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Hernandez v. Truck Insurance Exchange and Team Health, Inc.

Court of Appeals of Texas, Second District, Fort Worth

June 21, 2018






         I. Introduction

         In this issue of first impression, which presents a legal scenario unlikely to be repeated, we are asked to decide whether the supreme court's opinion in Phillips v. Bramlett (Phillips I), 288 S.W.3d 876 (Tex. 2009), constitutes "a unicorn crossbow," i.e., an item theoretically useful, but of no practical value, [1] to a personal injury plaintiff when the defendant surgeon surrenders his potential Stowers claim back to his malpractice insurer after a jury verdict in the plaintiff's favor exceeds the statutory cap on physician liability under article 4590i of the revised civil statutes.[2] Bound by supreme court precedent, we reverse the trial court's judgment, which dismissed Appellants' claim for want of jurisdiction in favor of Appellees Truck Health Insurance (Truck) and Team Health, Inc. (Team), and remand this case to the trial court for further proceedings.

         II. Background

         In November 2001, Marcus Hernandez Jr. died from massive blood loss following a liver biopsy. Almost two years later, Appellants, Marcus's parents, filed a wrongful death action against both Dr. Hitesh B. Yagnik, M.D. and the hospital where their son died. See Yagnik v. Hernandez, No. 02-11-00510-CV, 2013 WL 1668304, at *1 (Tex. App.-Fort Worth Apr. 18, 2013, pet. denied) (mem. op.). The hospital settled prior to the first trial, which resulted in a hung jury, and on retrial a different jury awarded $2, 679, 000 to Appellants, which- after the trial court applied the statutory caps on medical negligence damages and accounted for the hospital's settlement-resulted in a judgment of $1, 818, 601.63 against Yagnik, from which he appealed. Id. Yagnik then released Truck, one of his insurance carriers, from any liability arising from its failure to settle the underlying lawsuit in exchange for Truck's agreement to post his supersedeas bond on appeal and to pay the resulting judgment if the trial court's judgment was affirmed on appeal.

         We affirmed the trial court's judgment in 2013. Id. After the supreme court denied Yagnik's petition for review and motion for rehearing, our mandate issued on May 5, 2014.

         Over a decade after they filed their original lawsuit, but less than two years after we affirmed the trial court's judgment and issued our mandate, Appellants sued Yagnik's insurance carriers[3] for the negligent failure to settle a claim within the insurance policy limits-traditionally known as a common law Stowers action[4]-seeking to collect the difference between the almost $2.7 million jury verdict and the amount of the trial court's judgment.[5]

         Truck filed a plea to the jurisdiction, arguing that Appellants lacked standing to bring a direct action, [6] and Team filed a motion for summary judgment on the same basis. In support of their claim, Appellants expressly relied upon the supreme court's Phillips I opinion, asserting that the holding in Phillips I authorized them to bring their Stowers claim as a direct action.

         Team also argued in its motion that because Appellants' Stowers claim was filed after article 4590i was repealed and replaced by civil practice and remedies code chapter 73 in 2003, there could be no Stowers liability against the insurers beyond the amount of the capped damages.[7]

          The trial court dismissed Appellants' claims against Truck and Team for lack of subject matter jurisdiction after granting Truck's plea to the jurisdiction and granting in part Team's summary judgment motion "to the extent that the motion was based upon Plaintiffs' lack of standing to pursue a direct statutory Stowers cause of action against Team Health, Inc." In its order, the trial court stated that in light of its ruling that it lacked jurisdiction over the Stowers lawsuit due to Appellants' lack of standing, it expressly made no ruling on any of the other grounds for summary judgment in Appellees' motions.

         III. Discussion

         In four issues, Appellants argue that the trial court erred by concluding that they lacked standing because they have a direct Stowers cause of action and because their claims are not barred by settlement (under an equitable subrogation theory) or capped by the 2003 statute.[8]

         A. Standards of Review

         Whether a trial court has subject matter jurisdiction is a question of law that we review de novo. Tex. Bay Cherry Hill, L.P. v. City of Fort Worth, 257 S.W.3d 379, 387 (Tex. App.-Fort Worth 2008, no pet.) (citing Tex. Dep't of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 226 (Tex. 2004); Tex. Nat. Res. Conservation Comm'n v. IT-Davy, 74 S.W.3d 849, 855 (Tex. 2002)). Standing is implicit in the concept of subject matter jurisdiction, and whether a party has standing to maintain suit is a question of law. Everett v. TK-Taito, L.L.C., 178 S.W.3d 844, 850 (Tex. App.-Fort Worth 2005, no pet.) (citing Tex. Ass'n of Bus. v. Tex. Air Control Bd., 852 S.W.2d 440, 443 (Tex. 1993)); see IT-Davy, 74 S.W.3d at 855.

         The plaintiff has the burden to plead facts affirmatively showing that the trial court has jurisdiction, and we construe those pleadings liberally in favor of the pleader, look to the pleader's intent, and accept as true the factual allegations in the pleadings. Tex. Bay Cherry Hill, L.P., 257 S.W.3d at 387. If a plea to the jurisdiction challenges the existence of jurisdictional facts, we consider relevant evidence submitted by the parties when necessary to resolve the jurisdictional issues raised, as the trial court is required to do, taking as true all evidence favorable to the nonmovant and indulging every reasonable inference and resolving any doubts in the nonmovant's favor. Id. at 387-88 (citing Miranda, 133 S.W.3d at 228; Bland ISD v. Blue, 34 S.W.3d 547, 555 (Tex. 2000)). If the evidence creates a fact question regarding the jurisdictional issue, then the trial court cannot grant the plea to the jurisdiction, and the fact question will be resolved by the factfinder. Id. at 388 (citing Miranda, 133 S.W.3d at 227-28; Bland, 34 S.W.3d at 555). If the relevant evidence is undisputed or fails to raise a fact question on the jurisdictional issue, however, the trial court rules on the plea to the jurisdiction as a matter of law. Id. (citing Miranda, 133 S.W.3d at 227-28; Bland, 34 S.W.3d at 555).

         We also review a summary judgment de novo. See Travelers Ins. Co. v. Joachim, 315 S.W.3d 860, 862 (Tex. 2010). We consider the evidence presented in the light most favorable to the nonmovant, crediting evidence favorable to the nonmovant if reasonable jurors could, and disregarding evidence contrary to the nonmovant unless reasonable jurors could not. Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 289 S.W.3d 844, 848 (Tex. 2009). We indulge every reasonable inference and resolve any doubts in the nonmovant's favor. 20801, Inc. v. Parker, 249 S.W.3d 392, 399 (Tex. 2008).

         And as has frequently been iterated by this court and our supreme court, we review issues of statutory construction de novo, and in construing statutes, our primary objective is to give effect to the legislature's intent, relying on the plain meaning of the text unless a different meaning is supplied by legislative definition or is apparent from the context or the plain meaning leads to absurd results. Jack Cty. Appraisal Dist. v. Jack Cty. Hosp. Dist., 484 S.W.3d 228, 231- 32 (Tex. App.-Fort Worth 2016, no pet.) (referencing CHCA Woman's Hosp., L.P. v. Lidji, 403 S.W.3d 228, 231 (Tex. 2013), and Tex. Lottery Comm'n v. First State Bank of DeQueen, 325 S.W.3d 628, 635 (Tex. 2010)). We read statutes as a whole and interpret them to give effect to "every sentence, clause, and word" so that no part thereof will be rendered superfluous. Id. at 232 (quoting City of San Antonio v. City of Boerne, 111 S.W.3d 22, 29 (Tex. 2003)).

         B. Applicable Law

         We first review the pertinent statutes and cases, in addition to the law on standing, for context for the parties' arguments in the trial court and in their appellate briefs.

         1. Article 4590i, section 11.02(c)

         Former section 11.02(c) provided that the statutory cap on physician and other healthcare provider liability would not limit the liability of any insurer "where facts exist[ed] that would enable a party to invoke the common law theory of recovery commonly known in Texas as the 'Stowers Doctrine.'"[9] Act of May 30, 1977, 65th Leg., R.S., ch. 817, § 11.02(c), 1977 Tex. Gen. Laws 2039, 2052, 2064, repealed by Act of June 1, 2003, 78th Leg., R.S., ch. 204, § 10.09, 2003 Tex. Gen. Laws 847, 884.

         2. Civil Practice & Remedies Code Section 74.303(d)

         The Stowers exception in section 11.02(c) was not carried forward when article 4590i was repealed. Rather, section 11.02(c) was replaced by civil practice and remedies code section 74.303, which expressly provides that an insurer can use the statutory physician's cap to limit its liability. See Act of June 1, 2003, 78th Leg., R.S., ch. 204, § 10.01, sec. 74.303(d), 2003 Tex. Gen. Laws 847, 874-75 (current version at Tex. Civ. Prac. & Rem. Code Ann. § 74.303(d) (West 2017)). Section 74.303(d) states, "The liability of any insurer under the common law theory of recovery commonly known in Texas as the 'Stowers Doctrine' shall not exceed the liability of the insured." Tex. Civ. Prac. & Rem. Code Ann. § 74.303(d).

         3. 2003 Enabling Statute

         The 2003 enabling provision states that most of chapter 204's effective date would be September 1, 2003, [10] and that it ...

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