in the Midland/Odessa and El Paso divisions. This left him with responsibility of presiding over more than 8,000 cases at one of the worst possible times for the U.S. economy— the beginning of the savings and loan crisis.4 The dockets were literally “standing-room only,” and Judge King travelled every other week to meet his divisional assignments. On his first trip to Midland, Judge King and staff were required to hold court until 1:00 am to complete the docket, and when he arrived at his hotel room that night, the room key broke off in the door lock. But like every challenge before, he met this one with the same hard work and dedication to his job that he would maintain for his entire career, regardless of the size of the docket. Bankruptcy Judge H. Christopher Mott, who presides in Austin and El Paso and is famous for his sports analogies, provides an apt description of Judge King’s tenure on the bench: “Like a world class ultra-marathoner, Judge King has run for over three decades on the bench at a pace that seems impossible for most to even imagine.” Handling such a heavy docket was harder in the late 1980s than it is today because technological developments that we now take for granted were not available then. In 1988 there were no computers in chambers and all legal research was conducted using books. There was no internet access in chambers until the early 1990s. With the incredible volume of paper pleadings stacked on his desk, much of which had to be lugged to divisional assignments, Judge King began to ponder how much easier it would be for lawyers, clerks, court staff, and judges if these paper documents could somehow be eliminated or significantly reduced. Judge King began to work on an idea with then Chief Bankruptcy Judge Larry Kelly—what if documents could be filed and stored electronically? Was this even possible, and if so, how could such a thing be put into practice? In 1997, the Judges formed a Strategic Planning Committee and met with information technology professionals, judges, lawyers, and staff from other courts on a national level in an effort to determine what was available and what would be required to implement an electronic filing and storage system. On March 5, 2001, the Western District Bankruptcy Courts implemented the first electronic filing and case management system, becoming the first federal court in Texas to do so. There were certainly kinks along the way. However, the system evolved into what is now a completely paperless Case Management/Electronic Case Filing system, known as CM/ECF. Judge King played an essential role in this transition. Most courts in the United States, including both
federal and state courts, have followed the Western District’s lead in electronic filing and many have adopted this system as their model. Judge King has had a significant impact on the lives of those who have worked for and with him. Numerous clerks and court staff across the vast Western District and its various divisions speak fondly of their experiences with Judge King. But it was in chambers where his impact was the greatest. Judge King asked Tricia Bade Haass, his secretary from Foster Lewis, to join him when he transitioned to the bench. Tricia gladly followed and worked for Judge King for more than thirty-six years. As Ms. Haass stated, “I got the job of a lifetime, met a world of wonderful people, and gained a wealth of knowledge and experience.” Judge King’s courtroom deputy for twenty-nine years was Jana Brisiel. When asked about her time in chambers, Ms. Brisiel called it “the best job one could ever ask for.” Judge King was always quick to credit Ms. Brisiel for her professionalism with the bar and her excellent organization skills, which greatly assisted in keeping his court running smoothly. After Ms. Brisiel’s retirement in 2017, Deanna Castleberry stepped in and did an outstanding job. Judge King’s courtroom was known as one of the most userfriendly courtrooms in the state. According to David Gragg, chair of the Bankruptcy Practice Group at Langley & Banack, Inc., trying cases before Judge King “was a highlight of practicing bankruptcy in San Antonio” because “you always knew that you were going to be treated fairly and that your client would have ample opportunity to present his case to a judge that would listen and was patient, courteous, firm and without bias[,]” and who could “quickly recognize complex legal issues.” Gragg also praised Judge King’s staff for reflecting that same “user friendly” demeanor that made San Antonio such an attractive venue for complicated restructurings. Judge King also employed many law clerks over the years—a total of thirty-seven to be exact. As part of his effort to give back to a profession that had given him so much, Judge King believed that he had a duty to mentor and educate young lawyers. Instead of hiring long-term or “career” law clerks, Judge King typically hired recent law school graduates who would serve one-year, or occasionally two-year, terms. This allowed him to introduce more individuals to the profession, teaching each of them about the judicial system, the bankruptcy bench, and the practice of law in general. On any given day, Judge King’s law clerks could generally be found in chambers acting as his counsel, absorbing every lesson he handed out, or having lunch with the Judge at his favorite downtown restaurants. Any one of his law clerks will readily describe his or her time in chambers with Judge King as a significant professional-life highlight. Judge King freely discussed case-related issues with his clerks, bantered about humorous matters that arose during hearings, and was
David Stevenson, Steven J. Humeniuk, Hannah L. Roblyer, Evan J. Atkinson, Judge Ronald B. King, Thomas Rice, Judge Michael M. Parker, Alexandra L. Brak, Judge Craig A. Gargotta
Judge Craig A. Gargotta, William G. Putnicki, San Juana Barraza (Sunnie) Putnicki, Judge Ronald B. King
Judge King with former law partners Buddy Banack, Ken Malone, Mike Garatoni and Richard Kerr, June 2019
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Below: Ronnie King, Age 5; High School Yearbook Photo; Judge King Portrait; Judge and Cindy King with grandchildren,Port Aransas 2020
“My dad has many outstanding qualities—intelligence, integrity, and great legs—but one of my favorite things about my dad is his sense of humor.” — Kari King Dial
10 San Antonio Lawyer® | sabar.org
often available to talk about daily life and all that it brings. Judge King even officiated at some of his law clerks’ weddings. Finally, and perhaps the best indicator of his impact on his law clerks, two of Judge King’s former clerks are now the sitting bankruptcy judges in the San Antonio Division.5 Former law clerk Michael Parker, who was appointed to the vacancy created by Judge King’s retirement, described his clerkship as a “life altering” experience that made him a better person and better lawyer because of Judge King’s “wisdom, guidance and mentoring.” Judge King’s mentorship was not confined to chambers. He was a founding member and president of The Honorable Larry E. Kelly Bankruptcy American Inn of Court—an organization that emphasizes mentoring younger lawyers. As his wife Cindy states, “He has always loved working with and helping young lawyers, even in his days of practice, and adding a Bankruptcy Inn of Court chapter to the Western District of Texas was a goal that he determinedly worked toward and talked about during the better part of his judicial career. He is so proud of this success.” Judge King has retired after more than thirty-three years on the bench and has left an astonishing record. He was the longest serving United States Bankruptcy Judge from the state of Texas in history. He was named Chief Bankruptcy Judge for the Western District of Texas in November 2006. He has presided over more than 100,000 cases— including some of the largest and most significant cases in history. Memorable cases include: the Spectrum Brands 3.2-billion-dollar reorganization case; the INSILCO (International Silver Company) 800-million-dollar reorganization case; Buffets, LLC; a forty-one day trial in the TXCO Resources case;6 M&S Associates; and National Benevolent Association of the Christian Church. Judge King also presided over reorganizations or eventual liquidations of the following iconic San Antonio area businesses: Solo Serve; Winn’s Stores; Alamo Iron Works; Drug Emporium; Mooney Aircraft; Newell Industries; Camp Cooley; Tapatio Springs; and A’Gaci. Judge King also adjudicated debtor-creditor disputes in the thousands of consumer bankruptcy cases assigned to his docket over the years—a task he considered no less important than the large commercial disputes over which he presided. Judge King’s youngest child, Kelsey, was just a toddler when he took the bench. Now a lawyer herself, she mused that “[h]is intelligence, humor, and composed nature certainly have helped him shine as a jurist—but I think what makes him stand out the most is his humility.” When asked about his greatest accomplishment, Judge King singles out his family. He has been happily married to his high school sweetheart, Cindy Sauer King, for more than forty-six years. Together they raised three children, Kari King Dial, Ronald Baker King, Jr. (“Baker”), and Kelsey Ann Copeland. Kari is a government relations attorney; she and her husband, Chris, have a two-year old daughter. Kelsey is a litigation attorney; she and her husband, Matt, have a four-year-old daughter. Baker is an anesthesiologist; he and his wife, Kelly, have two boys, ages eleven and twelve. During his career, Judge King ensured that his schedule enabled him to be involved in his children’s lives and their varied and numerous academic and athletic events. He also made time, where possible, to stay in shape and play basketball at the gym. Despite several injuries on the court, Judge King continues to regularly play. He has also used his time away from the bench to relax with his family, spend time with his grandchildren, enjoy his family’s annual deer lease, and sample the offerings of Texas’ many great barbeque restaurants. For Bankruptcy Judge Mark X. Mullins of the Northern District of Texas, it is Judge King’s commitment to his family that is most remarkable: Over the years, I enjoyed appearing before Judge King as a lawyer because he was always fair, considerate, and exhibited the gold
REFLECTIONS FROM COLLEAGUES “Judge King is the gold standard. As he knows all too well, I’ve called on him my entire judicial career for advice on hard cases, and he has never failed to return my call or email and to offer help. He is one of my mentors, and he and his wife Cindy are among our closest friends.”
—The Honorable Harlin DeWayne Hale
UNITED STATES BANKRUPTCY JUDGE FOR THE NORTHERN DISTRICT OF TEXAS.
“In his remarkable career, Chief Judge King has disposed of varied matters with grace, efficiency and wisdom. His contributions to the administration of justice are invaluable.”
—The Honorable Xavier Rodriguez
UNITED STATES DISTRICT JUDGE FOR THE WESTERN DISTRICT OF TEXAS.
“Judge King, (Ronnie), although there are no words to adequately describe how much all of us in the Bankruptcy world will miss you, please know that your honesty, dedication, and commitment have personally impacted me more than you will ever know.”
—The Honorable Eduardo Rodriguez
UNITED STATES BANKRUPTCY JUDGE FOR THE SOUTHERN DISTRICT OF TEXAS.
The King family, Port Aransas 2020; Judge and Cindy King in early eighties; Judge and Cindy King at his retirement party with the cake and plaque
“Ronnie King is a superb Judge and great colleague. It is hard to imagine the Western District without him.”
—The Honorable Richard S. Schmidt
FORMER UNITED STATES BANKRUPTCY JUDGE FOR THE SOUTHERN DISTRICT OF TEXAS.
standard for judicial temperament. Then, as a judicial colleague, I so appreciated Judge King because of his mentoring spirit and thoughtful counsel. Most importantly, however, I am blessed to call Ronnie King my friend because of his example—he is deeply devoted to his faith and his love for his bride Cindy and their kids and grandkids. All that . . . and he still has all his hair—unbelievable! Judge King has always been considered a “lawyer’s judge.” Ronnie Hornberger, Of Counsel to Plunkett, Griesenbeck & Mimari, Inc., has appeared before Judge King for decades and notes his “outstanding” judicial qualities: “at once cerebral and practical, always respectful of those appearing before him, whether counsel, client or witness and whether from San Antonio or elsewhere. Truly ‘a gentleman and a scholar.’” Bill Kingman, Owner, Law Offices of William B. Kingman, PC, echoed Hornberger’s sentiments, noting that “[e]ven in particularly adversarial matters, Judge King has always patiently given each party their opportunity to state their case, meritless or not. I don’t think that any individual who ever appeared before Judge King can honestly say that she or he didn’t ‘have her or his day in court.’” Judge King justly earned the reputation of working with parties’ counsel to ensure matters could be handled efficiently, without undue waste of client resources, and with consideration of the parties’ and counsels’ scheduling demands. He never forgot what it was like to deal with the pressures and expectations of being a lawyer and running a law practice. He encouraged lawyers to be mindful of family matters when scheduling court dates. Further, he always recognized that, win or lose, the parties that appeared before him could better accept a ruling if they felt like they had their day in court. Judge King made a genuine effort to listen to every side of a dispute. Chief Bankruptcy
“I emphatically believe that there is no better bankruptcy judge in the country than Judge King. He’s the full package: intellect; common sense; business sense, affability; compassion; patience; and he always has a backbone when somebody needs to be dealt a tough consequence.”
—The Honorable Stacey Jernigan
UNITED STATES BANKRUPTCY JUDGE FOR THE NORTHERN DISTRICT OF TEXAS.
“Judge King is widely respected by his colleagues as a serious yet friendly man, an intellectual stalwart yet practical jurist, an elite yet welcoming talent. Judge King is a credit to his family, to his hometown, and to the nationwide bench. He will be sorely missed by one and all.”
—The Honorable Daniel Collins
UNITED STATES BANKRUPTCY JUDGE FOR THE DISTRICT OF ARIZONA.
“Since his appointment in October 1988, thirty-three years ago, Chief Bankruptcy Judge King has served with honor and distinction, setting the gold standard for judicial service: honor, integrity, and competence, with a commitment and passion for the rule of law. The judiciary of the Western District will forever be grateful for his service.”
—The Honorable Orlando L. Garcia
CHIEF UNITED STATES DISTRICT JUDGE FOR THE WESTERN DISTRICT OF TEXAS.
January–February 2022
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San Antonio Lawyer® 11
party, their counsel, or a witness acted out of bounds, he treated them with the same consideration and respect he expected them to have for the court in which they were appearing. Judge King also expected the lawyers appearing before him to be prepared and candid with him. He gave the following advice: “Don’t ever lie or misrepresent anything to the judge, or even shade the truth. Your reputation for veracity is your most important asset. Don’t forfeit it for one lousy client. This probably won’t be your last case.” With respect to younger lawyers, Judge King suggested that they “be collegial and respectful, not only to the Court and [their] colleagues, but to the entire court staff and clerk’s office.” Judge King also disliked and strongly discouraged incivility among litigants and their counsel and stressed the need to maintain professionalism among members of the bar. However, he also recognized that it was natural to expect that few people would be happy when they were in court, and that anger could be a byproduct of the stress and events that may have brought them to bankruptcy court in the first place. Despite these challenges, Judge King always seemed to maintain his ever-present cool demeanor. Deborah Williamson, a member at Dykema, reflected on Judge King’s famous demeanor: “He is patient. He lets you try your case, generally without interruptions. You might also get agreement that Judge King thinks that many of us can be (shall we say) a bit dramatic. To quote, ‘Counsel, there is no jury here.’ He rarely shows irritation—in fact, his poker face is legendary.” In fact, the authors have never seen him lose his temper whether in court, chambers, or anywhere else for that matter—even when he had every reason to be angry. Judge King has always epitomized civil judicial temperament. Lawyers that regularly appeared before him would tell you that he listened to the arguments, examined the evidence, and ruled accordingly. Beth Smith, Owner, Law Offices of Elizabeth G. Smith, has long admired Judge King “for his even judicial temperament,” and his thoughtful and fair rulings that “[take] into consideration the big picture of a case, and [adhere] to the rule of law.” Bankruptcy Judge Tony M. Davis, who presides in Austin, experienced Judge King’s demeanor as a lawyer and then as a colleague: The judicial code of conduct for Federal judges admonishes judges to be patient, dignified, respectful and courteous. Those four adjectives describe Judge King perfectly—in the way he interacts with lawyers and witnesses in the courtroom, the way he interacts with his judicial colleagues, and the way he acts at bar functions and Judge Craig A. Gargotta recalls that one of the best pieces of advice Inn of Court events. When I first appeared before Judge King in the Judge King ever imparted was “that he [King] always endeavored to multi-hundred-million-dollar Insilco case, I had the experience of get the right answer regardless of who the litigant was, and, if there appearing before dozens of bankruptcy judges from San Diego to was no right answer, then he tried to get the best answer.” Judge King New York and many points between. And yet of all those judges, I believed that giving dignity to all persons was paramount. Unless a thought then and now that Judge King was the one who exhibited and exhibits the perfect judicial demeanor. As a young lawyer, I found his courtroom to be an inspiring place to try cases. As a new judge, I looked to Judge King as my model. And, in DO YOU HAVE AN UPCOMING DEPOSITION, TRIAL PREP, OR EVIDENCE considering my experience with Judge King, PRESENTATION AND NEED TO RENT AUDIO/VISUAL EQUIPMENT? I see that a vital and enduring part of his considerable legacy will be all the law clerks, • A/V GEAR lawyers, and fellow judges whom he inspired • LAPTOPS with the example of his exemplary conduct. • COMPUTER
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While Judge King’s retirement was effective November 1, 2021, he requested and obtained approval for recall status from the Fifth Circuit Court of Appeals, allowing him to hear certain matters and assist the other Western District bankruptcy judges, as needed. Recall status
Eric B. Terry is the Owner of Eric Terry Law, PLLC and specializes in Business Bankruptcy Law. He clerked for Judge King from 1995-96.
Anthony (Tony) Hervol is the Owner of the Law Office of H. Anthony Hervol and has a general civil litigation practice, which includes bankruptcy matters. He clerked for Judge King from 1992-93.
ENDNOTES Searsy v. Comm’l Trading Corp., 560 S.W.2d 637 (Tex. 1977). The current Bankruptcy Code was enacted in 1978 and generally became effective on October 1, 1979. The current Code completely replaced the former Bankruptcy Act of 1898 (Act of July 1, 1898, ch. 541, 30 Stat. 544). 3 An example of one of the many successful cases tried by lawyer Ronald King is In re Anderson Oaks (Phase I) Ltd. Partnership, 77 B.R. 108 (Bankr. W.D. Tex. 1987). 4 During the savings and loan crisis of the 1980s and 1990s, approximately one-third of the savings and loan associations in the United States failed. The impact on the U.S. economy was devastating, resulting in significant defaults in consumer and business loans, as well as foreclosures throughout the country. 5 Chief Bankruptcy Judge Craig A. Gargotta clerked for Judge King from 1989-90; Judge Michael M. Parker clerked for Judge King from 1993-95. 6 TXCO Res., Inc. v. Peregrine Petroleum, L.L.C. (In re TXCO Res., Inc.), 475 B.R. 781 (Bankr. W.D. Tex. 2012). 1 2
provides Judge King with the best of both worlds. On the one hand, he can finally slow down, spend more time with family, and enjoy the fruits of a long-deserved retirement. At the same time, he can continue to serve the community he has long called home in a capacity and on a bench where he has been a fixture, and that he has loved, for most of his legal career. A few days after Judge King’s retirement celebration, he sat on the patio drinking coffee and staring into the screen of his laptop computer. Was he planning his first big post-retirement vacation? To the contrary, he was dutifully reviewing all of the pleadings for the docket he had scheduled the next day.
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January–February 2022
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San Antonio Lawyer® 13
BAMC Surprise Medical Billing:
are
ightm N 1 l e A Lev
By Barry H. Beer
J
anuary 27, 2017. It had grown dark and cold outside. Julius had places to go on his Harley Electra Glide. The weather was no deterrent for the twenty-five-year-old Army veteran. As he approached the 3600 block of Commercial Avenue in San Antonio, there were no vehicles ahead or behind him. The road was his own, as he liked it. Then, seemingly out of nowhere, a Ford Mustang came from the opposite direction and suddenly turned in front of him. There was no way to avoid the impact. It was devastating. Julius was rushed to the nearest Level 1 Trauma facility, Brooke Army Medical Center (BAMC), because the other such local facility, University Hospital, was farther away. He remained in a coma for seventeen days. He underwent multiple surgeries to reconstruct his face, skull, and shattered wrist. Countless pieces of titanium became permanent new skeletal fixtures. He was eventually discharged to live with his mother and start the agonizing process of recovery. He recalled nothing of the accident. Suffering from disabling pain and memory loss, Julius thought the worst was behind him. It was not. Months later, in the mail, a bill arrived from BAMC. It came from BAMC’s Uniform Business Office (UBO), and it read: “Balance due: $390,900.38.” The billing notices kept coming until in September, some eight months after hospitalization, he received this notice: This is the third and final attempt to collect your outstanding debt. Please be advised that your account balance is delinquent and referral to the US Department of Treasury is imminent. In accordance with the Debt Collection Improvement Act (DCIA) of 1996 and the Digital Accountability and Transparency Act (DATA), federal agencies are required to refer non-tax debts to the Department of Treasury within 120 days of delinquency. Neither the UBO nor the Military Treatment Facility where you received your services has the authority to grant a waiver to collect the charges related to these services. The UBO cannot assist you in obtaining a waiver and your debt cannot be placed on hold while you seek a waiver. You have the right to inspect and copy government records related to these charges and request a review of how we determine your charges; however, this request does not alleviate your financial responsibility. 14 San Antonio Lawyer® | sabar.org
Julius had no means to even begin to pay such a large debt. By the summer of 2019, he was again employed, though very much still recovering from his injuries from the accident two years earlier. On July 30, 2019, Julius received a letter from Coast Professional, Inc., entitled “Notice of Intent to Initiate Administrative Wage Garnishment Proceedings.” It read: This notice is from Coast Professional, Inc., a private collection agency on behalf of the US Department of Treasury, Bureau of Fiscal Service. Fiscal Service, the current holder of your outstanding delinquent federal obligation, on behalf of Department of Defense, has placed your account with the agency for collection. The current balance listed above, as due and owed, may be accruing daily interest and penalties, the actual amount owed may be different than what is stated. Julius stared for minutes at the notice from the collection agency, fixated and motionless. In the top right corner, next to the account number it read: “Current balance due: $632,307.56.” Due to penalties, costs, fees, and interest, his original principal balance had nearly doubled. As an honorably discharged veteran, he wondered why the VA would not pay for his medical services at BAMC. He soon discovered that, because he had neglected to enroll with the VA system upon his discharge, he was not qualified to have the VA pay his bill. He was told that—other than active military or a retiree or covered family member—all other civilians were responsible for full health care billing. For BAMC billing purposes, he was a civilian. Julius had no private health insurance on his own. The driver of the Mustang maintained only minimum insurance limits of $30,000, and the settlement tender of the injury claim did not even make a dent in Julius’s bill. Adding insult to already horrific injuries, within weeks of Coastal’s garnishment warning letter, Julius watched his paycheck being docked, with thousands of dollars quickly being stripped away. Because of fees and penalties, the balance due continued to rise, despite multiple garnishment payments. He would certainly die still owing the lion’s share of the debt, he thought to himself. To make matters worse, the debt was destroying his credit. He was unable to move out of his mother’s house and purchase his own home,
In February 2013, the Brooke Army Medical Center Facebook page or even rent an apartment. All attempts to try to resolve the debt by posted the following notice: contacting the Department of Treasury, BAMC, and Coast Professional, As of Jan. 30, 2013, at the direction of the U.S. Army Medical were unsuccessful. Somehow, BAMC’s bill had to be paid. Command Chief of Staff, patient medical bills less than $100,000 In response to an inquiry about a case with facts similar to Julius’s, and more than 90 days past due will be transferred to the US a BAMC spokesperson provided the following statement to News4 in Treasury Department for collection. . . . Once overdue medical San Antonio: “We understand the billing process is a confusing and bills are transferred, the hospital will no longer be able to accept complicated process to navigate. BAMC works diligently to educate payments or negotiate a repayment plan. . . . The U.S. Treasury patients and family members prior to discharge to provide them with Department will apply fees, penalties and interest to debt the necessary points of contact to aid in their navigation of this process. transferred for collection.4 . . . BAMC UBO (Uniform Billing Office) stands by to help explain any 1 aspect of the federal billing and collection process.” In August 2014, the Inspector General of the U.S. Department of Numerous news reports, Facebook posts, and anecdotes of other Defense issued a report entitled “Delinquent Medical Service Accounts similarly situated patients directly contradicted the foregoing assertion. at Brooke Army Medical Center Need Additional Management Julius, for example, did not receive UBO assistance in clarifying his bill Oversight.”5 The Inspector General’s report found that BAMC and or even providing an itemized statement. He was unable to get any real the Uniform Business Office (UBO) did not effectively manage assistance in navigating the billing and payment process. There certainly delinquent medical services accounts.6 As a result, BAMC was deemed was no assistance in seeking an adjustment, waiver, or even a payment to have missed opportunities to collect approximately $10.4 million plan. Once the debt was transferred to the Department of Treasury for in delinquent payments. The report concluded that BAMC needed to collections, it effectively became untouchable. immediately improve its collection efforts by taking aggressive actions to Coastal’s garnishment letter did include a hearing request form collect the delinquent debts.7 allowing debtors to object to the garnishment of wages by requesting a The report acknowledged that BAMC’s mission was to “promote hearing. Nowhere on the form, however, was there a box to be checked health and provide quality, compassionate, patient-centered care, in order to seek a waiver of the medical debt. The only potential grace while developing health care professionals and optimizing readiness.”8 offering was indicated in a section entitled “Garnishment amount— Still, the emphasis of the reporting was the urgent requirement that proposed garnishment would cause financial hardship.” The debtor was BAMC promptly establish procedures for management and collection required to provide a “signed financial statement, along with copies of delinquent medical services accounts. The Inspector General of earnings and income records and proof of expenses” on a Treasury recommended significantly increasing the dollar reimbursements for Department Financial Statement Form, downloadable from the internet. services provided, as well as making more aggressive use of the Federal Based on Julius’s previous lack of success in trying to resolve the matter Debt Administrative Wage Garnishment Tool.9 with the government, he decided sending in the financial form was a waste of time. Furthermore, it would only possibly halt the garnishment, not reduce or eliminate the debt. Julius was not alone. His situation was much like that of a variety of other cases. News articles with titles like “BAMC Doctors Saved Their Lives, Now BAMC Bills Threaten Their Livelihood”; “Burn Victim Facing $98,000 in Surprise Charges”; and “America’s Most Powerful Debt Collector,” were immediately evident upon inputting the words “BAMC” Resolving Cases and “billing” during an internet search. These Delivering Results news stories documented the similar plight of badly injured civilians taken to BAMC, without a choice in the matter, only to be confronted with the nightmare of enormous post-hospitalization bills. According to an article in The Atlantic Mediating all types of civil litigation cases from pre-lit to post verdict since 2007. magazine, citing data from the Defense Health Agency, civilian patients taken to military Board Certified in Civil Trial Law Texas Board of Legal Specialization hospitals reportedly owed a debt of nearly $200 AV Rated million in 2018.2 Once the debt got transferred Texas Super Lawyer: every year since 2009 to the Treasury Department, not only were wages subject to withholding, but so were tax refunds and even Social Security checks.3 To schedule an in-person or virtual mediation, visit the calendar at Unlike in previous years, when BAMC often www.KatzmanAndKatzman.com/adr-mediation/ exercised discretion by waiving medical billing or call for patients who were unable to pay, its current 210.979.7300 policy is to pursue debtor patients like Julius aggressively.
It’s settled
Alex Katzman
January–February 2022
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San Antonio Lawyer® 15
Suffering from disabling pain and memory loss, Julius thought the worst was behind him. It was not. Months later, in the mail, a bill arrived from BAMC. It came from BAMC’s Uniform Business Office (UBO), and it read: “Balance due: $390,900.38.”
received governmental medical care for injuries caused by a third party’s negligence. It read: (c) Damages Recoverable for Personal Injury Unaffected No action taken by the United States in connection with the rights afforded under this legislation shall operate to deny to the injured person the recovery for that portion of his damage not covered hereunder. The foregoing subsection required facilities such as BAMC to evaluate and consider the injured party’s other personal injury damages when deciding upon a waiver or compromise of the medical debt. This was to include: any permanent injuries incurred; pain and suffering; decreased earning power; and any medical expenses which the injured party has borne or will bear in the future.17 Further considerations were also to be made by the government in deciding whether to waive or reduce medical debt. Specifically, attorney fees and out-of-pocket costs for bringing a recovery action for the associated personal injury claim were to be taken into account.18 The MCRA clearly applied to the facts of Julius’s case. He suffered tremendous personal injury damages, caused by third-party negligence, all resulting in significant undue hardship. Even though his circumstances obviously warranted waiver of his medical debt, BAMC never offered him a waiver or a bill reduction. The availability and applicability of the MRCA was never broached by BAMC. After watching his paycheck being garnished and fearing the loss of his upcoming tax refund, Julius finally decided to seek legal help. He ultimately sought assistance from the law firm of this author. He was desperate to end his worsening situation. A complaint seeking declaratory relief was promptly filed and served upon both the Assistant United States Attorney for the Western District of Texas and the United States Attorney in Washington, D.C. Even before the
Unlike BAMC, non-profit and private hospitals generally must follow federal and state charity care laws when collecting medical debts from low income or uninsured patients.10 These laws instruct them to write off “unpaid debts.”11 In contrast, federal hospitals such as BAMC must use “prompt and aggressive action” to settle debts according to regulations from the Department of Defense.12 The federal government can also be more aggressive than private debt collectors, in that the Treasury Department does not need a judge’s order before garnishing wages. In an interview by Advisory.com, a BAMC spokesperson remarked: “Per federal law, [military facilities] do not have the authority to waive, compromise, or terminate any debt incurred when a civilian emergency patient is seen.”13 The BAMC spokesperson added, “BAMC bills patients once all efforts to collect from insurance companies have been exhausted”; and once a debt is transferred to the Treasury Department, “BAMC may not interfere with the collection actions.”14 Despite the fact that representatives of BAMC, the Treasury Department, and the collection company all told Julius that his $600,000-plus bill could not be waived, he later discovered that a waiver was, in fact, available. Such waiver would have saved him the added trauma of collection notices and garnishments. In 1962, Congress enacted the federal Medical Care Recovery Act (MCRA).15 This Act provided that the federal government shall have the right to recover, from When business partners separate...it’s third-party tortfeasors, the cost of medical care And, in many instances, there is no clear pre-nup. furnished by the government or at government expense, to persons injured as a result of thirdparty negligence.16 Specifically, pursuant to 42 U.S.C. § 2652(b), the government was allowed to adjust or waive medical billing as follows: Third Party Liability for Hospital and Medical Care: Regulations (b) Settlement, Release and Waiver of Claims. To the extent prescribed by regulations under subsection (a), the head of the department or agency of the United States concerned may (1) compromise, or settle and execute a release of, any claim which the United States has by virtue of the right established by section 2651 of this title; or (2) waive any such claim, in whole or in part, for the convenience of the Government, or if he determines that collection would result in undue hardship upon the person who suffered the injury or disease resulting in care or treatment described in section 2651 of this title. Subsection (c) of the MCRA went even further to protect patients/debtors who had 16 San Antonio Lawyer® | sabar.org
like a divorce.
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“When I explain it, they understand it.”
government filed an answer, the local U.S. Attorney contacted Julius’s counsel. The garnishment was halted, and the debt was immediately recalled from the Treasury Department. After Julius’s counsel provided the government a summary outlining Julius’s financial hardship, a formal settlement was soon reached. The government asserted its right to recover the cost of medical care rendered, pursuant to a statutory lien citing 10 U.S.C. § 1079(b). Meanwhile, the Plaintiff, Julius, relied upon 42 U.S.C. § 2652(b), seeking a waiver. In return for dismissal of the Complaint, the government agreed to waive its statutory lien. Formal settlement was entered in April 2020, just before Julius would have lost his tax refund check. Two clients of this author’s firm are currently awaiting the outcome of their pre-litigation attempts to resolve outstanding BAMC medical debts. In one instance not involving a liability claim, the civilian’s health insurance paid approximately $55,000, at in-network rate, towards a bill of $115,000. The balance billing of $60,000 was claimed by BAMC as due and owed. In a separate case, an automobile collision with an uninsured driver caused over $25,000 in medical debt. The patient is indigent and uninsured. Both clients have submitted detailed proof of financial hardship. In both cases, the threat of a declaratory judgment action and a demand for immediate recall of garnishment action was raised in early negotiations with the U.S. Attorney’s office. Fortunately, recall has occurred in both cases. In the same months during which Julius was successful in negotiating a waiver of his outstanding BAMC bill, United States Representative Joaquin Castro, from San Antonio, proposed legislation that would allow the government to waive medical bills for civilians who were unable to pay for the cost of military medical care at facilities like BAMC.19 Representative Castro remarked, “Military
trauma teams develop invaluable surgical skills and competency due to the high volume of civilian patients treated at BAMC—a number that cannot be duplicated treating only the active-duty military population. The civilian-military relationship is mutually beneficial as it saves lives, both on the battlefield and in our community.”20 Castro noted, “BAMC and University Hospital serve as the only Level 1 certified trauma centers in a twenty-two-county region in Southwest Texas, an area that covers more than 26,000 square miles and services more than 2.2 million people.”21 Through House Bill 6394, Representative Castro proposed an amendment to the National Defense Authorization Act, 10 U.S.C. § 1079 (“NDAA”), to reform billing practices, and that amendment became law in January 2021.22 Previously, 10 U.S.C. § 1079(a) and (b) read as follows: Procedures for Charging Fees for Care Provided to Civilians; Retention and Use of Fees Collected: (a) Requirement to Implement Procedures—The Secretary of Defense shall implement procedures under which a military medical treatment facility may charge civilians who are not covered beneficiaries (or their insurers) fees representing the costs, as determined by the Secretary, of trauma and other medical care provided to such civilians. (b) Use of Fees Collected—A Military medical treatment facility may retain and use the amounts collected under subsection (a) for— (1) trauma consortium activities; (2) administrative, operating, and equipment costs; and (3) readiness training. Now, however, 10 U.S.C. § 1079(b) reads as follows:
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(b) Waiver of Fees—The Secretary may waive a fee that would otherwise be charged under the procedures implemented under Subsection (a) to a civilian who is not a covered beneficiary if: (1) The civilian is unable to pay for the cost of the trauma or other medical care provided to the civilian, (including any such costs remaining after the Secretary receives payment from an insurer for such care, as applicable); and (2) The provision of such care enhances the knowledge, skills, and abilities of healthcare providers, as determined by the Secretary. While being interviewed about the new law on a CBS Newshour broadcast, Congressman Castro stated: Often times, folks are unconscious and not making a decision about which hospital they’re going to go to. There’s a good reason why bills for civilian patients who can’t afford to pay should be waived: this a training hospital where members of our military are trained on treating trauma . . . and so, there’s a benefit to the United States government and to the military of being able to see these patients. And yet, that really wasn’t being taken into account when people were being charged.23
January–February 2022
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Despite medical bill waivers being allowable under the 1962 Medical Care Security Act and Castro’s 2021 amendment to the NDAA, nowhere is a patient’s right to seek a debt waiver or compromise ever mentioned in the BAMC medical bill brochure currently posted online by the Department of Defense.24 In fact, it states just the opposite, repeating that: “As a military treatment facility, BAMC does not have the authority to compromise, waive, settle or suspend a debt.” Julius’s case, as well as those described in various news articles online, confirm that—to the contrary—BAMC does have authority to waive or settle and compromise civilian medical bills. This is even more true now, with the passage of the amendment to the NDAA, granting the Secretary of Defense authority to waive civilian medical debts in all cases, not just in tort cases, as was available in past legislation. The passage of both state and federal laws in recent years has addressed some of the BAMC billing predicaments facing civilians. Earlier this year, Texas lawmakers passed Senate Bill 935, requiring that workers’ compensation insurance reimbursement rates for medical care provided at a federal military treatment facility be at the same rate provided by federal regulations.25 S.B. 935 also clarified that medical care provided at these medical facilities is exempt from certain state workers’ compensation requirements involving billing and pre-authorization.26 Additionally, in June 2021, with the passage of Texas House Bill 2365, BAMC became recognized as a participating Medicaid provider. Upon its passage, author Ray Lopez proclaimed, “H.B. 2365 will ensure that our most vulnerable population who receive trauma care from a military treatment facility will not be saddled with excessive medical debt.”27 Finally, in recent years, BAMC was also authorized to bill Medicare for civilian patients. As an added note, federal employees who have civilian emergency billing debts owed to BAMC are deemed eligible for a compromise or reduction of their bills, if income and assets meet certain thresholds, due to the inability to pay. Federal employees are eligible for the reduction once they complete a “Financial Statement of Debtor” form, found on the Department of Treasury website.28 In 2019, the “End Surprise Billing Act” was passed by the 116th Congress under H.R. 861.29 The Act, which becomes effective in 2022, places limits on unscheduled “surprise” outof-network health care charges by doctors and hospitals. It addresses expenses often resulting when medical care is received in an out-ofnetwork emergency room. The Act also places limits on so-called balance billing, in which health care providers charge plan enrollees for the balance of an out-of-network bill, when an insurance company does not pay the full amount. The new law effectively holds patients harmless from surprise bills and prohibits outof-network providers from balance billing unless they give patients 72-hour notice of their network status and an estimate of charges. Until recently, BAMC was considered an out-of-network hospital by health insurance carriers. Still, even with in-network status, there are numerous stories and news articles describing bill processing failures by BAMC. These have included failing to file health insurance claims—either timely or at all; failing KFG21_CS_005_SA Lawyer Ad September_4o9x4o9_PR.indd 1
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to follow up on insurance appeals procedures; and failing to provide mandatory itemized billing statements, as required by health insurance carriers. This flawed interaction between BAMC and health insurance providers has resulted in the complete failure of health insurance payment or a substantial delay in payment, culminating in the initiation of BAMC collection efforts. Finally, even when health insurance innetwork payment is received, BAMC has nevertheless balance billed, pursuing the civilian patient for charges above the lump sum payment received from health insurance companies. Other than providing documentation of the patient’s financial inability to make payment on an outstanding medical debt, there are no provisions as to which cases warrant or require a waiver, and which do not. Accordingly, there will likely be multiple cases in which ligation will need to be initiated to have the statute interpreted and applied. Pursuant to the 2021 amendment to 10 U.S.C. § 1079(b), the Secretary of Defense “may waive a fee . . . when the civilian is unable to pay for costs of the trauma or other medical care provided.”30 This language is discretionary and does not provide any certainty of a waiver. Also, it does not, on its face, provide alternatively for acceptance by the government of a reduced payment in closure of the debt. Further, what constitutes “inability to pay” in order to be eligible for a waiver is not clear. Will the Treasury have the final word, as it does in cases where Financial Statement of Debtor forms are submitted by federal employees seeking a bill reduction? Will a local BAMC official or Assistant U.S. Attorney have authority to decide? At least as to the latter question, this author’s experience thus far has been that the local Assistant U.S. Attorney, interacting with a BAMC representative, has such authority. Unfortunately, however, it appears that only the threat of litigation prompts the negotiation process. Coincidentally, at the time this article was drafted, the United States Army published a bulletin entitled “BAMC Launches Initiatives to Help Alleviate Billing Concerns.”31 The bulletin begins by expressing BAMC’s concern for “helping patients navigate the complex maze of medical billing,” with the hope of “alleviat[ing] billing concerns, particularly for civilian and trauma patients.”32 According to Air Force Colonel Patrick Osborne, BAMC wants its “patients to focus on the recovery, not be stressed with billing issues.”33 One so-called “new and improved billing process” is the automatic transfer of any remaining balances directly to the Treasury Department’s Centralized Receivables Service (CRS). This occurs after 120 days of insurance processing. The CRS has the ability to set up long-term payment plans or suspend collections based on “demonstrated hardship” and is not required to tack on fees and penalties generated by the Treasury Department.34 Additionally, the Army bulletin indicates that BAMC will be bringing on trained financial counselors to help patients navigate the insurance and payment processes and serve as liaisons with insurance companies. The counselors will also help determine whether uninsured
patients are eligible for enrollment in programs offering payment assistance. The Army’s posting states that—while BAMC is not an authorized to enter into a contract with insurance carriers and, thus, is treated as being “out-of-network”—the law requires all insurance companies to consider federal health care facilities as “in-network” for billing purposes.35 Additionally, for billing transparency, effective January 2023, BAMC will be required to update its billing system to provide itemized patient billing statements. The Army’s bulletin concludes by stating that BAMC is committed to ensuring “our patients are treated with empathy and compassion in every aspect of their care . . . ensuring that they receive the best possible financial counseling and education.”36 However, personal case histories from individuals such as Julius and other clients of this author, as well as multiple news stories and social media accounts, have shown this statement to be untrue. Even after having suffered a severe physical trauma that was treated at BAMC, patients still face the subsequent emotional trauma of having to try to resolve an enormous BAMC bill. Regrettably, this situation remains a Level 1 nightmare . . . at least for now. Barry H. Beer is senior partner at Law Offices Beer & King, P.C., a primarily personal injury firm. He is a former long-time adjunct professor at St. Mary’s Law School.
ENDNOTES Dillon Collier & Joshua Saunders, BAMC Threatened to Turn Over Car Crash Victim to Dept. of Treasury After Sending Her Bill for $16K (Feb. 27, 2020), News 4 San Antonio, https://www.ksat.com/news/defenders/2020/02/28/bamc-threatened-to-turn-overcar-crash-victim-to-dept-of-treasury-after-sending-her-bill-for-16k/. 2 Jared Bennet & Olgha Khazan, Olga, America’s Most Powerful Debt Collector, The Atlantic (Jan. 21, 2020), https://www.theatlantic.com/health/archive/2020/01/militaryhospitalmedicaldebt/605194. 3 Id. 4 BAMC, Late Patient BillsWill be Transferred to US Treasury, Facebook (Feb. 1, 2013), https:// www.facebook.com/BrookeArmyMedicalCenter/posts/10151385904848631. 5 Inspector General, U.S. Dept. of Defense, Delinquent Medical Service Accounts at Brooke Army Medical Center Need Additional Management Oversight (Aug. 13, 2014). https:// media.defense.gov/2014/Aug/13/2001713389/-1/-1/1/DODIG-2014-101.pdf. 6 Id. 1
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Id. U.S. Dept. of Defense, Delinquent Medical Service Accounts at Brooke Army Medical Center Need Additional Management Oversight (Aug. 13, 2014), https://media.defense.gov/2014/Aug/13/2001713389/1/1/1/ DODIG2014101.pdf. 9 Id. 10 Advisory Board, The Most Aggressive Debt Collector in America? (Jan. 23, 2020), https://www.advisory.com/ en/dailybriefing/2020/01/23/bamcdebt. 11 Id. 12 Id. 13 Id. 14 Id. 15 42 U.S.C. §§ 2651-53. 16 Id. 17 32 CFR § 842.144(a) (1968). 18 46 Notre Dame Law Review 259 (Jan. 1, 1997). 19 H.R. 6395, 116th Cong. (2021). 20 CBS News, Burn Victim’s $1.7 Million Medical Bill from Military Hospital is Waived (July 23, 2021), https:// www.cbsnews.com/news/burn-victim-1-7-milliondollar-medical-bill-military-hospital-waived. 21 Id. 22 H.R. 6395 (2021); see also 10 U.S.C.1079(b). 23 CBS News, Burn Victim’s $1.7 Million Medical Bill from Military Hospital is Waived (July 23, 2021), https:// www.cbsnews.com/news/burn-victim-1-7-milliondollar-medical-bill-military-hospital-waived. 7 8
U.S. Dept. of Defense, Understanding Your BAMC Bill, https://bamc.tricare.mil/Portals/143/documents/ Billing/UBO-billing-brochure.pdf?ver=Xv4_ eV5CZYWplcdqP7Q5Bg%3d%3d. 25 Texas S.B. 935 (2021); see also Tex. Labor Code ch. 413, subch. B, § 413.0112. 26 Id. 27 Texas House of Representatives press release, (June 17, 2021), https://house.texas.gov/news/ press-releases/?id=7505. 28 U.S. Dept. of Defense, Resources for Taxpayers (April 22, 2021), https://www.fiscal.treasury.gov/crs/resourcesfor-payers.html#financial-statement-or-debtor. 29 H.R. 861, 116th Congress (2019), 42 U.S.C. § 1395c. 30 10 U.S.C. § 1079(b)(2021). 31 Elaine Sanchez, BAMC Launches Initiatives to Help Alleviate Billing Concerns (Sept. 1, 2021), https://www. army.mil/article/249911/bamc_launches_initiatives_to_help_alleviate_billing_concerns. 32 Id. 33 Id. 34 Id. 35 Id. 36 Id. 24
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2021 Amendments to Tex. Civ. Prac. & Rem. Code ch. 38 Answer Some Questions and Raise Others By Paul Curl
I
n its most recent session, the Texas Legislature passed two key amendments to Chapter 38 of the Texas Civil Practice and Remedies Code, which governs recovery of attorney’s fees in many cases. These amendments, which took effect September 1, 2021, address recovery of attorney’s fees against non-corporate entities and recovery of attorney’s fees in construction cases. While the amendments resolve certain issues and questions, they raise others.
Revised Section 38.001 Section 38.001 of the Texas Civil Practice and Remedies Code authorizes recovery of attorney’s fees in cases alleging an unpaid debt or a breach of contract. Until September 1, 2021, Section 38.001 read as follows: A person may recover reasonable attorney’s fees from an individual or corporation, in addition to the amount of a valid claim and costs, if the claim is for: 1. rendered services 2. performed labor 3. furnished materials 4. freight or express overcharges 5. lost or damaged freight or express 6. killed or injured stock 7. a sworn account 8. an oral or written contract (emphasis added).
A question had arisen in some recent cases about whether a limited liability company could be liable for attorney’s fees under Section 38.001. The reflexive response to this question is, “Why wouldn’t it be?” The answer is because an LLC is not an “individual or corporation,” the only classifications of defendant mentioned in Section 38.001. The issue of an LLC’s liability for attorney’s fees was not raised in the case authority for many years. In several cases, the courts allowed recovery of attorney’s fees against LLCs, without addressing the fact that an LLC is not an individual or corporation. See Triton 88, LP v. Star Elec, LLC, 411 S.W.3d 42, 63-65 (Tex. App.—Houston [1st Dist.] 2013, no pet.); Howard Indus., Inc. v. Crown Cork & Seal Co., 403 S.W.3d 347, 353 (Tex. App.—Houston [14th Dist.] 2013, no pet.); Lee-Way Prince Enters., LLC v. QAI Assur., Inc., No 01-0701004-CV, 2009 WL 3490982, at *4 (Tex. App.—Houston [1st Dist.] Oct. 29, 2009, no pet.). In these cases, the parties did not raise the issue of whether an LLC could be liable for attorney’s fees under Section 38.001. More recently, though, some Texas courts of appeals have addressed this question and held that an LLC is not liable for attorney’s fees because a limited liability company is not mentioned in Section 38.001. In Alta Mesa Holdings, LP v. Ives, 488 S.W.3d 438
(Tex. App.—Houston [14th Dist.] 2016, pet. denied), the LLC appellants made the argument that they were not liable for attorney’s fees because they were not “an individual or corporation.” The appellate court agreed. The appellate court looked “primarily to the language of the statute itself,” because it is “‘a fair assumption that the Legislature tries to say what it means, and therefore the words it chooses should be the surest guide to legislative intent.’” Id. at 453 (citing Fitzgerald v. Advanced Spine Fixation Sys., Inc., 996 S.W.2d 864, 866 (Tex. 1999)). After some discussion, the appellate court held that an LLC is not an individual and cannot be equated to a corporation, despite the fact that the words “‘company’ and ‘corporation’ are sometimes used synonymously.” Id. Therefore, the appellate court reasoned that attorney’s fees cannot be awarded against an LLC under Section 38.001. Although the appellate court acknowledged that, in some cases, attorney’s fees were awarded against an LLC, the court distinguished those cases on the basis that the parties never raised the issue. The Fourth Court of Appeals quoted extensively from Alta Mesa to reach the same result in 8305 Broadway, Inc. v. J & J Martindale Ventures, LLC, No. 04–16–00447– CV, 2017 WL 2791322 at *5 (Tex. App.— San Antonio June 28, 2017, no pet.). The
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Thirteenth Court of Appeals likewise followed Alta Mesa and also reviewed the legislative history of Section 38.001 and its predecessor statute in First Cash, Ltd. v. JQ-Parkdale, LLC, 538 S.W.3d 189, 200 (Tex. App.—Corpus Christi-Edinburg 2018, no pet.), reaching the same result. While other Texas courts of appeals have also followed Alta Mesa, the Texas Supreme Court has never taken up the issue. Recently, though, the Texas Legislature amended Section 38.001, and effective September 1, 2021, Section 38.001 reads as follows: (a) In this section, “organization” has the meaning assigned by Section 1.002, Business Organizations Code. (b) A person may recover reasonable attorney’s fees from an individual or organization other than a quasigovernmental entity authorized to perform a function by state law, a religious organization, a charitable organization, or a charitable trust, in addition to the amount of a valid claim and costs. . . . (emphasis added). In turn, Section 1.002(62) of the Texas Business Organizations Code defines “organization” as: RISK-TAKING CAN BE FUN...
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[A] corporation, limited or general partnership, limited liability company, business trust, real estate investment trust, joint venture, joint stock company, cooperative, association, bank, insurance company, credit union, savings and loan association, or other organization, regardless of whether the organization is for-profit, nonprofit, domestic, or foreign. Now, it is clear that an LLC and virtually any other type of business entity can be held liable for attorney’s fees under Section 38.001. The list of eight types of claims that may give rise to a claim for attorney’s fees is unchanged in the amended Section 38.001. The author/sponsor of House Bill 1578, which amended Section 38.001, made the following statement of intent for the amendment and referred specifically to Alta Mesa: Section 38.001, Civil Practice and Remedies Code, permits recovery of attorney’s fees from “an individual or corporation” in certain types of claims. Alta Mesa Holdings, LP v. Ives, 488 S.W.3d 438, 452-53 (Tex. App.—Houston [14th Dist.] 2016, pet. denied), construed the term “corporation” narrowly in this context, concluding that an LLC could not be held liable for attorney’s fees under Section 38.001, Civil Practice & Remedies Code. In doing so, the case foreclosed recovery of attorney’s fees from LLCs, partnerships, and other entities found liable for the claims listed in Section 38.001, Civil Practice and Remedies Code. H.B. 1578 addresses this situation by amending Section 38.001, Civil Practice and Remedies Code, to replace “corporation” with “organization,” as defined by Section 1.002, Business Organizations Code, for purposes of who may be required to pay attorney’s fees. Under Section 1.002, Business Organizations Code, “organization” means a corporation, limited or general partnership, limited liability company, business trust, real estate investment trust, joint venture, joint stock company, cooperative, association, bank, insurance company, credit union, savings and loan association, or other organization, regardless of whether the organization is for-profit, nonprofit, domestic, or foreign. This ensures that attorney’s fees may be recovered from all such entities—not just “corporations”—that are found liable for a
claim enumerated in Section 38.001, Civil Practice and Remedies Code. Author’s/Sponsor’s Statement of Intent, Tex. H.B. 1578, 87th Leg. The question is settled for lawsuits filed on or after September 1, 2021, but what about lawsuits that were in progress and pending resolution before that date? Was the Legislature’s amendment to Section 38.001 curative? Does it suggest that the courts of appeals had interpreted Section 38.001 incorrectly, or is the amendment an expansion of former Section 38.001 and an acknowledgment that it, indeed, did not previously apply to LLCs? Since the Texas Supreme Court never addressed the meaning of “individual or corporation” in the previous version of Section 38.001, it may still be an open question as to whether an LLC can be held liable for attorney’s fees under the pre-amendment version of Section 38.001. Section 38.006, which remains part of Chapter 38, states that “This chapter shall be liberally construed to promote its underlying purpose,” yet as the author/sponsor of House Bill 1578 noted, the Alta Mesa court applied a narrow construction to “corporation.” There should be enough lawsuits against LLCs filed before September 1, 2021, which are still in litigation, to make it worthwhile for Texas courts to revisit this question and consider whether the Alta Mesa court’s construction of the previous Section 38.001 was too narrow.
New Section 38.0015 The Legislature also added Section 38.0015 to Chapter 38. This section, which is completely new, deals with recovery of attorney’s fees in construction cases. Section 38.0015 states: (a) A person may recover reasonable attorney’s fees from an individual, corporation, or other entity from which recovery is permitted under Section 38.001 as compensatory damages for breach of a construction contract as defined by Section 130.001. (b) This section may not be construed to create or imply a private cause of action or independent basis to recover attorney’s fees. Section 130.001 of the Texas Civil Practice and Remedies Code defines a “construction contract” as: [A] contract or agreement made and entered into by an owner, contractor, subcontractor, registered architect,
licensed engineer, or supplier concerning the design, construction, alteration, repair, or maintenance of a building, structure, appurtenance, road, highway, bridge, dam, levee, or other improvement to or on real property, including moving, demolition, and excavation connected with the real property. Section 38.0015 does not create an independent ground to recover attorney’s fees. To the contrary, according to subsection (b) of Section 38.0015, the claimant must still meet the other requirements of Chapter 38 to recover attorney’s fees, which may then be deemed “compensatory damages.” The author’s/sponsor’s statement of intent for Section 38.0015 (House Bill 2416) indicates that it was intended to provide extra protection for contractors seeking coverage under an insurance policy, and to overrule the effect of an unnamed Texas Supreme Court case: The Texas Supreme Court has previously ruled that attorney’s fees awarded to a prevailing party are considered costs and not damages under a commercial general liability insurance policy. It has been suggested that this ruling leaves contractors exposed, even in covered insurance claims, to potentially large awards for attorney’s fees. In some cases, a contractor could have an otherwise covered case but still be forced to go to trial if the insurance carrier disagrees with the plaintiff’s assessment of damages. If the plaintiff gets an award of attorney’s fees, these costs will not be covered by the policy even if the rest of the damages are covered, which creates a sizeable gap in coverage. H.B. 2416 seeks to fill this coverage gap by authorizing a person to recover attorney’s fees as compensatory damages for breach of a construction contract. Author’s/Sponsor’s Statement of Intent, Tex. H.B. 2416, 87th Leg. The language of Section 38.0015 goes beyond protecting contractors. It provides that not just a contractor but a “person”—the same word used in Section 38.001—may recover attorney’s fees “as compensatory damages for breach of a construction contract.” Given the broad definition of “construction contract” in Section 130.001, it appears that an owner, subcontractor, architect, engineer, or supplier should be entitled to the benefit of Section 38.0015. The real effect of Section 38.0015 may have less to do with insurance coverage than
with supersedeas bonds. The Texas Supreme Court held in In re Nalle Plastics Family LP, 406 S.W.3d 168, 176 (Tex. 2013), that attorney’s fees awarded in a judgment are not compensatory damages that must be superseded on appeal under Section 52.006(a) of the Texas Civil Practice and Remedies Code in order to prevent enforcement of the judgment while the case is on appeal. Section 38.0015 changes this rule, at least in cases involving construction contracts, meaning that attorney’s fees—now denominated as compensatory damages—must be superseded on appeal along with the rest of the damage
award, or else the judgment can be collected while the case is on appeal. Why did the Legislature make this exception part of Chapter 38 instead of part of Section 52.006? Is there now a conflict between the statutes? If Section 38.0015 affects insurance coverage, will insurance companies just draft their policies differently in response? Will other industries, in addition to the construction industry, lobby for a similar exception? Does Section 38.0015 apply only in cases alleging an express construction contract, or will it also apply in a quantum meruit case? Will it be necessary to plead in
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For more information, contact the local San Antonio Chapter. www.attorney-mediators.org/SanAntonioChapter Gary Javore - gary@jcjclaw.com Recommended by Judges and Attorneys John Boyce 210.736.2224 jkbiii@boyceadr.com Leslie Byrd 210.229.3460 leslie.byrd@bracewell.com Michael Curry 512.474.5573 mcmediate@msn.com Allan DuBois 210.227.3106 akd@akduboislaw.com John Franco, Emeritus 210.865.8105 jjfrancotx@sbcglobal.net Aric J. Garza 210.225.2961 aric@sabusinessattorney.com Charles Hanor 210.829.2002 chanor@hanor.com Danielle L. Hargrove 210.313.8811 dlh@hargroveadr.com Ronald Hornberger 210.734.7092 rhornberger@pg-law.com Gary Javore 210.733.6235 gary@jcjclaw.com
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construction cases that attorney’s fees are sought as compensatory damages? If attorney’s fees are sought as compensatory damages, will this change the manner in which the attorney’s fees should be proved up? These questions and others need to be addressed by the appellate courts and the Legislature.
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P aul Curl is managing shareholder of Curl Stahl Geis, PC and specializes in business and commercial litigation. He is Board Certified in Civil Trial Law by the Texas Board of Legal Specialization and is a member of the American Board of Trial Advocates.
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Federal Court Update
Western District of Texas Court Summaries By Soledad Valenciano, Melanie Fry, and Jeffrie Lewis
If you are aware of a Western District of Texas order that you believe would be of interest to the local bar and should be summarized in this column, please contact Soledad Valenciano (svalenciano@svtxlaw.com, 210-787-4654) or Melanie Fry (mfry@dykema.com, 210-554-5500) with the style and cause number of the case, and the entry date and docket number of the order.
COVID-19; Employment Bruce v. Olde England’s Lion & Rose Rim, LLC, No. SA-20-CV-00928-XR (Rodriguez, X., October 25, 2021). In response to the COVID-19 pandemic, Congress enacted the Emergency Paid Sick Leave Act (EPSLA), which prohibits businesses that employ fewer than 500 workers from discharging, disciplining, or discriminating against employees who take leave after contracting COVID. To determine whether EPSLA applies to a particular business based on the number of employees it has, all common employees of joint employers must be counted together. In this case, three plaintiffs sued the LLC that owned their former restaurantemployer and its manager for unlawful termination under the EPSLA, claiming they were either terminated, or denied paid leave and terminated upon complaining about the denial, after testing positive for COVID. The manager is an indirect owner of both the restaurant LLC and an LLC that provides food services at Lackland Air Force Base. The defendants moved for summary judgment, arguing the EPSLA did not apply because the restaurant LLC constitutes a single integrated enterprise with the manager or the Lackland LLC, which employ over 500 employees or because the restaurant and the manager were joint employers of common employees. The court
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denied summary judgment because there was no legal theory to support treating the manager as part of an integrated enterprise; the defendants failed to establish as a matter of law that the two LLCs are a single integrated enterprise; and the defendants failed to establish that the employees at the restaurant and those at the air force base were “common”—the defendants had failed to show that any employees of either business worked at the other.
Federal Question Jurisdiction Zapata v. Republic Services, Inc., No. SA21-CV-00800-XR (Rodriguez, X., Sept. 27, 2021). In this wrongful death case, the plaintiffs sued their deceased family member’s employer and life insurer in state court. The claim against the insurer arose under federal law. The insurer thus removed the suit to federal court under federal question jurisdiction. The plaintiff then filed a notice of dismissal against the insurer and a motion to remand, arguing that remand was proper because no claim involving a federal question existed—due to the dismissal of the insurer—at the time of the motion to remand, and thus the court no longer had subject matter jurisdiction. The court rejected that reasoning, finding that subject matter jurisdiction remained because jurisdiction is determined by the claims in the state court petition at the time of removal. As there was a federal claim
in the petition at the time of removal, the plaintiffs’ dismissal of their federal claim did not divest the court of its jurisdiction. Still, the court chose not to exercise supplemental jurisdiction over the remaining state law claims because the state law claims predominated over the (now nonexistent) federal claims. The court remanded.
Civil Forfeiture; Fourth Amendment United States v. 89.9270303 Bitcoins, No. SA18-CV-0998-JKP, 2021 (Pulliam, J. Sept. 22, 2021). In this civil forfeiture case, the United States sought forfeiture of several different digital cryptocurrency wallets containing various cryptocurrencies allegedly traceable to criminal activity. The underlying crime was a fraud scheme involving the use of stolen gift card numbers to buy “clean” gift cards, which the perpetrator then sold for Bitcoin. He stored the Bitcoin on several passcode-protected digital wallets. After the perpetrator pleaded guilty and was sentenced, the government commenced this civil forfeiture action based on information it had obtained regarding the cryptocurrency wallets from the perpetrator’s recorded phone calls from prison. The perpetrator contested the forfeiture, arguing that the government had illegally seized and searched the cryptocurrency wallets in violation of the Fourth Amendment. The court rejected that argument, holding that the perpetrator-claimant did not have a
reasonable expectation of privacy in the calls he made from prison because he was advised that the calls were recorded. The court thus denied the perpetrator’s motion to suppress the wallets as evidence and motion for summary judgment. It granted the government’s motion for summary judgment in part, awarding forfeiture of the wallets containing Bitcoin, and denied the government’s motion in part as to wallets containing non-Bitcoin cryptocurrencies, because a question of fact existed as to whether the cryptocurrency on those wallets was traceable to the criminal activity.
Amount in Controversy; Uninsured Motorists Valdez v. Allstate Fire & Cas. Ins. Co., No. SA21-CV-00494-XR (Rodriguez, X., Sept. 22, 2021). The plaintiff sued her automobile insurer in state court for uninsured motorist (“UIM”) benefits under her insurance policy. She also raised extra-contractual bad-faith claims. The petition alleged damages “in excess of $250,000 but no more than $1,000,000.” The insurer removed to federal court on the basis of diversity jurisdiction. The insurer then moved to dismiss the plaintiff’s claims because she had not yet obtained a court judgment against the uninsured motorist. The plaintiff contested federal jurisdiction, claiming that despite the damages alleged in her petition, the amount in controversy did not meet the $75,000 threshold because her policy limit was less than $75,000. The court held that the policy limit guided the amount-in-controversy as to the plaintiff’s claims under her policy, but that her extra-contractual claims could still make up the difference between the policy limit and the amount of damages alleged in her state petition. The court denied the insurer’s motion to dismiss because the Texas Supreme Court held in Allstate Insurance Co. v. Irwin, 627 S.W.3d 263 (Tex. 2021), that UIM plaintiffs do not first need to obtain a judgment against the uninsured motorist before suing their insurer.
Rule 60(a); Clerical Corrections Union Pac. R.R. Co. v. Am. Ry. & Airway Supervisors’ Ass’n, No. SA-17-CV-270-XR (Rodriguez, X. Sept. 20, 2021). An employee of a railway company was fired for testing positive for drugs. Following his termination, the employee’s union filed a claim with the Public Law Board (“Board”), a
tribunal created by the federal government to resolve minor disputes between railways and unions. The Board ordered that the plaintiff be reinstated at the railway. The railway filed suit, asking the court to set aside the Board’s order. On remand from the Fifth Circuit’s decision on a separate issue, the parties submitted a joint statement asking the court to enter an order consistent with the Fifth Circuit’s holding. Nothing in the parties’ advisory mentioned an award of back wages to the worker. The court entered judgment pursuant to the terms agreed to by the parties. The worker then filed a Rule 60(a) “Motion to Correct Clerical Error, Oversight, or Omission in Final Judgment,” contending that the court should have granted an award of back wages, as requested in the union’s motion for summary judgment, which the court had granted. The court denied the motion, because the court’s authority under Rule 60(a) is limited to making corrections that are consistent with the court’s intent at the time it entered the judgment. Because nothing in the parties’ advisory to the court indicated that the court was to affirmatively award back wages, the court did not intend to do so at the time it entered the order based on the parties’ joint advisory.
Remand; Permissive Joinder EMET, LLC v. Johnson Controls, Inc., No. SA21-CV-00753-JKP-RBF (Pulliam, J. Oct. 7, 2021). The plaintiff business sued two separate air conditioner service companies and an individual in state court, alleging they performed unsatisfactory service amounting to negligence and fraud. One of the air conditioner service providers removed to federal court on diversity grounds. The plaintiff moved to remand because the nonremoving defendants were nondiverse to the plaintiff. The removing defendant argued remand was inappropriate because the plaintiff had fraudulently joined the nondiverse parties to defeat diversity. The court thus examined whether the joinder of the second air conditioner service provider comported with the permissive joinder requirements of Fed. R. Civ. P. 20(a)(2). The court found that the case met the permissive joinder requirements because the plaintiff’s claims against both air conditioner service providers arose out of the same series of transactions or occurrences. Thus, because at least one of the nondiverse parties had been properly joined, the court
remanded without consideration of whether the individual had been properly joined.
Failure to Amend When Ordered; Summary Judgment; Insurance/ DTPA Claims Finger Oil & Gas, Inc. v. Mid-Continent Cas. Co., No. 5-20-CV-00712-RBF (Farrer, R., October 20, 2021). Plaintiff Finger Oil & Gas purchased a commercial general liability coverage policy from Defendant Mid-Continent. Defendant Marsh brokered the purchase. After one of its natural gas wells had a blow out, Finger Oil contacted the broker (who then contacted Mid-Continent) regarding coverage for the event. Before the claim could be approved, Finger Oil had the well brought under control and repaired. Mid-Continent denied the claim. Finger Oil sued Mid-Continent, Marsh, and Marsh’s underwriter in state court, alleging breach of contract and violations of the DTPA and Chapter 41 of the Texas Insurance Code. Mid-Continent removed the suit on diversity grounds, claiming the underwriter was improperly joined. The court denied Finger Oil’s subsequent motion to remand and dismissed the claims against the underwriter for improper joinder. In a subsequent order, the court directed Finger Oil to file an amended pleading to bring its DTPA and Chapter 41 claims, which sound in fraud, in conformance with Fed. R. Civ. P. 9. When Finger Oil failed to amend, the court dismissed those claims pursuant to Fed. R. Civ. P. 37(b)(2)(A)(iivii). The court also held that these fraud-type claims, which were also the subject of the defendants’ motions for summary judgment, failed on the merits. No confidential or fiduciary relationship exists between the parties to establish that either defendant had a duty to disclose the policy’s exclusions. Further, there were no misrepresentations of coverage and no statements that conveyed a false impression triggering an obligation to make a fuller, follow-up disclosure. There was also no evidence that any non-disclosure caused Finger Oil’s damages, as Finger Oil did not point to any evidence showing it incurred any costs because of anything that the defendants stated. In addition, the court found no genuine issue of material fact as to any failure to promptly investigate or promptly deny the insurance
January–February 2022
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San Antonio Lawyer® 27
Fourth Court Update
Tech Upgrade By Chief Justice Rebeca C. Martinez
A
global pandemic, a “snowpocalypse,” and a computer virus tested the supporting technology of every Texas appellate court. The impact and response to these challenges fell most directly on the shoulders of IT specialists serving the courts at every level, and not all appellate courts were prepared or benefited from their own “inhouse” network specialist. In this article, I wish to recognize a member of our court family who has contributed above and beyond to meet the unique challenges suffered these last two years— Mr. Del Merritt—and to celebrate the Fourth Court’s technology upgrades made recently. Mr. Del Merritt started working at the Fourth Court of Appeals on February 16, 2005, as the court’s network specialist. During his tenure here, he has served under four Chief Justices and three Clerks of Court. Del has overseen many IT upgrades to the court, beginning with the transition to electronic filing and archiving, and most recently creating hybrid platforms for continued livestreaming and remote courtroom proceedings. The last two years have been the most taxing, with the court’s transition to a remote working environment due to the pandemic and the restoration of the court’s IT infrastructure from a statewide ransomware attack. To Del’s credit, we began livestreaming oral arguments soon after we went remote. The first Zoom argument was conducted on May 19, 2020, and the court
has continued to livestream arguments after returning in-person on October 1, 2021. I believe the Fourth Court may have been the first to conduct a hybrid oral argument, held on October 7, 2021, in our courtroom and simultaneously livestreamed and archived on the court’s YouTube Channel. To Del’s further credit, the Fourth Court has also been able to continue its unique and honored tradition of Court Memorials, formal memorial services conducted to honor attorneys and judges who have passed away during the preceding year. Our first livestream memorial was conducted on April 23, 2021, honoring the life of Philip Bozzo, Jr. Our first hybrid memorial was held in person and livestreamed on November 4, 2021, honoring the life of Roland R. Esparza. Our courtroom upgrades allow for a larger virtual audience that can participate safely and without geographic limitations. In addition to the twenty oral arguments livestreamed to date since May 2020, the court presided virtually over the Final Round of the St. Mary’s School of Law Linda & David Schleuter 2021 1L Moot Court Competition, and many of the justices have continued to participate as volunteers and speakers on a virtual platform. All of us have benefitted from Del’s technical support in and out of the courtroom. As our Clerk of Court Michael Cruz attests, “Anything that is plugged in or has electricity running through it will involve
Justices and counsel at a recent hybrid oral argument.
28 San Antonio Lawyer® | sabar.org
I believe the Fourth Court may have been the first to conduct a hybrid oral argument, held on October 7, 2021, in our courtroom and simultaneously livestreamed and archived on the court’s YouTube Channel. Del.” With Del’s guidance, we will soon benefit from additional computer and laptop upgrades in the Spring, just in time to support the evolving nature of work performed by each justice, staff attorney, and clerk as part of the “new normal.” The court further benefits from recent upgrades in our two conference rooms to support hybrid meetings and online training. As Chief Justice, I envision the Fourth Court will continue to remain at the forefront of technological advances, as we seek to achieve equitable and open access to those we serve. As a member of the Supreme Court’s Remote Proceedings Task Force, charged with identifying statutes and rules that support or impede the use of remote video technology for court proceedings in civil cases, I imagine that forthcoming amendments to the Texas Rules of Civil Procedure, the Rules
Network specialist Del Merritt with conference room upgrades.
Federal Court Update, continued from page 27 claim. Although there was no motion to dismiss the negligence claim, in the interest of judicial efficiency, the court stated that the negligence claim was subject to dismissal because Texas does not recognize a claim for negligent handling of an insurance claim.
Expert Testimony; Causation
Del Merritt standing before the court's rebuilt server.
Closeup of courtroom conferencing technology.
video-
of Judicial Administration, and the Rules of Appellate Procedure, among others, will provide further guidance to support remote proceedings, making IT specialists like Mr. Merritt even more critical. He has certainly kept the Fourth Court looking good! Chief Justice Rebeca C. Martinez has served on the Fourth Court of Appeals since January 2013. Justice Martinez previously served for U.S. Magistrate Judge Eduardo E. de Ases for the Western District of Texas and for Justice Federico G. Hinojosa on the Thirteenth Court of Appeals, and practiced trial law for over 20 years.
exclude a treating doctor’s causation opinion. The court added that an opinion should not be excluded solely because it relies on the patient’s self-reported history. Rather, that fact should go to the weight of the opinion. Here, the treating physician obtained the plaintiff’s medical history, reviewed MRIs, and examined the plaintiff.
Alpizar v. John Christner Trucking, LLC, No. SA-17-CV-0712-JKP (Pulliam, J., October 22, 2021). The court examined a motion to exclude the testimony of a treating physician on the issue of causation. The plaintiff complained of continued pain following a motor vehicle accident. While the court would not allow the physician to testify as a biochemical expert, it would otherwise allow his testimony. This exclusion was justified because the physician’s opinion did not require biomechanical training. The defendants argued that the physician’s causation opinion was flawed because he did not know of a prior car accident in which the plaintiff sustained similar injuries. The court determined the physician was qualified by his education, training, and experience as an orthopedic spine surgeon to give an opinion on the cause of the plaintiff’s injury and the need for surgery. The court reasoned that lack of knowledge of one prior accident is insufficient, in and of itself, to
Soledad Valenciano practices commercial and real estate litigation with Spivey Valenciano, PLLC.
Melanie Fry practices commercial litigation and appellate law with Dykema Gossett PLLC.
Jeffrie B. Lewis practices business litigation and appellate law with Gonzalez Chiscano Angulo & Kasson, PC.
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