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Superior Healthplan, Inc. v. Badawo

Court of Appeals of Texas, Third District, Austin

August 8, 2019

Superior HealthPlan, Inc. and William Brendle Glomb, MD, Appellants
Linda Badawo, Individually, and as Next Friend of D. B. (formerly known as D. M.), a Minor, Appellee


          Before Chief Justice Rose, Justices Kelly and Smith



         Superior HealthPlan, Inc. and its senior medical director, Dr. William Glomb, (collectively, Superior) appeal from an interlocutory order denying their motion to dismiss Linda Badawo's lawsuit pursuant to the Texas Citizens' Participation Act (TCPA). See Tex. Civ. Prac. & Rem. Code §§ 27.001-.011.[1] Badawo sued Superior alleging it wrongfully denied Medicaid benefits to her adopted son D.B. and that he suffered serious personal injuries as a result.[2] We will affirm the district court's order denying the motion to dismiss.


         D.B. and his twin sister (not a party to this appeal) were born prematurely at twenty-five weeks with a variety of medical issues. D.B. in particular had breathing difficulties and depended on a ventilator, a machine that pushed oxygen into his lungs through a tracheostomy tube threaded through an incision in his throat. D.B. learned to breathe on his own after several months, but the tube remained in place to keep his airway open. The State obtained custody of D.B. and his sister and, following their release from the hospital, placed them in foster care with Linda Badawo, a pediatric nurse, who eventually petitioned to adopt them.

         Both children were entitled to Medicaid benefits through a program administered by the state Health and Human Services Commission (HHSC). Superior is a private organization that contracts with HHSC to deliver Medicaid benefits to foster children and certain persons with disabilities. Superior initially approved one-on-one nursing care for both children. Around the time of D.B.'s first birthday, Badawo asked Superior to upgrade D.B.'s care from twelve to twenty-four hours a day because he was pulling out his tracheostomy tube multiple times a day. Superior refused. Superior subsequently informed her that it would now pay for only a single nurse for both children. After Superior refused to reconsider either decision, Badawo appealed to HHSC. See 1 Tex. Admin. Code § 357.3 (2019) (Tex. Health and Human Servs., Authority and Right to Appeal) (authorizing "[c]lients of Medicaid-funded services" to appeal certain actions regarding a reduction in benefits or refusal to approve care).

         The appeal was still pending in October 2016 when Badawo traveled to Nigeria to visit relatives. The children were placed in different foster homes because Badawo's petition to adopt them had not been approved by this time. Shortly afterwards, a nurse at D.B.'s new home (but not assigned to him) noticed that D.B. had pulled out his tracheostomy tube and was not breathing. He had no detectible pulse and was taken to the emergency room where doctors revived him. D.B. suffered significant brain damage from loss of oxygen to his brain for approximately forty minutes. As a result, he now experiences an average of six seizures a day. Superior then approved Badawo's request for twenty-four-hour one-on-one nursing care. Badawo subsequently adopted D.B. and his sister.

         Badawo, as D.B.'s next friend, then sued Superior asserting causes of action for failing "to exercise ordinary care when making health care treatment decisions," Tex. Civ. Prac. & Rem. Code § 88.002(a), common-law negligence, negligence per se, breach of fiduciary duty, and fraud. Superior filed a motion to dismiss all claims under the TCPA. The district court denied the motion without stating its reasons, and this appeal ensued. See Tex. Civ. Prac. & Rem. Code § 51.014(a)(12) (authorizing appeal from interlocutory order denying TCPA motion to dismiss).


         Superior initially argues that Badawo lacks standing to sue as D.B.'s next friend because she has legally adopted him. See In re Bridgestone Ams. Tire Operations, LLC, 459 S.W.3d 565, 572 & n.9 (Tex. 2015) (orig. proceeding) (holding minors cannot sue by next friend if a parent has legal authority to represent them in court). Superior characterizes this as a challenge to Badawo's standing, but it actually concerns her capacity. "The issue of standing focuses on whether a party has a sufficient relationship with the lawsuit so as to have a 'justiciable interest' in its outcome, whereas the issue of capacity 'is conceived of as a procedural issue dealing with the personal qualifications of a party to litigate.'" Austin Nursing Ctr., Inc. v. Lovato, 171 S.W.3d 845, 848 (Tex. 2005) (quoting 6A Charles Alan Wright, Arthur R. Miller, and Mary Kay Kane, Federal Practice and Procedure: Civil 2d § 1559, at 441 (2d ed. 1990)). Because minors generally lack capacity, they must appear in court through a next friend or another person with "the capacity to sue on their behalf." Id. at 849 (emphasis added); see In re KC Greenhouse Patio Apartments, LP, 445 S.W.3d 168, 172 (Tex. App.-Houston [1st Dist.] 2012, orig. proceeding) (explaining "[t]he next friend is present in a representative capacity only" (citation omitted)). And unlike standing, "a challenge to capacity may be waived." In re Bridgestone, 459 S.W.3d at 573. Preservation of error requires a party to make a "timely request, objection, or motion" and either obtain a ruling or object to the trial court's refusal to rule. Tex.R.App.P. 33.1(a). Superior included a footnote in its answer stating that it "reserves its right to contest Linda Badawo's standing to seek legal relief on behalf of this minor." Dr. Glomb included substantively the same statement in his answer, but neither actually argued to the district court that she lacked capacity or requested a ruling on that issue. We therefore conclude Superior has not preserved this issue for review.


         The TCPA creates a multi-step process for dismissal of claims based on the defendant's exercise of the rights to speak freely, petition, or associate. Tex. Civ. Prac. & Rem. Code § 27.003; see id. § 27.001(2)-(4) (defining exercise of protected rights). The party bringing the motion has the initial burden to establish "by a preponderance of the evidence that the legal action is based on, relates to, or is in response to the party's exercise" of one of the rights protected by the TCPA. Id. § 27.005(b). If the movant makes the required showing, the burden shifts to the nonmovant to "establish[] by clear and specific evidence a prima facie case for each essential element of the claim in question." Id. § 27.005(c). If the nonmovant establishes the required prima facie case, the burden returns to the movant to establish "by a preponderance of the evidence each essential element of a valid defense to the nonmovant's claim." Id. § 27.005(d).

         "Intertwined with and overlying this multi-step dismissal process is the TCPA provision exempting certain actions from the TCPA's application." Morrison v. Profanchik, ____ S.W.3d ____, ____, No. 03-17-00593-CV, 2019 WL 2202210, at *2 (Tex. App.-Austin May 22, 2019, no pet. h.); see Tex. Civ. Prac. & Rem. Code § 27.010 (establishing four exemptions). If the movant carried its initial burden to show the TCPA applies, the trial court then considers whether the nonmovant's claims fall within any exception raised by the movant. Morrison, 2019 WL 2202210, at *2. The nonmovant bears the burden to demonstrate that her ...

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