© 2015 The Texas Lawbook.
By Janet Elliott
AUSTIN (May 18) – Medical and business groups warn that the future of doctor-owned hospitals hangs in the balance as the Texas Supreme Court considers whether a hospital partnership could be vicariously liable for a physician-partner’s alleged negligence.
For-profit hospitals, such as The Women’s Hospital at Renaissance, provide about half of the acute care in Texas and often operate in medically underserved areas of the state, said the Texas Association of Business in an amicus brief supporting the Edinburg hospital. A member of the partnership that owns the hospital, Dr. Rodolfo Lozano, was sued after a baby he delivered in 2012 suffered nerve damage.
The child’s parents, Jesus Jaime and Jessica Andrade, later added Doctors Hospital at Renaissance Ltd., which owns and operates Women’s Hospital At Renaissance, to the lawsuit.
The couple’s lawyer, Timothy Culberson, said the rise in physician-owned hospitals has changed the nature of the physician-hospital relationship.
“There is a closely intertwined and inextricable business relationship where the line between physician partner and partnership that owns a hospital disappears as it relates” to Texas partnership liability laws, he said in a post-submission brief.
Dale Wainwright filed the brief for the business group and in March argued the case for the hospital. He said the claim against the partnership was filed after the plaintiffs discovered that Lozano was underinsured.
“Dr. Lozano was a passive investor,” said Wainwright, who is managing partner of Bracewell’s Austin office. “It is simply a creative way to tie a deeper pocket with Dr. Lozano.”
Culberson, a Houston attorney who handles birth injury cases, said statements by Lozano and language in the partnership agreement appear to contradict the partnership’s argument that Lozano was acting as an independent contractor and not as a partner at the time of the alleged negligence.
“I have an admission by the partner himself who says part of the purpose of the partnership is to provide obstetrical services,” said Culberson.
The 13th Court of Appeals last June held that summary judgment for the hospital was precluded by an unresolved fact question concerning whether the doctor was acting within the scope of the partnership business or with its authority.
Ordinary Course of Business
Culberson is relying on Section 152.303 of the Texas Business Organizations Code, which states that a partnership is liable for loss or injury to a person as a result of a wrongful act or omission of a partner acting in the ordinary course of business of the partnership or with the authority of the partnership.
The Corpus Christi appeals court said that the partnership agreement and Lozano’s testimony provide “at least some evidence that the [hospital’s] ‘ordinary course of business’ includes the practice of medicine by its physician-partners.”
Wainwright argued that other provisions in the statute prevent limited partnerships from practicing medicine. Thus, Lozano could not have been acting in the course of business when he used his independent judgment to treat patients, Wainwright said.
“Are hospitals licensed to be hospitals and perform medical services ancillary to the practice of medicine?” Wainwright said. “Are they in the same business as licensed physicians actually performing procedures on individual patient? I believe the answer is no.”
An amicus brief filed by a group of medical and hospital associations characterized the evidence cited by the 13th Court of Appeals as “weak and speculative.” It said the court disregarded the clear distinction in the law between the provision of health care services and the practice of medicine.
“This type of blurring of terminology, out of context and without regard to the legal definitions established by the Legislature for imposing liability for health care liability claims, should be expressly condemned and discouraged,” said the brief. “To do otherwise is simply to encourage more of the same in the future as lawyers for claimants attempt to expand the concept of vicarious liability of ‘deep pocket’ health care providers and to do so with only weakest of evidence.”
D. Michael Wallach of Wallach & Andrews in Fort Worth filed the brief for the Texas Medical Association, Texas Hospital Association and others.
Culberson said he doesn’t anticipate a “rush to the courthouse to sue a bunch of doctors’ hospitals.” If he is wrong, he said the Legislature could write an exception to the partnership liability law to exclude doctor-owned hospitals.
The case is Doctors Hospital at Renaissance Ltd and RGV Med LLC v. Jesus Jaime Andrade and Jessica Andrade, No. 15-0563.
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