LEGISLATIVE UPDATE: It has been an exciting couple of weeks as the 2005 Texas legislative session finally starts to wind down. However, one last minute item popped up unexpectedly. It seems that Medicaid has been reimbursing convicted sex offenders for Viagra prescriptions. Jeez, who’s in charge here? The legislature passed an eleventh hour bill prohibiting future reimbursements.
SETTLEMENT CREDITS: CSSB 890, legislation restoring the dollar-for-dollar settlement credit in civil cases, has been passed by the Texas House, by a unanimous vote, and the Texas Senate is expected to concur with the House version of the bill. If signed by the Guv, this bill will take effect immediately. The Texas Association of Defense Counsel is the major proponent of this bill.
The House and Senate have also taken measures to strengthen the Texas civil justice system. In the past week, each has passed sorely needed legislation to increase judicial compensation and juror pay. These bills are now in conference committees where minor differences in the House and Senate bills are expected to be worked out. The Texas Association of Defense Counsel is also a major proponent of these bills and has lobbied vigorously for their passage.
TEXAS SUPREME COURT UPDATE: THIS MORNING, THE TEXAS SUPREME COURT HELD that an insured may seek reimbursement of its settlement payments from its own insured under certain circumstances. The principal issue is whether an excess insurer that disputes policy coverage may be reimbursed for settling a lawsuit at the policyholder’s request when the policyholder did not also agree to the insurer’s right to seek reimbursement. The insurer argues that the court of appeals incorrectly applied Texas Association of Counties County Government Risk Management Pool v. Matagorda County, 52 S.W.3d 128 (Tex. 2000), to this reimbursement dispute over an offshore oil-platform collapse. In Matagorda County the Court held that a primary insurer who settles a suit can seek reimbursement from the insured only if the insured gives clear and unequivocal consent to the settlement and to the insurer’s right to seek reimbursement. In this case the excess insurer contends in part that, unlike the facts in Matagorda County, it did not have a duty to defend Frank’s in the lawsuit and did not control the defense. The trial court granted summary judgment for Frank’s and the court of appeals affirmed.
The Supreme Court REVERSED AND REMANDED and HOLDS that Matagorda County does not foreclose reimbursement in this case. Matagorda County’s concern – that an insurer holding a unilateral right to settle could accept a settlement that the insured considered out of the insured’s financial reach and leave the insured required to reimburse the insurer for that amount – is ameliorated if not eliminated in at least two circumstances: (1) when an insured has demanded that its insurer accept a settlement offer that is within policy limits, or (2) when an insured expressly agrees that the settlement offer should be accepted. In these situations, the insurer has a right to be reimbursed if it has timely asserted its reservation of rights, notified the insured it intends to seek reimbursement and paid to settle claims that were not covered. When in a coverage dispute an insured demands that its insurer accept a settlement offer within policy limits, as in this case, the insured is deemed to have viewed the settlement offer as a reasonable one. If the offer is one that a reasonable insurer should accept, it is one that a reasonable insured should accept if there is no coverage. In cases such as this one, an agreement to reimburse an insurer is implied in law. Excess Underwriters at Lloyd’s, London v. Frank’s Casing Crew & Rental Tools Inc. (Tex 2005).
Also this morning, the Texas Supreme Court handed down a decision in a medical malpractice and malicious credentialing case. The principal issues are (1) whether legally sufficient evidence exists that the hospital acted with malice in credentialing a physician who abused drugs and, if not, (2) whether the trial court erred by submitting a broad-form apportionment question predicated on either negligence or malicious credentialing. In this case Romero’s husband suffered brain damage when he lost blood during surgery. Romero alleged the hospital and its employees, including the surgeon, negligently delivered blood for her husband’s transfusion and the hospital acted with malice in granting the surgeon staff credentials because he was addicted to a prescription narcotic. A jury found the hospital negligent and that it acted with malice in granting and retaining the surgeon’s staff credentials. The court of appeals reversed, holding that legally sufficient evidence did not exist to show the hospital acted with malice and that the broad-form question in the jury charge made impossible liability apportionment between the negligence and malicious-credentialing claims.
The Supreme Court AFFIRMED, holding that (1) legally sufficient evidence does not exist to support the malicious credentialing claim, either under the more exacting “clear and convincing evidence” law of the case as plaintiffs requested for the jury charge or by a preponderance of the evidence and (2) the jury could not conceivably have ignored its finding on malicious credentialing in apportioning responsibility. The Romeros complain that the peer review privilege effectively precludes recovery for malicious credentialing, but that complaint in this case, at least, is overstated. Had the Romeros offered evidence that Columbia should not have allowed the surgeon to operate on Romero, that would have been some evidence of malice, and had such evidence been convincing, it would support recovery. Evidence of malice undoubtedly is difficult to come by, but the Legislature has made recovery for improper credentialing of physicians difficult. As for apportioning damages, the jury was instructed to apportion responsibility among the hospital, the doctor and others and, in doing so, to consider Columbia’s malicious credentialing of the doctor. Since there was no evidence of malicious credentialing, the jury should not have been allowed to consider that claim in setting Columbia’s percentage of responsibility. Romero v. KPH Consolidation Inc. (Tex 2005).
MICHAEL JACKSON UPDATE: We don’t do Michael Jackson Updates. Neverland? Nevermind.
YESTERDAY, Texas Update covered the swearing in ceremony of Judge Phil Johnson as the newest member of the Texas Supreme Court. (That’s called an investiture.) Judge Johnson is a former Vice President of the Texas Association of Defense Counsel and a former Chief Justice of the Amarillo Court of Appeals. He is a fabulous addition to the court.
TEXAS SUPREME COURT JUDGE Pricilla Owen was confirmed by the U.S. Senate on Wednesday and is expected to leave the Texas Supreme Court for the U.S. Fifth Circuit Court of Appeals within the next month. Owen’s departure from the Texas High Court creates yet another open seat. If interested, fax your resume to the Guv. Investitures have become a common event in our capital city. Try it, you’ll like it.
TEXAS UPDATE FOLLOW-UP: Many of our readers have asked for a Texas Update on the House bill which would prohibit sexy routines by cheerleaders. Well, although the bill passed the Texas House, the Senate refuses to even give it a hearing much less a vote. One Senator is quoted as saying that the Senate has more important things to do. Huh? We don’t get it. As we reported a couple of weeks ago, this same Senate recently passed a bill to make the chuck wagon the official vehicle of the State of Texas.
The good news? The legislature adjourns next Tuesday. Texas Update can then return to more scholarly endeavors.