Doctors Hospital at Renaissance, Ltd. and RGV MED, LLC v. Jesus Jaime Andrade and Jessica Andrade, 13-15-00046-CV

Doctors Hospital at Renaissance, Ltd. and RGV MED, LLC v. Jesus Jaime Andrade and Jessica Andrade

13-15-00046-CV

| Tex. App. | Apr 23, 2015

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Case Information

*0 FILED IN 13th COURT OF APPEALS CORPUS CHRISTI/EDINBURG, TEXAS 4/23/2015 2:45:25 PM DORIAN E. RAMIREZ Clerk *1 ACCEPTED 13-15-00046-CV THIRTEENTH COURT OF APPEALS CORPUS CHRISTI, TEXAS 4/23/2015 2:45:25 PM DORIAN RAMIREZ CLERK NO. 13-15-00046-CV

IN THE COURT OF APPEALS FOR THE THIRTEENTH DISTRICT OF TEXAS DOCTORS HOSPITAL AT RENAISSANCE, LTD. AND RGV MED, LLC, Appellants , v.

JESUS JAIME ANDRADE AND JESSICA ANDRADE, Appellees .

ON INTERLOCUTORY APPEAL FROM THE 275TH JUDICIAL DISTRICT COURT OF HIDALGO COUNTY, TEXAS BRIEF FOR APPELLANTS DOCTORS HOSPITAL AT RENAISSANCE, LTD. ET AL. Steven Gonzalez Richard A. Sheehy

State Bar No. 08131900 State Bar No. 18178600

Gerald Castillo

State Bar No. 24012399

Gonzalez Castillo, L.L.P. Sheehy, Ware & Pappas, P.C.

1317 E. Quebec Avenue 2500 Two Houston Center

McAllen, Texas 78503 909 Fannin

(956) 618-0115 – Telephone Houston, Texas 77002

(956) 618-0455 – Facsimile (713) 951-1000 - Telephone

E-Mail: sgonzalez@valleyfirm.com (713) 951-1199 - Facsimile

E-Mail: gcastillo@valleyfirm.com Email: rsheehy@sheehyware.com

Attorneys for Appellants Oral Argument Requested Doctors Hospital at Renaissance et al.

Identity of Parties and Counsel Pursuant to Rule 38.1(a), Texas Rules of Appellate Procedure, the following is a list of all parties and counsel involved in this case. This list is included so that

the Justices of this Court may evaluate possible disqualification or recusal from

participation in the decision of this case on appeal:

Counsel for Defendants and Appellants Doctors Hospital at Renaissance and

RGV MED, LLC

Richard A. Sheehy

State Bar No. 18178600

Email: rsheehy@sheehyware.com

Sheehy, Ware & Pappas, P.C.

2500 Two Houston Center

909 Fannin Street

Houston, Texas 77010

Telephone: (713) 951-1000

Facsimile: (713) 951-1199

Steven Gonzalez

State Bar No. 08131900

Email: sgonzalez@valleyfirm.com

Gerald Castillo

State Bar No. 24012399

Email: gcastillo@valleyfirm.com

Gonzalez Castillo, L.L.P

1317 E. Quebec Avenue

McAllen, Texas 78503

(956) 618-0115 – Telephone

(956) 618-0455 – Telecopier

Counsel for Plaintiffs and Appellees Jesus Jaime Andrade and Jessica

Andrade

Timothy Culberson

State Bar No.24012484

Email: info@culbersonlaw.com

The Culberson Law Firm

1400 Woodloch Forest Drive, Suite 575

The Woodlands, Texas 77380

Telephone: (281) 825-4977

Facsimile: (281) 674-8161

Daniel M.L. Hernandez

State Bar No. 24034479

Email: efiling@hdzfirm.com

Daniel R. Hernandez

State Bar No. 09515690

Email: efiling@hdzfirm.com

Hernandez Law Firm, P.C.

4841 S. Jackson Road

Edinburg, Texas 78539

Telephone: (956) 369-4480

Facsimile: (956) 822-6001

iii

Table of Contents

Identity of Parties and Counsel ................................................................................. ii

Table of Contents ..................................................................................................... iv

Table of Authorities ................................................................................................... v

Statement of the Case ................................................................................................. 2

Statement Regarding Oral Argument ........................................................................ 3

Issues Presented ......................................................................................................... 3

Statement of Facts ...................................................................................................... 4

Summary of the Argument ......................................................................................... 7

Standard of Review .................................................................................................... 9

Argument.................................................................................................................. 10

A. Dr. Lozano was not carrying on the ordinary course of the partnership business. ........................................................................... 16 B. Dr. Lozano cannot carry on the regular course of DHR’s business or like business without subjecting DHR to criminal penalties. .............................................................................................. 18 C. The opinion in Jones v. Foundation Surgery Affiliates does not control this case. .................................................................................. 22 Conclusion ............................................................................................................... 25

Certificate of Compliance ........................................................................................ 27

Exhibits:

A. Order of trial court certifying questions.

B. Order of this Court authorizing appeal.

C. Excerpts from Business Organizations Code.

D. Excerpts from Occupations Code

Table of Authorities

Cases

Baptist Memorial Hospital System v. Sampson ,

969 S.W.2d 945 (Tex. 1998) ............................................................................. 11 Berel v. HCA Health Services ,

881 S.W.2d 21 (Tex. App. – Houston [1 st Dist.] 1994, writ denied) ................. 10 Columbia Rio Grande Healthcare v. Hawley ,

284 S.W.3d 851 (Tex. 2009) ............................................................................. 10 Drennan v. Community Health Investment Corp. ,

905 S.W.2d 811 (Tex. App. – Amarillo 1995, writ denied) ....................... 10, 11 El Paso Natural Gas Co. v. Minco Oil & Gas ,

8 S.W.3d 309 (Tex. 1999).................................................................................... 9 Finley v. Steenkamp ,

19 S.W.3d 533 (Tex. App. – Fort Worth 2000, no pet.) .................................... 20 Gonzalez v. San Jacinto Methodist Hospital ,

880 S.W.2d 436 (Tex. App. – Texarkana 1994, writ denied) ........................... 11 Jones v. Foundation Surgery Affiliates ,

403 S.W.3d 306 (Tex. App. ˗ Houston [1 st Dist.] 2013, pet. denied) ...................................................................................... 14, 22, 24, 25 La Sara Grain v. First National Bank ,

673 S.W.2d 558 (Tex. 1994) ............................................................................. 21 Lear Siegler Inc. v. Perez ,

819 S.W.2d 470 (Tex. 1991) ............................................................................... 9 Loram Maintenance of Way v. Ianni ,

210 S.W.3d 593 (Tex. 2006) ............................................................................. 25 Matthews Construction Co. v. Rosen ,

796 S.W.2d 692 (1990) ...................................................................................... 25 Mayhew v. Town of Sunnyvale ,

964 S.W.2d 922 (Tex. 1998), cert. denied , 526 U.S. 1144 (1999) ..................... 9 v

McIntyre v. Ramirez ,

109 S.W.3d 741 (Tex. 2003) ............................................................................... 9 Nall v. Plunkett ,

404 S.W.3d 552 (Tex. 2013) ............................................................................... 9 Quick v. City of Austin ,

7 S.W.3d 109 (Tex. 1998).................................................................................. 10 Romero v. KPH Consolidated ,

166 S.W.3d 212 (Tex. 2005) ............................................................................... 8 Shaw v. Kennedy ,

879 S.W.2d 240 (Tex. App. – Amarillo 1994, no writ) ...................................... 7 Spindletop MHMR v. Doe ,

54 S.W.3d 893 (Tex. App. – Beaumont 2001, pet. denied) .............................. 20 State v Heal ,

917 S.W.2d 6 (Tex. 1996) ................................................................................. 10 Texas South Rentals v. Gomez ,

267 S.W.3d 228 (Tex. App. – Corpus Christi 2008, no pet.) ............................ 25 Vibbert v. PAR Inc. ,

224 S.W.3d 317 (Tex. App. – El Paso 2006, no pet.) ....................................... 21 Statutes

T EX . B US . O RG . C ODE § 1.051 ................................................................................. 20

T EX . B US . O RG . C ODE §§ 152.301-152.304 ............................................................... 4

T EX . B US . O RG . C ODE § 152.301 ............................................................ 4, 12, 21, 22

T EX . B US . O RG . C ODE § 152.302 ............................................................................. 16

T EX . B US . O RG . C ODE § 152.302(a) ......................................................................... 13

T EX . B US . O RG . C ODE § 152.302(b) ......................................................................... 13

T EX . B US . O RG . C ODE § 152.303 ................................................................ 13, 16, 21

T EX . B US . O RG . C ODE § 152.0551 .................................................................... 15, 18

T EX . B US . O RG . C ODE § 153.152 .................................................................... 4, 7, 10

T EX . C IV . P RAC . & R EM . C ODE § 51.014(d) ...........................................................3, 7

T EX . C IV . P RAC . & R EM . C ODE § 51.014(f) ............................................................3, 7

T EX . G OV ’ T C ODE § 311.001 .................................................................................... 20

T EX . G OV ’ T C ODE § 311.021(3) ............................................................................... 20

T EX . G OV ’ T C ODE § 311.023(5) ............................................................................... 20

T EX . O CC . C ODE § 151-165 ...................................................................................... 13

T EX . O CC . C ODE § 151.002 ............................................................................... 14, 18

T EX . O CC . C ODE § 151.002(a)(13) .............................................................. 13, 18, 21

T EX . O CC . C ODE § 155.001 ......................................................................... 14, 19, 23

T EX . O CC . C ODE § 155.003 ......................................................................... 14, 19, 23

T EX . O CC . C ODE § 164.052(a)(17) .................................................................... 14, 19

T EX . O CC . C ODE § 165.153 .............................................................................. 14, 19

Rules

T EX . R. A PP . P. 9.4(i)(3) ........................................................................................... 27

T EX . R. A PP . P. 38.2(a) .............................................................................................. ii

T EX . R. A PP . P. 56.1(b) ............................................................................................. 25

T EX . R. C IV . P. 166a(b) .............................................................................................. 9

T EX . R. C IV . P. 168 ..................................................................................................... 3

vii

NO. 13-15-00046-CV IN THE COURT OF APPEALS FOR THE THIRTEENTH DISTRICT OF TEXAS DOCTORS HOSPITAL AT RENAISSANCE, LTD. AND RGV MED, LLC, Appellants , v.

JESUS JAIME ANDRADE AND JESSICA ANDRADE, Appellees .

ON INTERLOCUTORY APPEAL FROM THE 275TH JUDICIAL DISTRICT COURT OF HIDALGO COUNTY, TEXAS BRIEF FOR APPELLANTS DOCTORS HOSPITAL AT RENAISSANCE, LTD. ET AL. To the Honorable Court of Appeals :

Appellants and Defendants Doctors Hospital at Renaissance, Ltd. (“DHR”) and RGV MED, LLC (“RGV”) (collectively “Defendants” or “hospital”) file this

brief to challenge the trial court’s denial of a motion for summary judgment in

Cause No. C-5886-13-E; Jesus Jaime Andrade, et al. v. Rodolfo Lozano, M.D., et

al. ; in the 275 th Judicial District Court of Hidalgo County, Texas, before the

Honorable Juan R. Partida, Judge Presiding.

Statement of the Case Plaintiffs Jesus Jaime Andrade and Jessica Andrade, individually and as parents and next friends of Julianna Andrade, a minor (“Plaintiffs”) brought this

action initially against Defendants Rodolfo Lozano, M.D. and Hugo Zapata, M.D.,

P.A. to recover damages allegedly sustained as the result of medical malpractice

during the birth of the minor Plaintiff. (C.R. 20). Later, Plaintiffs amended their

petition to name DHR and RGV as Defendants in the case. (C.R. 56). DHR is the

partnership that owns and operates the hospital where the delivery took place, and

RGV is the general partner of that partnership. (C.R. 415, 416, 477).

Plaintiffs’ claims against DHR and RGV are based solely on a theory of vicarious liability because Dr. Lozano was a limited partner in DHR as an investor

at the time of the baby’s delivery. (C.R. 494, 498)(Plaintiffs’ Second Amended

Petition)(DHR and RGV “are only liable in this matter under the legal doctrine of

vicarious liability under [The Business Organizations Code].”). Plaintiffs do not

claim and there is no evidence that DHR or RGV violated any standard of care

during the labor and delivery of the child. ( Id. ). Plaintiffs also do not claim that Dr.

Lozano was an employee or agent of the hospital based on his status as a member

of the medical staff. ( Id. ); see also (R.R. 14)(Plaintiffs tell court that traditional

theories of liability against the hospital “are not what we have here.”).

DHR and RGV filed a motion for summary judgment and argued that they could not be liable to Plaintiffs under Plaintiffs’ theory of liability as a matter of

law. (C.R. 44). The trial court denied the motion, but found that the motion met the

requirements of T EX . C IV . P RAC . & R EM . C ODE § 51.014(d) and T EX . R. C IV . P. 168

for an interlocutory appeal. (C.R. 521). The court certified the controlling

questions of law raised in the motion for summary judgment for review by this

Court. ( Id. ); (Exhibit A). This Court then granted DHR and RGVs petition for

interlocutory appeal pursuant to Section 51.014(f). (C.R. 524); (Exhibit B). ^[1]

Statement Regarding Oral Argument DHR and RGV would welcome the chance to present oral argument to the Court on the important and controlling questions of law raised in the petition for

interlocutory review and this brief. The issues raised in this appeal are critical for

hospitals owned in whole or in part by investor doctors. The decision by this Court

may have a significant impact on the continued viability of such hospitals in Texas.

Issues Presented (1) Whether a limited partnership that owns a hospital may be vicariously liable for the alleged professional negligence of a doctor pursuant to T EX . B US .

*11 O RG . C ODE §§ 152.301-152.304 and 153.152 solely because a doctor is a limited

partner in the limited partnership.

(2) Whether a general partner of a limited partnership that owns a hospital may be vicariously liable for the alleged professional negligence of a doctor

pursuant to T EX . B US . O RG . C ODE §§ 152.301-152.304 and 153.152 solely because

a doctor is a limited partner in the limited partnership. ^[2]

Statement of Facts The facts that are relevant to the controlling issues of law in this appeal are relatively simple and not really in dispute. Dr. Rodolfo Lozano delivered Julianna

Andrade at Woman’s Hospital at Renaissance on August 1, 2012. (C.R. 240, 496).

He had treated Jessica Andrade during her pregnancy. (C.R. 118, 171). Plaintiffs

claim that the delivery was complicated by a shoulder dystocia which is a

condition in which the baby’s shoulder is blocked behind the mother’s pubic bone

during delivery. (C.R. 34, 138). Plaintiffs claim further that the doctor did not

follow the appropriate standard of care to deal with that condition, but used

excessive twisting and lateral traction on the baby during the delivery. (C.R. 34,

40, 497). As a result of the doctor’s actions, Plaintiffs allege that the baby suffered

nerve injury during the delivery, and that she now suffers from a permanent

*12 neurological injury to her left arm. (C.R. 38, 494). Dr. Lozano was working for

Hugo Zapata, M.D., P.A. at the time of the delivery. (C.R. 166). ^[3]

DHR owns and operates Women’s Hospital at Renaissance which is where the delivery took place. (C.R. 102, 240, 415). RGV is the general partner in that

partnership. (C.R. 416, 477). The partnership was formed initially in December

2001 to own and operate an ambulatory surgery center in Edinburg. (C.R. 289)

(limited partnership agreement); see also (C.R. 297)(purpose of partnership is to

“develop, construct and operate” health care facilities). DHR now also owns and

operates a general acute care hospital. ( Id. ). DHR began offering labor and delivery

medical services in 2007 when Women’s Hospital at Renaissance opened. (C.R.

102, 275).

Under the terms of the partnership agreement, limited partners are not permitted to “perform any act” on behalf of the partnership. (C.R. 301). Every

partner is allowed to engage independently or with other persons in other business

ventures including rendering medical services of any kind. (C.R. 173). The doctors

who are limited partners may have staff privileges at other hospitals, and may

admit and treat patients there. (C.R. 174). “Nothing herein shall prevent any

partner from personally performing professional medical services directly for his

*13 or her patients at any hospital or ambulatory surgery center, or healthcare facility.”

( Id. ). DHR does not require that investor doctors admit a certain number of patients

to the hospital, although other hospitals have that requirement. (C.R. 167); see

(C.R. 302-3)(limited partnership agreement benefits to partner “are not payment

for, and are not in any way contingent upon the referral, admission or any other

arrangement for the provision of any item or service” to patients of the partner).

Dr. Lozano became a limited partner at DHR in 2003. (C.R. 162, 275); see (C.R. 95)(Dr. Lozano’s subscription agreement). He was a limited partner in DHR

at the time of Julianna’s delivery. (C.R. 240). He has not been involved with the

medical board and has had no input into DHR or the hospital’s policies. (C.R. 164,

240). He has not read the partnership agreement and cannot say what is in it. (C.R.

392). He has not been to meetings for DHR for several years. (C.R. 164). At best,

he is a passive investor in DHR. ( Id. ).

Plaintiffs initially sued Dr. Lozano for professional negligence during the delivery of the Andrade baby. (C.R. 20). They also sued Dr. Zapata’s P.A. on a

theory of vicarious liability because Dr. Lozano worked for the P.A. at the time of

the delivery. (C.R. 20, 109, 494). Later, in an amended petition, they named DHR

and RGV as Defendants, claiming that they were also vicariously liable for the acts

of Dr. Lozano because he was a limited partner in DHR. (C.R. 56). Plaintiffs do

not claim, and there is no evidence, that either DHR or RGV breached any

standard of care during the care and treatment of Jessica Andrade or the baby.

( Id. ). ^[4]

DHR and RGV filed a motion for summary judgment, arguing that they could not be vicariously liable for the acts of Dr. Lozano solely because he was a

limited partner in DHR. (C.R. 44). The trial court denied the motion, but agreed

with Defendants that there was a substantial ground for difference of opinion on

the questions of law raised in the motion. (C.R. 521). The Court also found that an

immediate appeal from the order denying the motion may materially advance the

ultimate termination of the litigation. (C.R. 522, 523). Defendants then filed a

petition for interlocutory review with this Court pursuant to T EX . C IV . P RAC . &

R EM . C ODE § 51.014(d). The Court granted the petition, and allowed DHR and

RGV to pursue this interlocutory appeal from the trial court’s order. (C.R. 524);

see Section 51.014(f) (application for permissive appeal).

Summary of the Argument Hospitals owned by doctors will be faced with an untenable situation if they can be vicariously liable for the negligence of a doctor solely because the doctor

has a limited ownership interest in the hospital. In most cases involving claims of

medical malpractice, plaintiffs claim that a hospital has independent liability for

*15 personal injuries or wrongful death due to the actions of its nurses or

administrative staff. This case does not present that situation; Plaintiffs agree that

the hospital and the general partner did nothing wrong themselves to cause any

injury to Julianna Andrade. There is also no claim that the hospital should not have

granted credentials to Dr. Lozano to practice medicine at Women’s Hospital. E.g.,

Romero v. KPH Consolidated , 166 S.W.3d 212 (Tex. 2005). DHR and RGV face

liability here solely because of the actions of a doctor over whom they had no

control. Indeed, they are prohibited by law to exercise any control over any doctor

who practices medicine at the hospital.

The Business Organizations Code does not require or provide for vicarious liability for a doctor’s acts in this case. A partnership is liable for injuries resulting

from a wrongful act or omission or other actionable conduct of a partner only when

the partner acts in the ordinary course of business of the partnership or with the

authority of the partnership. A hospital provides a location and support services for

the doctor to practice medicine; the hospital does not make medical judgments or

practice medicine itself. As a result, the Code does not support Plaintiffs’ theory of

liability.

There are also public policy and other statutory reasons why the hospital should not be liable under these facts. Doctors are generally independent

contractors. That status is important so that doctors are free to use their own

independent judgment in the care and treatment of their patients. If the hospital can

be vicariously liable for the conduct of doctors who practice there, the hospital will

be put in a position where it must interfere with the relationship between a doctor

and her patient. That result is contrary to both good patient care and the law in

Texas prohibiting the corporate practice of medicine. Under Plaintiffs’ theory, a

hospital can be liable for the acts of an investor doctor but can take no action by

law to control the doctor’s medical judgment. This Court should reverse the order

of the trial court and render judgment for DHR and RGV.

Standard of Review A defendant is entitled to summary judgment by showing that plaintiff cannot recover against defendant as a matter of law. T EX . R. C IV . P. 166a(b); Lear

Siegler Inc. v. Perez , 819 S.W.2d 470 (Tex. 1991). Under Rule 166a(b), a

defendant need not defeat all elements of a plaintiff’s cause of action; it must

defeat only one. Nall v. Plunkett , 404 S.W.3d 552 (Tex. 2013).

The issues presented to the trial court and to this Court are questions of law.

McIntyre v. Ramirez , 109 S.W.3d 741 (Tex. 2003). As a result, the Court should

review the trial court’s order de novo . El Paso Natural Gas Co. v. Minco Oil &

Gas , 8 S.W.3d 309 (Tex. 1999); Mayhew v. Town of Sunnydale , 964 S.W.2d 922

(Tex. 1998), cert. denied , 526 U.S. 1144 (1999). Under the de novo standard, the

Court should conduct an independent analysis of the record and reach its own legal

conclusions. The Court should not give deference to the trial court’s ruling. Quick

v. City of Austin , 7 S.W.3d 109 (Tex. 1998); State v Heal , 917 S.W.2d 6 (Tex.

1996).

Argument The only basis for Plaintiffs’ claims against DHR and RGV is that DHR and RGV are vicariously liable for the alleged negligent conduct of Dr. Lozano

because he was a limited partner of DHR, acting within the course and scope of his

partnership, when he delivered Julianna Andrade on August 1, 2012. Further,

because RGV is the general partner of DHR, Plaintiffs claim that RGV is also

vicariously liable for the alleged negligent acts of Dr. Lozano. Plaintiffs do not

claim that DHR or RGV, acting through their employees and staff, caused any

harm to Julianna Andrade. ^[5]

As a preliminary matter, it is settled in Texas that a hospital is generally not vicariously liable for the acts or omissions of a doctor on staff. Columbia Rio

Grande Healthcare v. Hawley , 284 S.W.3d 851 (Tex. 2009); Drennan v.

Community Health Investment Corp. , 905 S.W.2d 811 (Tex. App. – Amarillo

1995, writ denied); Berel v. HCA Health Services , 881 S.W.2d 21 (Tex. App. –

Houston [1 st Dist.] 1994, writ denied). The reasoning for this general rule is that a

*18 doctor is an independent contractor who uses her own judgment in the care and

treatment of her patients. The hospital does not control the details of her work.

( Id. ); Baptist Memorial Hospital System v. Sampson , 969 S.W.2d 945 (Tex. 1998).

“That a doctor has staff privileges with a particular hospital and agrees to abide by certain policies and procedures while utilizing a hospital’s facilities does

not translate into an employment agreement.” Drennan, supra at 819, citing

Gonzalez v. San Jacinto Methodist Hospital , 880 S.W.2d 436 (Tex. App. –

Texarkana 1994, writ denied). The doctors who practice at Women’s Hospital are

individually licensed independent contractors. Neither DHR, RGV nor any other

investor doctor can control or interfere with a doctor’s medical judgment in the

treatment of her patients.

Here, Plaintiffs do not claim that Dr. Lozano was an employee or agent of the hospital based on his privileges there. The theory of vicarious liability is based

solely on his status as a limited partner and investor in DHR. A review of the

relevant statutes and the partnership agreement compels the conclusion that

Plaintiffs’ theory of liability against DHR and RGV is fatally flawed. The record

and the law here show that:

(1) DHR only provides the facility, staff and equipment to support doctors’ medical treatment of their patients;

(2) DHR and its investor doctors do not and cannot exercise control over a doctor’s medical judgment and decisions during a patient’s labor and delivery;

(3) The investor doctors cannot perform any act on behalf of DHR; and (4) Plaintiffs complain only that Dr. Lozano’s medical treatment decisions during the labor and delivery were the cause of the child’s injuries.

Dr. Lozano’s medical decisions were not made in the ordinary course of

DHR’s business but in the ordinary course of his own practice. Nothing in the

partnership agreement authorizes DHR or RGV to practice medicine. A finding of

vicarious liability under this theory would create novel financial exposure for

hospitals owned in whole or in part by medical professionals and threaten their

ability to provide medical services to patients needing them. See (R.R. 14)(“But I

will say Doctor Lozano was willfully under insured for this severe injury of this

little girl. And that’s why we’re here today.”).

The Texas Business Organizations Code does not impose vicarious liability for DHR and RGV in this case.

Plaintiffs base their claims against DHR on Chapter 152 of the Texas Business Organizations Code dealing with general partnerships. In particular, they

rely on:

 Section 152.301: “Each partner is an agent of the partnership for the purpose of its business.”

 Section 152.302(a): the actions of a partner in a limited liability partnership bind the partnership so long as the act is apparently for carrying on in

the ordinary course of either (a) the partnership business itself; or (b) business of

the kind carried on by the partnership.

 Section 152.302(b): if a partner acts outside the scope of the partnership's business, his actions may bind the partnership only if authorized by

the other partners.

 Finally, and most relevant here, under Section 152.303, a partnership is liable for injuries resulting from a wrongful act or omission, or other actionable

conduct of a partner acting: (1) in the ordinary course of business of the

partnership; or (2) with the authority of the partnership. ^[6]

The Business Organizations Code is not the only law that is relevant to this case. The act of “practicing medicine” is a highly specialized and regulated field

governed by the Texas Medical Practices Act in Texas Occupational Code §§ 151-

165. Section 151.002(a)(13) defines “practicing medicine” as “the diagnosis,

treatment or offer to treat a mental or physical disease or disorder or a physical

deformity or injury by any system or method or the attempt to affect course of

those conditions.”

*21 Equally as important for purposes here, the Medical Practices Act has strict licensing requirements. Under Sections 155.001 and 155.003, only a “person” may

obtain a license to practice medicine. There are no provisions for a corporation or

partnership to do so. By law, DHR and RGV are prohibited by law from practicing

medicine. See T EX . O CC . C ODE § 151.002 (definition of “person” as individual

unless term expressly applicable to partnerships, associations or corporations);

Jones v. Foundation Surgery Affiliates , 403 S.W.3d 306, 312 (Tex. App. ˗

Houston [1 st Dist.] 2013, pet. denied).

Indeed, under T EX . O CC . C ODE § 165.153, persons who practice medicine without a license are subject to criminal penalties. Further, a physician or an

applicant for a license to practice medicine commits a prohibitive practice if that

person: “directly or indirectly aids or abates the practice of medicine by a person,

partnership, association, or cooperation that is not licensed to practice medicine by

the Board.” T EX . O CC . C ODE § 164.052(a)(17). A person is liable for criminal

penalties for “additional harm” if he practices medicine without a license and

causes harm to another person. ( Id. at § 165.153). Consistent with the law, neither

DHR nor RGV has a license to practice medicine and does not practice medicine;

Dr. Lozano does.

Finally, the Organizations Code does allow doctors to form professional associations for the practice of medicine. Section 152.0551 provides in relevant

part:

(a) Physicians licensed under Subtitle B, Title 3, Occupations Code may create a partnership to perform a professional service that falls within the scope of practice for those practitioners.

(d) The authority of each practitioner is limited by the scope of practice of the respective practitioner.

(e) Nothing in this section may be construed to allow the practice of medicine by someone not licensed as a physician under Subtitle B, Title 3, Occupations Code, or to allow a person not licensed as a physician to direct the activities of a physician in the practice of medicine.

Under this section, no partnership has the ability to control the clinical authority granted by each member's respective license. As such, DHR and RGV

cannot rightfully control the manner by which another investor physician practices

medicine. Section 152.0551 represents a clear legislative intent to clothe the

practice of medicine with independent contractor status.

In summary, Texas law provides that: (1) only those with medical licenses are permitted to practice medicine in Texas; and (2) a limited partnership or limited

liability company, in attempting to practice medicine by controlling the manner in

which a licensed physician practices medicine, could act in violation of the law, as

does any physician who would permit such control. ^[7]

A. Dr. Lozano was not carrying on the ordinary course of the partnership business.

Plaintiffs must show that Dr. Lozano was acting as a limited partner in DHR when he delivered the Andrade baby. T EX . B US . O RG . C ODE § 152.302 (partner

binds partnership if his act is apparently for carrying out partnership business or

business of the kind carried on by partnership); ( Id. at § 152.303)(partnership liable

for personal injury to a person only if partner acting in the ordinary course of the

partnership business or with the authority of the partnership). DHR was formed to

own and operate Women’s Hospital and other medical centers. (C.R. 102, 289). Its

stated purpose is to develop, construct and operate health care facilities. (C.R.

297). Its business was not and could not be the actual performance or provision of

labor and delivery services; such services must be provided by a doctor. The

“practice of medicine” was not a reason why DHR was organized. Plaintiffs simply

cannot make their predicate statutory showing.

*24 Regardless of Dr. Lozano's status as a limited partner of DHR, for the purpose of providing medical care and treatment, Dr. Lozano is an independent

contractor who must use his own professional skills and judgment in the care and

treatment of his patients. The Limited Partnership Agreement expressly prohibits

Dr. Lozano from taking any action on behalf of DHR (C.R. 301)(“The Limited

Partners shall not perform any act on behalf of the Partnership; incur any expense,

obligation or indebtedness of any nature on behalf of the Partnership; or in any

manner participate in the management of the Partnership.”). Clearly, when Dr.

Lozano was performing obstetrical services at DHR on August 1, 2012 those

services were not on behalf of the partnership. He was not acting within the course

and scope of his partnership business, but was providing medical care in

accordance with his medical license, over which DHR and RGV had no control.

Plaintiffs here must show that Dr. Lozano’s treatment decisions during labor and delivery of the baby were in the ordinary course of DHR’s business. To the

contrary, Dr. Lozano’s independent practice of medicine and DHR’s business are

not the same. DHR provides a facility with a nursing and administrative staff,

supplies and equipment where doctors or the medical staff may treat their patients

and perform necessary medical procedures. Dr. Lozano is a passive investor in

DHR; he has no control over its operations or management. He is prohibited from

taking any action to bind DHR or the other partners. He is not required to admit

any patients at Women’s Hospital and may have privileges at any other hospital.

His medical decisions and judgment at the time of Julianna’s delivery in August

2012 had nothing to do with the ordinary course of DHR’s business or kind of

business. “Practicing medicine” is simply not DHR or RGV’s business. T EX . O CC .

C ODE § 151.002(a)(13) (definition of “practicing medicine”).

This conclusion is also compelled by statute. T EX . B US . O RG . C ODE §152.0551 states “[nothing in this section may be construed to allow the practice of

medicine by someone not licensed as a physician under Subtitle B, Title 3,

Occupations Code or to allow a person not licensed as a physician to direct the

activities of a physician in the practice of medicine.” This section prohibits DHR

and RGV from exercising any control over Dr. Lozano's actions. Dr. Lozano

cannot and could not be acting in the course of DHR’s business under the terms of

the partnership agreement and the relevant statutes. The Business Organizations

Act by its terms does not apply to impose vicarious liability on DHR or RGV.

B. Dr. Lozano cannot carry on the regular course of DHR’s business or like business without subjecting DHR to criminal penalties.

The record and the law establish the following:

 Plaintiffs’ claim against Dr. Lozano was based on his care and treatment of Jessica and Julianna Andrade which is the “practice of medicine.”

T EX . O CC . C ODE § 151.002(a)(13); (C.R. 494).

 The practice of medicine requires a license. T EX . O CC . C ODE §§ 155.001, 155.003; ( Supra at 13).

 A person commits a crime if he or she practices medicine without a license. T EX . O CC . C ODE § 165.153; ( Supra at 14).

 A person commits a crime if he or she aids or abets the practice of medicine without a license. T EX . O CC . C ODE § 164.052(a)(17); ( Supra at 14).

 A person is liable for criminal penalties for “additional harm” if he or she practices medicine without a license and causes another person physical or

psychological harm. T EX . O CC . C ODE § 165.153.

 Only an individual person may hold a license to practice medicine; a corporation or partnership cannot. T EX . O CC . C ODE §§ 155.001, 155.003; ( Supra at

13).

The trial court’s order, if allowed to stand, potentially puts the hospital in violation of law. By definition, if Dr. Lozano was acting in the ordinary course of

DHR’s business, which is required by Plaintiffs’ theory under the Business

Organizations Act, then DHR must be in the business of “practicing medicine,”

which it does not and cannot do. As discussed above, the partnership agreement

shows that DHR supplies a location and a support staff to allow doctors to practice

medicine; it prohibits doctors from acting for DHR but allows them to admit

patients elsewhere. ( Supra at 5).

If a doctor is “in the ordinary course of business” of a hospital simply because she is a passive investor there, that investment alone means the hospital is

practicing medicine in violation of law. The hospital then must either reject doctors

as investors or violate the law. Neither option is proper as a matter of law or public

policy. The third and preferable option is for the Court to reconcile the relevant

sections of the Business Organizations Code and the Occupations Code and hold

that a doctor who practices medicine is not in the course of a hospital’s business.

This option makes good sense especially when the partnership agreement for the

owner of the hospital prohibits the investor doctor from acting for the owner.

The Code Construction Act applies to interpret the Business Organizations Code. T EX . B US . O RG . C ODE § 1.051; see T EX . G OV ’ T C ODE § 311.001 et seq.

(Code Construction Act). The Court may and should consider the consequences of

a particular construction when it interprets and applies a statute. T EX . G OV ’ T C ODE

§ 311.023(5); Finley v. Steenkamp , 19 S.W.3d 533 (Tex. App. – Fort Worth 2000,

no pet.)(Court must consider consequences of construction of statute and avoid

absurd results); Spindletop MHMR v. Doe , 54 S.W.3d 893 (Tex. App. – Beaumont

2001, pet. denied)(consequences of a particular construction is an important aid to

statutory meaning); see also T EX . G OV ’ T C ODE § 311.021(3)(Court should presume

a just and reasonable result); ( Id. at (4))(Court should presume a result feasible of

execution). Of course, courts should also construe statutes to harmonize them. La

Sara Grain v. First National Bank , 673 S.W.2d 558 (Tex. 1994); Vibbert v. PAR

Inc. , 224 S.W.3d 317 (Tex. App. – El Paso 2006, no pet.).

Applying T EX . B US . O RG . C ODE § 152.301 – 152.303 to a situation involving a passive investor doctor accused of negligence would result in an unreasonable

result, that is, that DHR was practicing medicine because that is what Dr. Lozano

was doing. Yet, DHR and RGV cannot practice medicine. Equally as important,

the trial court’s decision would force a hospital to get intimately involved in the

relationship between a doctor and her patient. The legislature could not have

intended the Business Organizations Code to apply to the acts of a doctor simply

because the doctor is a passive and limited investor in the owner of the hospital.

Plaintiffs’ view raises serious criminal and public policy issues that the Courts may

avoid by holding simply that Dr. Lozano was not carrying on the ordinary course

of DHR’s business or DHR’s kind of business when he was practicing medicine.

Indeed, the very agreement that defines his relationship with DHR prohibits Dr.

Lozano from acting for DHR. ^[8]

*29 C. The opinion in Jones v. Foundation Surgery Affiliates does not control this case.

As the trial court noted in its order permitting this interlocutory appeal, the only case found by the parties in Texas or around the country that discussed

liability based on the acts of investor doctors is Jones v. Foundation Surgery

Affiliates of Brazoria County , 403 S.W.3d 306 (Tex. App. – Houston [1 st Dist.]

2013, pet. denied), which was not decided by this Court. (C.R. 522). Plaintiffs

relied heavily on this opinion in their response to Defendants’ motion for summary

judgment. (C.R. 69, 73-76). Plaintiffs’ reliance on that opinion is misplaced; it

certainly does not control the resolution of this case.

In Jones , Henry Martinez, M.D. performed gall bladder surgery on Amanda Jones at Foundation Surgery Affiliates (“surgery center”) in August 2007. Dr.

Martinez became a partner in the surgery center in November 2006. Plaintiffs

claimed generally that Dr. Martinez was negligent in the care and treatment of

Jones during the surgery. Plaintiffs sued the surgery center based on the doctor’s

status as a limited partner. The trial court granted the surgery center’s motion for

summary judgment.

The Court of Appeals reversed and held there was a fact question whether Dr. Martinez was acting in the ordinary course of the surgery center’s business

when Jones was injured. In reaching this decision, the Court reviewed the doctor’s

subscription agreement with the surgery center at length. ( Id. at 309). The Court

emphasized that the surgery center required Dr. Martinez to perform at least one-

third of his surgeries and derive one-third of his income there so he could share his

profits with other partners. ( Id. ). The Court even mentioned that requirement twice

in the opinion. ( Id. at 309, 317). The Court also relied on the surgery center’s filing

with the Secretary of State that reflected the surgery center’s business. Perhaps

most critically, the subscription agreement expressly stated that the surgery center

had some control over the actions of doctors who treated their patients at the

surgery center. ( Id. at 317). Plaintiffs in that case even presented evidence that the

surgery center had expressly authorized Dr. Martinez to perform the gall bladder

surgery. With that record, the Court’s finding that Plaintiffs presented a “genuine

issue of material fact” is perhaps not surprising. ^[9]

The situation here is far different. The partnership agreement specifically prohibits an investor doctor from performing any acts on behalf of the partnership.

(C..R. 301)(“The Limited Partners shall not perform any act on behalf of the

Partnership.”). It also clearly and expressly allows an investor doctor to perform

surgeries and admit patients wherever she wants without any requirement that the

doctor admit a certain number of patients to Women’s Hospital. (C.R. 302)(“No

*31 Partner who is a physician shall be prohibited from maintaining his or her staff

privileges and admitting and treating patients at any other hospital or ambulatory

surgery center” or receiving payment for those services); ( Id. )(“Nothing herein

shall prevent any Partner from personally performing professional medical services

directly for his or her patients at any hospital or ambulatory surgery center, or

healthcare facility.”); ( Id. at 303)(“Nothing herein is intended to prohibit any party

from practicing medicine at any other facility”); (C.R. 167, 303)(benefits to

doctors not contingent “in any way” upon referral or admission of patients to

hospital). And, unlike the situation in Jones , Dr. Lozano’s subscription agreement

does not give DHR any control over his medical practice, and the filings in the

record with the Secretary of State do not reflect any specific business of DHR.

(C.R. 91-94, 102, 477, 484); (R.R. 18)(Plaintiffs admit filings with Secretary of

State are silent so they do not have the same evidence as in Jones ). Even the

partnership agreement here makes it clear that DHR does not control Dr. Lozano’s

medical practice, but simply “owns and operates” Women’s Hospital.

These factual distinctions are enough to distinguish Jones and show that it is not persuasive precedent for this case, especially given the Court’s almost

exclusive reliance on documents with very different terms than the subscription

and partnership agreement here. Even so, it is apparent from the opinion that the

surgery center there did not raise, or the Court did not decide, arguments by DHR

and RGV here. E.g. , ( Supra at 23 n. 9). Finally, if indeed the Court decides that

Jones is factually similar to this case, which is unlikely, DHR and RGV submit

that Jones was wrongly decided. ^[10]

Conclusion This Court should reverse the order denying DHR and RGV’s motion for summary judgment and render judgment that Plaintiffs take nothing from DHR and

RGV.

*33 Respectfully submitted, Steven Gonzalez

State Bar No. 08131900 Gerald Castillo

State Bar No. 24012399 Gonzalez Castillo, L.L.P.

1317 E. Quebec Avenue McAllen, Texas 78503 (956) 618-0115 – Telephone (956) 618-0455 – Telecopier E-Mail: sgonzalez@valleyfirm.com E-Mail: gcastillo@valleyfirm.com SHEEHY, WARE & PAPPAS, P.C. By:

Richard A. Sheehy State Bar No. 18178600 2500 Two Houston Center 909 Fannin Street Houston, Texas 77010-1003 (713) 951-1000 – Telephone (713) 951-1199 – Facsimile E-mail: rsheehy@sheehyware.com Attorneys for Appellants and Defendants Doctors Hospital at Renaissance, Ltd. and RGV MED, LLC *34 Certificate of Compliance

Pursuant to Rule 9.4(i)(3), I certify that this Brief for Appellants, beginning with the Statement of Facts, and ending after the Conclusion, contains 5,490

words, as measured by a computer program used to prepare the brief.

Richard A. Sheehy Certificate of Service

This will certify that a true and correct copy of this document has been forwarded to all counsel of record pursuant to the Texas Rules of Appellate

Procedure on the 23rd day of April 2015.

Timothy Culberson Via E-Service The Culberson Law Office, PLLC

1400 Woodloch Forest Drive, Suite 575

The Woodlands, Texas 77380

Daniel M.L. Hernandez Via E-Service Hernandez Law Firm, P.C.

4841 S. Jackson Road

Edinburg, Texas 78539

Steven Gonzalez Via E-Service Gerald Castillo

Gonzalez Castillo, L.L.P.

1317 E. Quebec Avenue

McAllen, Texas 78503

Richard A. Sheehy 2300502

EXHIBIT A

C/\USE NO. 5886-13-E

JESUS JAIME ANDRADE AND JESSICA § lN THE DISTRICT COURT ANDRADE, lNDIVIDUALL Y AND AS §

PARENTS AND NEXT FRIENDS OF §

JULIANNA ANDRADE, A MINOR §

Plaint(ffs, § § § 275rn JUDICIAL DISTRICT V. §

RODOLFO LOZANO, M.D., HUGO ZAPATA, §

M.D., P.A., DOCTORS HOSPITAL AT §

RENAISSANCE, LTD. AND RGV MED, LLC, §

§ De:fendants. § HIDALGO COUNTY, TEXAS ORDER

On November 13, 2014, the Court considered the Motion of Defendants Doctors Hospital at Renaissance, Ltd. and RGV Med, LLC for Summary Judgment. All parties received notice of the hearing pursuant to the Texas Rules of Civil Procedure and were represented by and through their attorneys of record. The Court has considered the motion, the response to the motion, the reply to the response, Plaintiffs' summary judgment evidence, and all matters of record. The Cow1 has also heard the argument of counsel. The Court is of the opinion that the motion should be denied. As the basis for this ruling, the Court holds as a matter of law that: 1. A limited partnership that owns a hospital may be vicariously liable for the alleged professional negligence of a doctor pursuant to TEX. Bus. ORO. CODE §§ 152.301-152.304 and 153.152 solely because the doctor is a limited partner in the limited partnership; and

2. A general partner of a limited pa11nership that owns a hospital may be vicariously liable for the alleged professional negligence of a doctor pursuant to TEX. Bus. ORO. CODE§§ 152.301-152.304 and 153.152 solely because the doctor is a limited partner in the limited partnership.

*37 At the request of Defendants Doctors Hospital at Renaissance, Ltd. and ROY Med, LLC, the Court will permit an appeal from this Order pursuant to TEX. C1v. PRAC. & REM. Coor.: §51.014(d) and Texas Rule of Civil Procedure 168. The Court finds that this Order involves controlling questions of law as to which there is a substantial ground for difference of opinion and that an immediate appeal from this Order may materially advance the ultimate termination of the litigation. The controlling issues of law are:

I. Whether a limited partnership that owns a hospital may be vicariously liable for the alleged professional negligence of a doctor pursuant to TEX. Bus. ORO. CODE §§152.301-152.304 and 153.152 solely because the doctor is a limited partner in the limited paitnership?

2. Whether a general partner of a limited paitnership that owns a hospital may be vicariously liable for the alleged professional negligence of a doctor pursuant to TEX. Bus. ORO. CODE §§152.301-152.304 and 153.152 solely because the doctor is a limited partner in the limited partnership?

The CoUJt finds that there is a substantial ground for difference of opinion on these questions of Jaw. The Court and the parties have been unable to find any law in Texas or around the country that deals with these issues except for the opinion by the Cou11 in Jones v. Foundation Surgery A.fflliates of Brazoria County, 403 S.W.3d 306 (Tex. App. - Houston [lst Dist.] 2013, pet. denied.). That case was not decided by the Court of Appeals for the Thirteenth Judicial District. The resolution of the legal issues presented in the Motion for Summary Judgment may have a significant impact on the law of medical malpractice in Texas.

The Court also finds that an immediate appeal from this Order may materially advance the ultimate termination of this litigation because Doctors Hospital at Renaissance, Lid. and ROY Med, LLC would be entitled to summary judgment if the answers to these controlling *38 questions of law are in the negative. The Court and the parties would then avoid a full trial on the merits of the claims in this case. Therefore, it is

ORDERED that the Motion for Defendants Doctors Hospital at Renaissance, Ltd. and ROY Med, LLC for Summary Judgment is denied. Further, it is

ORDERED that the Court permits an appeal from this Order that would otherwise not be appealable pursuant to TEX. C1v. PRAC. & REM. CODE § 51.014(d) and Texas Rule of Civil Procedure 168. Further, it is

ORDERED that all proceedings in this case in this Court are stayed pending further Order of the Court.

SIGNED this /~if.. day of January 2015.

EXHIBITB *40 \ .

NUMBER 13-15~00046-CV COURT OF APPEALS THIRTEENTH DISTRICT OF TEXAS CORPUS CHRISTI - EDINBURG DOCTORS HOPSITAL AT RENAISSANCE, LTD ..

AND RGV MED, LLC, Appellants, v.

JESUS JAIME ANDRADE AND

JESSICA ANDRADE, Appellees. On Petition for Permissive Appeal from the 275th District Court of Hidalgo County, Texas.

ORDER

Before Chief Justice Valdez and Justices Rodriguez and Garza Order Per Curiam

Doctors Hospital at Renaissance, Ltd., and RGV MED, LLC have filed a petition for permissive interlocutory appeal challenging the trial court's denial of summary judgment in trial court cause number 5886-13-E. See TEX. R. APP. P. 28.3; TEX. CIV. PRAG. & REM. CODE ANN.§ 51.014(d), (f). The trial court plaintiffs, Jesus Jaime Andrade

524 '

*41 and Jessica Andrade, have filed a response stating that they are unopposed to the petition for permissive appeal.

This Court, having examined and fully considered the petition and response, is of the opinion that the petition should be granted. Accordingly, we GRANT permission to appeal. A notice of appeal is deemed to have been filed on this date. See TEX. R. APP. P. 28.3(k). The appeal will be governed by the rules for accelerated appeals. Id.; see TEX. R.APP. P. 28.1.

We direct the clerk of this Court to file a copy of this order with the trial court clerk. See TEX. R. APP. P. 28.3(k).

IT IS SO ORDERED.

PER CURIAM Delivered and filed the

2nd day of March, 2015. 2

EXHIBIT C

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West law.

V.T.C.A., Business Organizations Code§ 152. 301 Page ^[1]

Effective: January 1, 2006

Vernon's Texas Statutes and Codes Annotated Currentness

Business Organizations Code (Refs & Annos)

Title 4. Partnerships (Refs & Annos)

flSI Chapter 152. General Partnerships

flSI Subchapter E. Relationship Between Partners and Other Persons -+-+ § 152. 301. Partner as Agent

Each partner is an agent of the partnership for the purpose of its business.

CREDIT(S)

Acts 2003, 18th Leg., ch. 182, § 1, eff. Jan. 1, 2006.

Current through the end of the 2013 Third Called Session of the 83rd Legislature

END OF DOCUMENT

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Page 2of2 West law.

V.T.C.A., Business Organizations Code§ 152.302 Page 1

Effective: September 1, 2007

Vernon's Texas Statutes and Codes Annotated Currentness

Business Organizations Code (Refs & An nos)

Title 4. Partnerships (Refs & Annos)

f!Sl Chapter 152. General Partnerships

flSl Subchapter E. Relationship Between Partners and Other Persons

,..,.. § 152.302. Binding Effect of Partner's Action

(a) Unless a partner does not have authority to act for the partnership in a particular matter and the person with

whom the partner is dealing knows that the partner lacks authority, an act of a partner, including the execution of an instrument in the partnership name, binds the partnership if the act is apparently for carrying on in the or

dinary course:

(1) the partnership business; or

(2) business of the kind carried on by the partnership.

(b) An act of a partner that is not apparently for carrying on in the ordinary course a business described by Sub

section (a) binds the partnership only if authorized by the other partners.

( c) A conveyance of real property by a partner on behalf of the partnership not otherwise binding on the partner

ship binds the partnership if the property has been conveyed by the grantee or a person claiming through the

grantee to a holder for value without knowledge that the partner exceeded that partner's authority in making the

conveyance.

CREDIT(S)

Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006. Amended by Acts 2007, 80th Leg., ch. 688, § 105, eff. Sept.

1, 2007.

Current through the end of the 2013 Third Called Session of the 83rd Legislature

END OF DOCUMENT

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Page 2 of2

Westlaw.

V.T.C.A., Business Organizations Code§ 152.303 Page

Effective: January 1, 2006

Vernon's Texas Statutes and Codes Annotated Currentness

Business Organizations Code (Refs & Annos)

Title 4. Partnerships (Refs & Annos)

f[5] Chapter 152. General Partnerships

f[5] Subchapter E. Relationship Between Partners and Other Persons -+-+ § 152.303. Liability of Partnership for Conduct of Partner

(a) A partnership is liable for loss or injury to a person, including a partner, or for a penalty caused by or in

curred as a result of a wrongful act or omission or other actionable conduct of a partner acting:

(1) in the ordinary course of business of the partnership; or

(2) with the authority of the partnership.

(b) A partnership is liable for the loss of money or property of a person who is not a partner that is:

(1) received in the course of the partnership's business; and

(2) misapplied by a partner while in the custody of the partnership.

CREDIT(S)

Acts 2003, 78th Leg., ch. 182, § I, eff. Jan. I, 2006.

Current through the end of the 2013 Third Called Session of the 83rd Legislature

END OF DOCUMENT

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west law.

V.T.C.A., Business Organizations Code§ 153. 152 Page

Effective: January 1, 2006

Vernon's Texas Statutes and Codes Annotated Currentness Business Organizations Code (Refs & Annas)

Title 4. Partnerships (Refs & Annas)

frsl Chapter 153. Limited Partnerships (Refs & Annas)

fl!l Subchapter D. General Partners

-+-+ § 153. 152. General Powers and Liabilities of General Partner (a) Except as provided by this chapter, the other limited partnership provisions, or a partnership agreement, a

general partner of a limited paitnership:

(1) has the rights and powers and is subject to the restrictions of a partner in a partnership without limited

partners; and

(2) has the liabilities of a partner in a partnership without limited partners to the partnership and to the other

partners.

(b) Except as provided by this chapter or the other limited partnership provisions, a general partner of a limited

partnership has the liabilities of a partner in a pa1inership without limited partners to a person other than the

partnership and the other partners.

CREDIT(S)

Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.

HISTORICAL AND STATUTORY NOTES

2012 Main Volume

Prior Laws:

Vernon's Ann.Civ.St. mi. 6132a-l, § 4.03.

LIBRARY REFERENCES

2012 Main Volume

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West law"

V.T.C.A., Business Organizations Code§ 152. 0551 Page 1

Effective: June 17, 2011

Vernon's Texas Statutes and Codes Annotated Currentness Business Organizations Code (Refs & Annos)

Title 4. Partnerships (Refs & Annos)

f151 Chapter 152. General Partnerships

f~ Subchapter B. Nature and Creation of Partnership

-+-+ § 152. 0551. Partnerships Formed by Physicians and Physician Assistants (a) Physicians licensed under Subtitle B, Title 3, Occupations Code, [FNl] and physician assistants licensed un

der Chapter 204, Occupations Code, may create a partnership to perform a professional service that falls within

the scope of practice of those practitioners.

(b) A physician assistant may not be a general partner or participate in the management of the partnership.

cian assistant or of any physician in the partnership.

(d) The authority of each practitioner is limited by the scope of practice of the respective practitioner. An organ

izer of the entity must be a physician and ensure that a physician or physicians control and manage the entity.

(e) Nothing in this section may be construed to allow the practice of medicine by someone not licensed as a

physician under Subtitle B, Title 3, Occupations Code, or to allow a person not licensed as a physician to direct the activities of a physician in the practice of medicine.

(f) A physician assistant or combination of physician assistants may have only a minority ownership interest in

an entity created under this section. The ownership interest of an individual physician assistant may not equal or exceed the ownership interest of any individual physician owner. A physician assistant or combination of physi

cian assistants may not interfere with the practice of medicine by a physician owner or the supervision of physi

cian assistants by a physician owner.

(g) The Texas Medical Board and the Texas Physician Assistant Board continue to exercise regulatory authority

over their respective license holders according to applicable law. To the extent of a conflict between Subtitle B,

Title 3, Occupations Code, and Chapter 204, Occupations Code, or any rules adopted under those statutes,

Subtitle B, Title 3, or a rule adopted under that subtitle controls.

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V.T.C.A., Business Organizations Code§ 152. 0551 Page2

CREDIT(S)

Added by Acts 2011, 82nd Leg., ch. 782 (H.B. 2098), § 2, eff. June 17, 2011.

[FNI] V.T.C.A., Occupations Code§ 151.001 et seq.

Current through the end of the 2013 Third Called Session of the 83rd Legislature

END OF DOCUMENT

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EXHIBITD

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west law.

V.T.C.A., Occupations Code§ 151. 002 Page 1

Effective: June 14, 2013

Vernon's Texas Statutes and Codes Annotated Currentness

Occupations Code (Refs & Annos)

Title 3. Health Professions

Subtitle B. Physicians

flil Chapter 151. General Provisions (Refs & An nos)

f!31 Subchapter A. General Provisions

-+-+ § 151. 002. Definitions

(a) In this subtitle:

(1) "Board" means the Texas Medical Board.

(2) "Continuing threat to the public welfare" means a real danger to the health of a physician's patients or to

the public from the acts or omissions of the physician caused through the physician's lack of competence, im

paired status, or failure to care adequately for the physician's patients, as determined by:

(A) the board;

(B) a medical peer review committee in this state;

(C) a physician licensed to practice medicine in this state or otherwise lawfully practicing medicine in this state; (D) a physician engaged in graduate medical education or training; or

(E) a medical student.

(3) "Disciplinary order'' means an action taken under Section 164.001, 164.053, 164.058, or 164.10 I.

( 4) "Doctor of osteopathic medicine" includes a doctor of osteopathy, an osteopath, an osteopathic physician,

and an osteopathic surgeon.

(5) "Health care entity" means:

Page 3of7

V.T.C.A., Occupations Code§ 151. 002 Page2

(A) a hospital licensed under Chapter 241 or 577, Health and Safety Code; (B) an entity, including a health maintenance organization, group medical practice, nursing home, health science center, university medical school, hospital district, hospital authority, or other health care facility, that: (i) provides or pays for medical care or health care services; and

(ii) follows a formal peer review process to further quality medical care or health care; (C) a professional society or association of physicians, or a committee of such a society or association, that follows a formal peer review process to further quality medical care or health care; (D) an organization established by a professional society or association of physicians, hospitals, or both, that: (i) collects and verifies the authenticity of documents and other information concerning the qualifications, competence, or performance of licensed health care professionals; and

(ii) acts as a health care facility's agent under the Health Care Quality Improvement Act of 1986 (42 U.S.C. Section 1110 I et seq.); or

(E) a health care collaborative certified under Chapter 848, Insurance Code.

(6) "Legally authorized representative" of a patient means:

(A) a parent or legal guardian ifthe patient is a minor;

(B) a legal guardian ifthe patient has been adjudicated incompetent to manage the patient's personal affairs; (C) an agent of the patient authorized under a durable power of attorney for health care; (D) an attorney ad !item appointed for the patient;

(E) a guardian ad !item appointed for the patient;

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V.T.C.A., Occupations Code§ 151. 002 Page 3

(G) an attorney retained by the patient or by another person listed by this subdivision.

(6-a) "License holder" means a person holding a license, permit, or certificate issued under this subtitle.

(7) "Medical peer review" or "professional review action" means the evaluation of medical and health care

services, including evaluation of the qualifications and professional conduct of professional health care practi

tioners and of patient care provided by those practitioners. The term includes evaluation of the:

(A) merits of a complaint relating to a health care practitioner and a determination or recommendation re garding the complaint;

(B) accuracy of a diagnosis;

(D) report made to a medical peer review committee concerning activities under the committee's review au thority;

(E) report made by a medical peer review committee to another committee or to the board as permitted or required by law; and

(F) implementation of the duties of a medical peer review committee by a member, agent, or employee of the committee.

(8) "Medical peer review committee" or "professional review body" means a committee of a health care en

tity, the governing board of a health care entity, or the medical staff of a health care entity, that operates under

written bylaws approved by the policy-making body or the governing board of the health care entity and is au

thorized to evaluate the quality of medical and health care services or the competence of physicians, including evaluation of the performance of those functions specified by Section 85.204, Health and Safety Code. The

term includes:

(A) an employee or agent of the committee, including an assistant, investigator, intervenor, attorney, and any other person or organization that serves the committee; and

(B) the governing body of a public hospital owned or operated by a governmental entity, the governing body of a hospital authority created under Chapter 262 or 264, Health and Safety Code, and the governing body of a hospital district created under Article IX, Texas Constitution, but only: (i) in relation to the governing body's evaluation of the competence of a physician or the quality of medic- © 2015 Thomson Reuters. No Claim to Orig. US Gov. Works.

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V.T.C.A., Occupations Code§ 151. 002 Page4

al and health care services provided by the public hospital, hospital authority, or hospital district; and (ii) to the extent that the evaluation under Subparagraph (i) involves discussions or records that specific ally or necessarily identify an individual patient or physician.

(9) "Medical records" means all records relating to the history, diagnosis, treatment, or prognosis of a patient.

( 10) "Operation" means the application of surgery or the performance of surgical services.

(11) "Person" means an individual, unless the term is expressly made applicable to a partnership, association, or corporation.

(12) "Physician" means a person licensed to practice medicine in this state.

(13) "Practicing medicine" means the diagnosis, treatment, or offer to treat a mental or physical disease or dis

order or a physical deformity or injury by any system or method, or the attempt to effect cures of those condi

tions, by a person who:

(A) publicly professes to be a physician or surgeon; or

(B) directly or indirectly charges money or other compensation for those services.

(14) "Surgery" includes:

(A) surgical services, procedures, and operations; and (B) the procedures described in the surgery section of the common procedure coding system as adopted by the Health Care Financing Administration of the United States Department of Health and Human Services.

(b) The terms "physician" and "surgeon" are synonyms. As used in this subtitle, the terms "practitioner" and

"practitioner of medicine" include physicians and surgeons.

CREDIT(S)

Acts 1999, 76th Leg., ch. 388, § l, eff. Sept. I, 1999. Amended by Acts 2001, 77th Leg., ch. 1420, § 14.021(a),

eff. Sept. 1, 2001; Acts 2003, 78th Leg., ch. 202, § 1, eff. June I 0, 2003; Acts 2005, 79th Leg., ch. 269, § 1.01,

eff. Sept. 1, 2005; Acts 2011, 82nd Leg., !st C.S., ch. 7 (S.B. 7), § 4.06, eff. Sept. 28, 2011; Acts 2013, 83rd

Leg., ch. 1180 (S.B. 949), § 1, eff. June 14, 2013.

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V.T.C.A., Occupations Code§ 155. 001 Page I

Effective:[See Text Amendments]

Vernon's Texas Statutes and Codes Annotated Cun-entness

Occupations Code (Refs & Annos)

Title 3. Health Professions

Subtitle B. Physicians

f!Sl Chapter 155. License to Practice Medicine (Refs & Annos)

f~ Subchapter A. License Requirements

-+-+ § 155. 001. License Required

A person may not practice medicine in this state unless the person holds a license issued under this subtitle.

CREDIT(S)

Acts 1999, 76th Leg., ch. 388, § I, eff. Sept. I, 1999.

Cumnt through the end of the 2013 Third Called Session of the 83rd Legislature

END OF DOCUMENT

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West law"

V.T.C.A., Occupations Code§ 155.003 Page

Effective: September 1, 2011

Vernon's Texas Statutes and Codes Annotated Currentness

Occupations Code (Refs & Annos)

Title 3. Health Professions Subtitle B. Physicians

flil Chapter 155. License to Practice Medicine (Refs & Annos)

f!3l Subchapter A. License Requirements -+-+ § 155.003. General Eligibility Requirements

(a) To be eligible for a license under this chapter, an applicant must present proof satisfactory to the board that

the applicant:

(I) is at least 21 years of age;

(2) is of good professional character and has not violated Section 164.051, 164.052, or 164.053;

(3) has completed:

(A) at least 60 semester hours of college courses, other than courses in medical school, that are acceptable to The University of Texas at Austin for credit on a bachelor of arts degree or a bachelor of science degree; (B) the entire primary, secondary, and premedical education required in the country of medical school graduation, ifthe medical school is located outside the United States or Canada; or (C) substantially equivalent courses as determined by board rule;

(4) is a graduate of a medical school located in the United States or Canada and approved by the board;

(5) has either:

(A) successfully completed one year of graduate medical training approved by the board in the United States or Canada; or

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V.T.C.A., Occupations Code§ 155.003 Page2

pleted two years of graduate medical training approved by the board in the United States or Canada; (6) has passed an examination accepted or administered by the board; and

(7) has passed a Texas medical jurisprudence examination as determined by board rule.

(b) All medical or osteopathic medical education an applicant receives in the United States must be accredited

by an accrediting body officially recognized by the United States Department of Education as the accrediting

body for medical education leading to the doctor of medicine degree or the doctor of osteopathy degree. This

subsection does not apply to postgraduate medical education or training.

restricted license ifthe applicant:

(1) received medical education in a hospital or teaching institution sponsoring or participating in a program of

graduate medical education accredited by the Accreditation Council for Graduate Medical Education, the

American Osteopathic Association, or the board in the same subject as the medical or osteopathic medical

education as defined by board rule; or

(2) is specialty board certified by a specialty board approved by the American Osteopathic Association or the

American Board of Medical Specialties.

(d) In addition to the other requirements prescribed by this subtitle, the board may require an applicant to com

ply with other requirements that the board considers appropriate.

(e) An applicant is not eligible for a license if:

(1) the applicant holds a medical license that is currently restricted for cause, canceled for cause, suspended

for cause, or revoked by a state, a province of Canada, or a uniformed service of the United States;

(2) an investigation or a proceeding is instituted against the applicant for the restriction, cancellation, suspen

sion, or revocation in a state, a province of Canada, or a uniformed service of the United States; or

(3) a prosecution is pending against the applicant in any state, federal, or Canadian court for any offense that

under the laws of this state is a felony or a misdemeanor that involves moral turpitude.

CREDIT(S)

Acts 1999, 76th Leg., ch. 388, § 1, eff. Sept. 1, 1999. Amended by Acts 2001, 77th Leg., ch. 1420, § 14.027(b),

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V.T.C.A., Occupations Code§ 155.003 Page 3

eff. Sept. I, 200 I; Acts 2005, 79th Leg., ch. 269, § 1.21, eff. Sept. 1, 2005; Acts 2011, 82nd Leg., ch. 498 (H.B.

1380), § 1, eff. Sept. 1, 2011.

Current through the end of the 2013 Third Called Session of the 83rd Legislature

END OF DOCUMENT

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Page 2of6

V.T.C.A., Occupations Code§ 164. 052 Page 1

Effective: October 29, 2013

Vernon's Texas Statutes and Codes Annotated Currentness

Occupations Code (Refs & Annos)

Title 3. Health Professions

Subtitle B. Physicians

r'l!l Chapter 164. Disciplinary Actions and Procedures f!Sl Subchapter B. License Denial and Disciplinary Actions

-+-+ § 164. 052. Prohibited Practices by Physician or License Applicant (a) A physician or an applicant for a license to practice medicine commits a prohibited practice ifthat person:

(1) submits to the board a false or misleading statement, document, or certificate in an application for a Ii- cense;

(2) presents to the board a license, certificate, or diploma that was illegally or fraudulently obtained;

(3) commits fraud or deception in taking or passing an examination;

(4) uses alcohol or drugs in an intemperate manner that, in the board's opinion, could endanger a patient's life;

(5) commits unprofessional or dishonorable conduct that is likely to deceive or defraud the public, as provided by Section 164.053, or injure the public;

(6) uses an advertising statement that is false, misleading, or deceptive;

(7) advertises professional superiority or the performance of professional service in a superior manner if that

advertising is not readily subject to verification;

(8) purchases, sells, barters, or uses, or offers to purchase, sell, barter, or use, a medical degree, license, certi

ficate, or diploma, or a transcript of a license, certificate, or diploma in or incident to an application to the

board for a license to practice medicine;

(9) alters, with fraudulent intent, a medical license, certificate, or diploma, or a transcript of a medical license,

certificate, or diploma;

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V.T.C.A., Occupations Code§ 164. 052 Page 2

(10) uses a medical license, certificate, or diploma, or a transcript of a medical license, certificate, or diploma that has been:

(A) fraudulently purchased or issued;

(B) counterfeited; or

(11) impersonates or acts as proxy for another person in an examination required by this subtitle for a medical

license;

(12) engages in conduct that subverts or attempts to subvert an examination process required by this subtitle

for a medical license;

(13) impersonates a physician or permits another to use the person's license or certificate to practice medicine

in this state;

(14) directly or indirectly employs a person whose license to practice medicine has been suspended, canceled,

or revoked;

(15) associates in the practice of medicine with a person:

(A) whose license to practice medicine has been suspended, canceled, or revoked; or (B) who has been convicted of the unlawful practice of medicine in this state or elsewhere; (16) performs or procures a criminal abortion, aids or abets in the procuring of a criminal abortion, attempts to

perform or procure a criminal abortion, or attempts to aid or abet the performance or procurement of a crimin

al abortion;

(17) directly or indirectly aids or abets the practice of medicine by a person, partnership, association, or cor

poration that is not licensed to practice medicine by the board;

(18) performs an abortion on a woman who is pregnant with a viable unborn child during the third trimester of

the pregnancy unless:

(A) the abortion is necessary to prevent the death of the woman;

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V.T.C.A., Occupations Code§ 164. 052 Page 3

(B) the viable unborn child has a severe, irreversible brain impairment; or

(C) the woman is diagnosed with a significant likelihood of suffering imminent severe, irreversible brain damage or imminent severe, irreversible paralysis;

(19) performs an abortion on an unemancipated minor without the written consent of the child's parent, man aging conservator, or legal guardian or without a court order, as provided by Section 33.003 or 33.004, Family

Code, authorizing the minor to consent to the abortion, unless the physician concludes that on the basis of the

physician's good faith clinical judgment, a condition exists that complicates the medical condition of the preg

nant minor and necessitates the immediate abortion of her pregnancy to avert her death or to avoid a serious

risk of substantial impairment of a major bodily function and that there is insufficient time to obtain the con

sent of the child's parent, managing conservator, or legal guardian; or

(20) performs or induces or attempts to perform or induce an abortion in violation of Subchapter C, Chapter

171, Health and Safety Code.

(b) For purposes of Subsection (a)(l2), conduct that subverts or attempts to subvert the medical licensing exam

ination process includes, as prescribed by board rules, conduct that violates:

(1) the security of the examination materials;

(2) the standard oftest administration; or

(3) the accreditation process.

( c) The board shall adopt the forms necessaiy for physicians to obtain the consent required for an abortion to be

performed on an unemancipated minor under Subsection (a). The form executed to obtain consent or any other required documentation must be retained by the physician until the later of the fifth anniversary of the date of

the minor's majority or the seventh anniversary of the date the physician received or created the documentation

for the record.

CREDIT(S)

Acts 1999, 76th Leg., ch. 388, § 1, eff. Sept. 1, 1999. Amended by Acts 2005, 79th Leg., ch. 269, § 1.42, eff.

Sept. 1, 2005; Acts 2013, 83rd Leg., 2nd C.S., ch. 1 (H.B. 2), § 6, eff. Oct. 29, 2013.

Current through the end of the 2013 Third Called Session of the 83rd Legislature

Page 2of4

westtaw.

V.T.C.A., Occupations Code § 165. 153 Page 1

Effective:[See Text Amendments]

Vernon's Texas Statutes and Codes Annotated Currentness

Occupations Code (Refs & Annos)

Title 3. Health Professions Subtitle B. Physicians

l'lil Chapter 165. Penalties

l'l5l Subchapter D. Criminal Penalties -+-+ § 165. 153. Criminal Penalties for Additional Harm

(a) A person commits an offense if the person practices medicine without a license or pe1mit and causes another

person:

(1) physical or psychological harm; or

(2) financial harm.

(b) An offense under Subsection (a)(l) is a felony of the third degree.

CREDIT(S)

Acts 1999, 76th Leg., ch. 388, § 1, eff. Sept. 1, 1999.

REVISOR'S NOTE

2012 Main Volume

Sections 3.07(a)(2) and (3), V.A.C.S. Article 4495b, refer to a person practicing medicine with a "valid" license or permit. The revised law omits "valid" as unnecessary because the word does not add to the clear meaning of the law. For example, a document purporting to be a license is no longer a license if it is expired and is not a license if it is a forgery. HISTORICAL AND STATUTORY NOTES

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[1] Plaintiffs settled with Dr. Lozano. (C.R. 66, 513). Plaintiffs later dismissed Dr. Zapata’s professional association with prejudice. (C.R. 518). It is not clear if the P.A. paid any consideration for that dismissal but DHR and RGV are currently the only Defendants remaining in the case.

[2] The issues presented mirror the controlling issues of law designated by the trial court in its order that permitted this interlocutory appeal. (C.R. 522). Copies of the relevant statutes are attached as exhibits to this brief.

[3] Whether Dr. Lozano breached a standard of care during the delivery is not an issue in this appeal. He believes that the baby’s condition may have occurred in utero because of a low level of amniotic fluid in the Mother’s womb. (C.R. 154). Regardless, DHR and RGV do not concede that Dr. Zapata breached a standard of care or that any such breach caused the child’s injury.

[4] Plaintiffs sued RGV because RGV is the general partner in DHR. (C.R. 416, 477); see T EX . B US . O RG . C ODE § 153.152 (general powers and liabilities of general partner); Shaw v. Kennedy , 879 S.W.2d 240 (Tex. App. – Amarillo 1994, no writ).

[5] Most of the arguments in this brief will be directed to the claims against DHR because Dr. Lozano was a limited partner in DHR. The arguments apply with equal force as to RGV which is a Defendant only because RGV is the general partner in DHR. (C.R. 494, 498); T EX . B US . O RG . C ODE § 153.152. RGV adopts DHR’s arguments by reference because RGV’s liability, if any, is dependent on DHR’s liability. ( Id. ).

[6] The partnership agreement expressly prohibits a limited partner from acting on behalf of DHR. (C.R. 301). There is no evidence to the contrary in the record. As a result, Plaintiffs’ theory of liability under the Business Organizations Code depends on whether Dr. Lozano was acting in the ordinary course of DHR’s business or business of the kind carried on by DHR.

[7] In this trial court, Plaintiffs argued that control was not relevant because their claim of vicarious liability is not based on a theory that Dr. Lozano was an employee or agent of the hospital based on his status as a member of the medical staff; their claim is based on his status as a limited partner in DHR. (C.R. 83-84; R.R. 27). They are half right. Control is not an issue when Plaintiffs do not claim employment or common law agency status; however, control is relevant to show that the sections of the Business Organizations Code at issue do not and should not apply. See ( R.R. 32).

[8] Plaintiffs incorrectly claim that DHR and RGV admitted that the purpose of the partnership was to provide obstetrical services. (C.R. 77); see (C.R. 275) (responses to interrogatories). The interrogatory responses simply indicate that Women’s Hospital was offering labor and delivery services to the public at the time of Julianna’s birth; they do not state that the hospital was practicing medicine. In fact, the purpose of the partnership is defined in Section 1.7 of the Limited Partnership Agreement that provides in relevant part that: “the purpose for which the partnership is organized is to develop, construct, and operate such Health Care Facilities as the General Partner may deem appropriate from time to time.” Clearly, the practice of medicine is not one of the purposes for which the Partnership was organized. DHR was not “practicing medicine” as that term is defined in Section 151.002(a)(13) of the Occupations Code.

[9] During the course of the opinion, the Court referenced the surgery center’s argument that the surgery center could not be liable to Plaintiffs solely because Dr. Martinez was a limited partner because it was not and could not be licensed to practice medicine. ( Id. at 314); see T EX . O CC . C ODE § 155.001, 155.003; see also ( Supra at 18). The Court did not discuss this argument in any detail in the opinion, but simply held that the partnerships filings and subscription agreement raised a fact question. ( Id. at 315).

[10] It the trial court, Plaintiffs state that Jones is “strong precedent” because the Supreme Court denied the surgery center’s petition for review. (C.R. 73); see also (R.R. 17)(“And so the Supreme Court looked at it, said we don’t need to mess with that opinion. It is good law.”). Plaintiffs are clearly wrong. Declining to review a case is no evidence that the Supreme Court agrees with the law as decided by the Court of Appeals. Loram Maintenance of Way v. Ianni , 210 S.W.3d 593 (Tex. 2006). “The denial or dismissal of a petition does not give any indication of this Court’s decision on the merits of the case.” ( Id. at 596), citing T EX . R. A PP . P. 56.1(b); Matthews Construction Co. v. Rosen , 796 S.W.2d 692, 694 n. 2 (1990); see also Texas South Rentals v. Gomez , 267 S.W.3d 228, 239 n. 8 (Tex. App. – Corpus Christi 2008, no pet.)(“A denial of review or a dismissal of a petition for want of jurisdiction by the Texas Supreme Court is not a comment on the correctness of the Court of Appeals’ opinion below, although parties often argue as much.”).

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