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In re North Cypress Medical Center Operating Co., Ltd.

Supreme Court of Texas

April 27, 2018

In re North Cypress Medical Center Operating Co., Ltd., Relator

          Argued November 9, 2017

          On Petition for Writ of Mandamus

          Justice Lehrmann delivered the opinion of the Court, in which Justice Johnson, Justice Boyd, Justice Devine, Justice Brown, and Justice Blacklock joined.

          Debra H. Lehrmann, Justice.

         Our procedural rules allow broad discovery of unprivileged information that is "relevant to the subject matter of the pending action." Tex.R.Civ.P. 192.3(a). This includes information that may ultimately be inadmissible at trial so long as it "appears reasonably calculated to lead to the discovery of admissible evidence." Id. The "subject matter" of the underlying action, which involves the enforceability of a hospital lien securing payment of charges for services rendered to an uninsured patient, encompasses the reasonableness of those charges.

         The trial court's order at issue in this mandamus proceeding requires the defendant hospital to produce information regarding its reimbursement rates from private insurers and public payers for the services it provided to the plaintiff. The hospital argues those reimbursement rates are irrelevant to whether its charges to the uninsured plaintiff were reasonable and that the trial court therefore abused its discretion in ordering production of that information. We disagree. The reimbursement rates sought, taken together, reflect the amounts the hospital is willing to accept from the vast majority of its patients as payment in full for such services. While not dispositive, such amounts are at least relevant to what constitutes a reasonable charge. Accordingly, we deny the hospital's petition for writ of mandamus.

         I. Background

         Crystal Roberts was involved in an automobile accident on June 9, 2015, and was taken by ambulance to the emergency room at North Cypress Medical Center. North Cypress released Roberts approximately three hours later after performing a series of x-rays, CT scans, lab tests, and other emergency services. Because Roberts was uninsured, North Cypress billed her for the services at its full "chargemaster" prices, which totaled $11, 037.35. North Cypress also filed a hospital lien for this amount. See Tex. Prop. Code § 55.002(a) ("A hospital has a lien on a cause of action or claim of an individual who receives hospital services for injuries caused by an accident that is attributed to the negligence of another person.").

         The liability insurer of the driver at fault offered to settle the case for $17, 380, attributing $9, 404 to past medical expenses. Roberts sought reduction of North Cypress's bill, and the parties negotiated but could not reach an agreement on the bill's amount.[1] Roberts sued, seeking a declaratory judgment that North Cypress's charges were unreasonable and its lien invalid to the extent it exceeds a reasonable and regular rate for services rendered.[2] North Cypress counterclaimed on a sworn account for $8, 278.31, the amount to which it had previously offered to reduce its bill.

         Roberts served requests for production and interrogatories on North Cypress, including the following:

• Please produce all contracts regarding negotiated or reduced rates for the hospital services provided to Plaintiff in which Defendant is a party, including those with Aetna, First Care, United Healthcare, Blue Cross Blue Shield, Medicare, and Medicaid.
. . . .
• Please produce the annual cost report you are required to provide to a Medicare Administrative Contractor Medicare [sic], as a Medicare certified institutional provider for 2011, 2012, 2013, 2014 and 2015.
. . . .
• Please state the Medicare reimbursement rate for x-rays, CT scans, lab tests and emergency room services, as you performed on the Plaintiff on June 9, 2015.
• Please state the Medicaid reimbursement rate for x-rays, CT scans, lab tests and emergency room services, as you performed on the Plaintiff on June 9, 2015.

         North Cypress objected to these discovery requests and moved for a protective order, asserting that they sought irrelevant information and were overly broad. Roberts filed a corresponding motion to compel. In an oral ruling on the record, the trial court ordered North Cypress to produce the requested information, though the court narrowed the scope to include only contracts "that cover the [time] period at issue in this case."

         North Cypress moved for reconsideration, reiterating its relevance objection and adding that it would "suffer irreparable harm" from the disclosure of its "confidential and proprietary" negotiated insurance contracts. The trial court denied the motion, prompting North Cypress to file a petition for writ of mandamus in the court of appeals. The court of ...


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