The high nine in Austin continue to give and to take away when it comes to healthcare liability, and you have to wonder if the insurance industry is starting to think it bought a pig in a poke with the Texas Medical Liability Act (MLA). What is emerging from the Texas Supreme Court’s continuing efforts to grapple with the MLA is an expansive reading of the coverage of the MLA but a more forgiving stance toward claimants under it. Read on, for details.
On June 28, 2013, the Court issued its opinion in PM Management-Trinity NC v. Kumets. In that case, the claimants argued that a nursing home had unlawfully discharged a resident because of complaints made by her family. The facts are pretty straight forward. Yevgeniya Kumets was admitted to the Trinity Care Center nursing home to recover from a stroke. Her family members said that Trinity provided inadequate care, and that it caused her to suffer a second stroke. When the family complained, Trinity kicked her out, and the family sued, asserting a host of claims that implicated the MLA and that also asserted claims under the Texas Health & Safety Code, which—at that time—allowed a claim against a nursing facility that retaliates or discriminates against a resident or family member who makes a complaint.
After Kumets’s family filed expert reports under the MLA, the trial court ultimately found them deficient, but refused to dismiss the retaliation claim. The basis was that it wasn’t covered by the MLA, so no report was needed. On appeal, a divided panel of the Austin Court of Appeals affirmed the trial court, holding that only the retaliation claim—which was about pure economic loss and not injury or death of a claimant—survived Trinity’s Motion to Dismiss. But a dissent argued that the retaliation claim related to healthcare as well. The dissent argued that the retaliation claim was based on the same essential facts as the claims about treatment, so it should have been dismissed, too.
The Texas Supreme Court agreed with the dissent. It held that the retaliation claim—although authorized by a completely different statute—was still a healthcare liability claim and subject to all of the MLA’s procedures. So if the report was inadequate, the claim got dismissed. And, thus, the Texas Supreme Court affirmed that a whole mess of cases that don’t involve actual medical treatment to patients now falls under the MLA and has to be covered by medical liability insurers. Granted, this is no different from the direction the Court has moved in past, but it can’t make insurance executives sleep well at night.
Just a week earlier, in CHCA Woman’s Hospital v. Lidji, the Court made a very different holding. Lidji involved the timeliness of an expert report. Under the MLA, a claimant has 120 days from the filing of the original petition in the case—the case’s inception in court—to file an expert report outlining the details of the case. In Lidji, the claimants filed suit against CHCA for injuries sustained by their daughter following her premature birth. They argued that she suffered severe neurological injury—a crippling, lifelong condition—as a result of improper treatment, and filed suit on April 2, 2009. On July 27, 2009—116 days after they started their suit—they voluntarily dismissed it, without having filed an expert report. And, just over two years later on August 15, 2011, they filed a new suit against CHCA, alleging the same facts and served an expert report the same day.
CHCA howled. (This is editorializing on my part; I don’t actually know if it did, but I’ve been there enough times to imagine what transpired.) CHCA argued that the report was untimely because it had to have been served within 120 days of the original filing of suit; that is, within 120 days of April 2, 2009. That is, the report had to be in CHCA’s hands no later than the last day of July, 2009.
CHCA had a good argument. It had the Austin Court of Appeals’s decision in Estate of Allen v. Scott & White Clinic on its side. And several Texas Courts of Appeal have held that a claimant’s dismissal of his suit doesn’t re-start the 120 day deadline for filing an expert report. But that’s not what the claimants in Lidji argued. Instead of arguing that the MLA’s 120 day period restarts after a voluntary dismissal, they argued that the period simply stops with the dismissal and picks up again, if and when suit gets re-filed. And the Texas Supreme Court agreed.
Noting that the MLA neither expressly allows nor expressly prohibits tolling an expert-report deadline in the event of a voluntary dismissal, Justice Lehrmann, in her decision for the Court, set out to do two things. She set out to preserve the absolute right of a plaintiff in Texas to dismiss his case without consequence (known as “taking a nonsuit”) and preserve the overall structure of the MLA. The result? As long as there is no lawsuit on file, the MLA’s clock—a ticking timebomb for many claimants—stops ticking.
In a lot of cases, this will not come into play. Developing a medical liability case takes time, and, if a claimant is already of age to bring suit and aware of the facts, the two-year limitations period may stop the Lidji decision from having a broad impact. But, in cases involving birth injuries, limitations may have little effect. In Texas, anyone under the age of 18 years is presumptively unable to bring a lawsuit. That means they have until their 18th birthday to file a lawsuit. The MLA narrows this with a statute of repose limiting all claims to ten years, but that still means that a claim brought strictly on behalf of a child injured during birth can sit for ten years before it is barred. Ten years is a lot of time in which to work. And it means that, where Lidji applies, its impact can be huge.
Because now a plaintiff can file suit and threaten a defendant and invoke its insurance coverage . . . and then simply disappear, only to re-appear later on. And it doesn’t have to be a birth injury case. Lidji’s impact may well be felt the most in smaller cases. If a claimant has a smaller claim and would prefer not to have to pay expert witnesses, he can file suit and test the waters (and the defendant’s desire to settle) and dismiss his suit within 120 days if the waters aren’t to his liking. Then he can get those expert reports while the case is dismissed and re-file, without the time pressure that would otherwise exist under the MLA.
Is this what insurers intended when they lobbied so intensively for the MLA? Is this what the Texas Legislature—fat with insurance money—thought it was passing? It seems unlikely. The ostensible purpose of the MLA was to make medical liability insurance cheaper, but you don’t do that by increasing the number of potential claims covered by medical liability insurance and making them easier to prosecute, and the Texas Supreme Court has done both in the last two weeks. One can only wonder what the insurers are thinking now.