Robert Passmore, III v. Baylor Health Care , 823 F.3d 292 ( 2016 )

Case: 15-10358 Document: 00513513485 Page: 1 Date Filed: 05/19/2016
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit
FILED
May 19, 2016
No. 15-10358 Lyle W. Cayce
Clerk
ROBERT LEROY PASSMORE, III, Individually and as Next Friend of M. P.
and A. P., minors; KELLY PASSMORE,
Plaintiffs - Appellants
v.
BAYLOR HEALTH CARE SYSTEM, doing business as Baylor Medical
Center of Plano; BAYLOR REGIONAL MEDICAL CENTER OF PLANO;
KIMBERLY MORGAN, APN,
Defendants - Appellees
Appeal from the United States District Court
for the Northern District of Texas
Before DAVIS, BARKSDALE, and DENNIS, Circuit Judges.
JAMES L. DENNIS, Circuit Judge:
Section 74.351 of the Texas Civil Practice and Remedies Code requires
plaintiffs in health care liability cases to serve an expert report within 120 days
after the filing of a defendant’s original answer. Robert Passmore and his wife
brought this health care liability suit against Baylor Health Care System,
Baylor Regional Medical Center of Plano, and nurse Kimberly Morgan to
recover damages for injuries that Mr. Passmore suffered as a result of
undergoing two back surgeries at Baylor Regional Medical Center. The
Passmores filed their suit in federal court under the court’s bankruptcy
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jurisdiction. Following limited discovery, the defendants moved to dismiss
because the Passmores had failed to serve an expert report in accordance with
section 74.351’s requirements, and the district court ultimately accepted their
position and dismissed the case with prejudice. The main issue on appeal is
whether section 74.351 applies in federal court. We hold that it does not and
therefore reverse and remand.
I
A
Section 74.351 of the Texas Civil Practice and Remedies Code requires a
plaintiff who has brought a “health care liability claim” to serve on each
defendant “not later than the 120th day after the date each defendant’s
original answer is filed . . . one or more expert reports, with a curriculum vitae
of each expert listed in the report for each physician or health care provider
against whom a liability claim is asserted.” 1 TEX. CIV. PRAC. & REM. CODE
§ 74.351(a).
According to the Supreme Court of Texas, a section 74.351 threshold
expert report serves two functions: (1) to “inform the defendant of the specific
conduct the plaintiff has called into question”; and (2) to “provide a basis for
the trial court to conclude that the claims have merit.” Certified EMS, Inc. v.
Potts, 392 S.W.3d 625, 630 (Tex. 2013) (citation and internal quotation marks
omitted). Two additional provisions of the Texas statute allow defendants to
enforce its expert report requirement and to avoid incurring litigation costs in
connection with frivolous claims. First, the statute mandates the stay of most
discovery in the case pending the filing of the required expert report.
1 This report must provide “a fair summary of the expert’s opinions . . . regarding
applicable standards of care, the manner in which the care rendered by the physician or
health care provider failed to meet the standards, and the causal relationship between that
failure and the injury, harm, or damages claimed.” TEX. CIV. PRAC. & REM. CODE
§ 74.351(r)(6).
2
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§ 74.351(s), (u). 2 Second, upon a defendant’s motion, if the plaintiff fails to
timely serve the required expert report, the statute instructs courts to dismiss
the claim with prejudice and award attorney’s fees and costs to the defendant.
§ 74.351(b).
No binding precedent deals with section 74.351’s applicability in a
federal court applying substantive state law. In one, unpublished opinion, this
court has applied section 74.351 as an alternative ground for affirming the
district court’s dismissal of a medical malpractice suit, but the court did not
analyze whether the statute applies in federal court. See Chapman v. United
States, 353 F. App’x 911, 913-14 (5th Cir. 2009). Of the numerous district
courts in this circuit to have considered this issue, an overwhelming majority
has held that section 74.351 is procedural state law that does not apply in
federal court. 3 These courts have generally found that section 74.351 conflicts
2 Section 74.351(s) limits pre-expert report discovery to the claimant’s acquisition of
information related to the patient’s health care through: (1) written discovery, (2) depositions
on written questions, and (3) discovery from nonparties. Section 74.351(u) further restricts
the number of depositions available under subsection (s) to no more than two. In re Huag,
175 S.W.3d 449, 456 (Tex. App. 2005). Section 74.351’s stay of discovery is one major addition
to the mandates of its predecessor, former article 4590i, section 13.01 of Texas Revised Civil
Statutes, which did not entitle defendants to a stay of discovery. See TEX. REV. CIV. STAT.
4590i §13.01 (repealed 2003).
3 Compare Bunch v. Mollabashy, No. 3:13-CV-1075-G BH, 2015 WL 1378698, at *9
(N.D. Tex. Mar. 26, 2015); Milligan v. Nueces Cty., Tex., No. CIV. A. C-08-118, 2010 WL
2352060, at *3 (S.D. Tex. June 9, 2010); Garcia v. LCS Corr. Servs., Inc., No. CIV. A. C-09-
334, 2010 WL 2163284, at *5 (S.D. Tex. May 24, 2010); Basco v. Spiegel, No. CIV. A. 08-0468,
2009 WL 3055319, at *1-2 (W.D. La. Sept. 21, 2009); Guzman v. Mem’l Hermann Hosp. Sys.,
No. CIV. A. H-07-3973, 2008 WL 5273713, at *14-15 (S.D. Tex. Dec. 17, 2008); Mason v.
United States, 486 F. Supp. 2d 621, 625 (W.D. Tex. 2007); Toler v. Sunrise Senior Living
Servs., Inc., No. CIV. A. SA-06-CV-0887-XR, 2007 WL 869581, at *4 (W.D. Tex. Mar. 21,
2007); Hawkins v. Wadley Reg’l Med. Ctr., No. 5:05-CV-154, 2006 WL 5111117, at *1 (E.D.
Tex. May 18, 2006); Hall v. Trisun, No. CIV. A. SA-05-CA-0984 OG NN, 2006 WL 1788192,
at *3-4 (W.D. Tex. June 23, 2006) report and recommendation adopted, No. SA 05 CA 984
OG, 2006 WL 2329418 (W.D. Tex. Aug. 1, 2006); Beam v. Nexion Health Mgmt., Inc., No. 206
CV 231, 2006 WL 2844907, at *1-3 (E.D. Tex. Oct. 2, 2006); Garza v. Scott & White Mem’l
Hosp., 234 F.R.D. 617, 621-23 (W.D. Tex. 2005); Brown v. Brooks Cty. Det. Ctr., No. C.A. C-
04-329, 2005 WL 1515466, at *2 (S.D. Tex. June 23, 2005); Redden v. Senior Living Properties,
L.L.C., No. CIV. A. 104-CV-125-C, 2004 WL 1932861, at *3 (N.D. Tex. Aug. 27, 2004);
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with Federal Rules of Civil Procedure 26 and 37 because its application would
interfere with the federal discovery scheme and deprive the courts of discretion
in their control of timing and sanctions for noncompliance. See, e.g., Bunch v.
Mollabashy, No. 3:13-CV-1075-G BH, 2015 WL 1378698, at *9 (N.D. Tex. Mar.
26, 2015); Beam v. Nexion Health Mgmt., Inc., No. 206 CV 231, 2006 WL
2844907, at *1-3 (E.D. Tex. Oct. 2, 2006).
B
In late 2011 and early 2012, Robert Passmore underwent two back
surgeries at Baylor Regional Medical Center in Plano, Texas. The Passmores
contend that the two surgeries caused permanent damage to Mr. Passmore’s
spine, rendering him completely disabled.
The Passmores sued the Baylor entities and Morgan in federal district
court under theories of direct negligence and vicarious liability. Christopher
Duntsch, the doctor who performed the two surgeries, had filed for bankruptcy
protection and was not made a party to the suit. 4 The Passmores asserted that
the outcome of the suit may affect the resolution of Duntsch’s bankruptcy
proceeding and thus that the district court had “related-to” bankruptcy
jurisdiction pursuant to 28 U.S.C. § 1334(b).
On January 23, 2014, the defendants filed their answers, and the parties
subsequently engaged in limited discovery. On June 17, 2014, 145 days after
they had filed their answers, the defendants filed motions to dismiss, claiming
McDaniel v. United States, No. CIV. A. SA-04-CA-0314-, 2004 WL 2616305, at *6-8 (W.D.
Tex. Nov. 16, 2004); Poindexter v. Bonsukan, 145 F. Supp. 2d 800, 803-10 (E.D. Tex. 2001)
(discussing predecessor to section 74.351), with Privett v. United States, No. 5:13-CV-79, 2014
WL 174596, at *1-2 (E.D. Tex. Jan. 7, 2014) (applying section 74.351 without conducting an
Erie analysis); Prentice v. United States, 980 F. Supp. 2d 748, 752 (N.D. Tex. 2013); Cruz v.
Chang, 400 F. Supp. 2d 906, 911-15 (W.D. Tex. 2005) (holding that predecessor to section
74.351 did apply in federal cases).
4 The bankruptcy proceeding in Duntsch’s matter is still pending. See In re Duntsch,
No. 1:13-bk-30510 (Bankr. D. Colo.).
4
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that the Passmores failed to serve an expert report within 120 days after the
defendants’ answers and therefore failed to comply with section 74.351.
The Passmores objected to the application of section 74.351 in federal
court, asserting that it directly collides with the Federal Rules of Civil
Procedure, but the district court rejected their objection, held that section
74.351 is substantive state law that applies in federal court, and dismissed the
suit with prejudice. This appeal followed.
II
Before we reach the main issue on appeal, we must satisfy ourselves that
that the district court had jurisdiction to decide the case and that this court
has jurisdiction to consider the appeal. See Union Planters Bank Nat’l Ass’n v.
Salih, 369 F.3d 457, 460 (5th Cir. 2004) (“[F]ederal courts are duty-bound to
examine the basis of subject matter jurisdiction sua sponte, even on appeal.”).
28 U.S.C. § 1334(b) grants district courts jurisdiction to decide cases that are
“related to” a case under Title 11 of the United States Code, i.e., cases “related
to” bankruptcy. “A proceeding is ‘related to’ a bankruptcy if the outcome of
that proceeding could conceivably have any effect on the estate being
administered in bankruptcy.” In re Bass, 171 F.3d 1016, 1022 (5th Cir. 1999)
(citations and some internal quotation marks omitted).
The Passmores filed their lawsuit in federal district court, asserting that
the court had “related-to” bankruptcy jurisdiction pursuant to 28 U.S.C.
§ 1334(b) because the outcome of their suit may affect the resolution of
Duntsch’s bankruptcy proceeding. Although the district court did not
expressly address this issue, a finding that it had subject matter jurisdiction is
implicit in its dismissal of the Passmores’ suit based on Texas law. See Cadle
Co. v. Neubauer, 562 F.3d 369, 371 (5th Cir. 2009) (district court’s denial of
motions to vacate was implicit finding of subject matter jurisdiction). This
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finding is a legal determination that we review de novo. See In re Canion, 196
F.3d 579, 584 (5th Cir. 1999).
The Passmores did not explain in either their complaint or their briefs
on appeal how the outcome of their suit may affect the resolution of Duntsch’s
bankruptcy proceeding. However, if the Passmores ultimately prevailed in
their suit, on a theory of either direct negligence or vicarious liability, the
defendants may have contribution or indemnity claims against Duntsch under
Texas law. See In re Martin, 147 S.W.3d 453, 459 (Tex. App. 2004) (liable
defendant may bring post-judgment contribution claim against joint tortfeasor
that was not party to the primary lawsuit); St. Anthony’s Hosp. v. Whitfield,
946 S.W.2d 174, 177-78 (Tex. App. 1997) (vicariously liable principal may bring
indemnity action against tortfeasor agent). Thus, the outcome of the
Passmores’ lawsuit could conceivably have an effect on Duntsch’s estate, and
the action is therefore sufficiently “related to” bankruptcy to provide both the
district court and this court with subject matter jurisdiction. See 28 U.S.C.
§ 1334(b); Bass, 171 F.3d at 1022.
III
We turn now to the primary issue on appeal: whether section 74.351
applies in federal court. We review a district court’s decision on the application
of state law in federal court de novo. Hall v. GE Plastic Pac. PTE Ltd., 327
F.3d 391, 395 (5th Cir. 2003). A federal court entertaining state law claims
cannot apply a state law or rule if (1) the state law or rule “direct[ly] colli[des]”
with a Federal Rule of Civil Procedure and (2) the Federal Rule “represents a
valid exercise of Congress’ rulemaking authority.” Burlington N. R.R. Co. v.
Woods, 480 U.S. 1, 4-5 (1987).
A
A state law directly collides with a Federal Rule if it provides a different
answer to the question in dispute. See Shady Grove Orthopedic Assocs., P.A.
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v. Allstate Ins. Co., 559 U.S. 393, 398 (2010) (majority opinion) (citing
Burlington, 480 U.S. at 4-5). Here, the question in dispute is whether the
Passmores’ failure to serve an expert report within 120 days of the defendants’
answers mandates the dismissal of their suit. Federal Rules of Civil Procedure
26 and 37 provide an answer to this question.
Rule 26(a) governs pretrial disclosures and discovery, including the
disclosure of expert reports, and it provides that parties must generally
disclose required expert reports “at the times and in the sequence that the
court orders.” FED. R. CIV. P. 26(a)(2)(D). Clearly, Rule 26 does not require
plaintiffs to serve expert reports on defendants within 120 days of the
defendants’ answers as section 74.351 would require.
Rule 37(c) provides the consequences for a party’s failure to comply with
Rule 26(a) requirements. In addition to other available sanctions, Rule 37(c)
permits federal courts to dismiss a non-complying plaintiff’s action. FED. R.
CIV. P. 37(b)(2)(A)(v), (c)(1). Thus, Rule 37 grants federal courts broad
discretion in deciding whether to dismiss the action of a plaintiff who fails to
comply with disclosure and discovery requirements. See Moore v. CITGO Ref.
& Chems. Co., L.P., 735 F.3d 309, 315 (5th Cir. 2013). By contrast, section
74.351(b) mandates the dismissal of a non-complying plaintiff upon a
defendant’s motion; it therefore conflicts with Rule 37’s discretionary sanctions
scheme. See Burlington, 480 U.S. at 7-8 (where a federal law’s “discretionary
mode of operation” conflicts with a nondiscretionary provision of state law,
federal law applies).
Thus, under Rules 26 and 37, the Passmores need not have served an
expert report within 120 days of the defendants’ answers and, in any case, their
failure to do so would not have resulted in mandatory dismissal of their suit.
The combined operation of Rules 26 and 37 therefore answers the disputed
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question differently than section 74.351 does. Section 74.351 therefore directly
collides with these Federal Rules.
In challenging this conclusion, the defendants argue that section 74.351
differs from Rules 26 and 37 in its purpose and scope. As to the purpose of the
Texas statute, the defendants assert that it is meant to ensure that only
meritorious lawsuits proceed, unlike the Federal Rules, which serve to regulate
discovery. As to section 74.351’s scope, the defendants point out that Rules 26
and 37 govern all cases generally and that Rule 26 requires disclosure of expert
reports containing a “complete statement of all opinions to be expressed,” FED.
R. CIV. P. 26(a)(2)(B)(i), whereas the Texas statute governs only health care
liability cases and requires only an expert report discussing a single theory of
liability, Potts, 392 S.W.3d at 630.
To preclude the application of a state law, however, the relevant Federal
Rule need not be identical in purpose or scope. Rather, the inquiry is whether
the scope of the Federal Rule is “sufficiently broad . . . to control the issue before
the court,” Burlington, 480 U.S. at 4-5 (citation and internal quotation marks
omitted), such that it “answer[s] the same question” as the state law, Shady
Grove, 559 U.S. at 399. As explained above, the Texas statute answers the
same question as Rules 26 and 37: whether a plaintiff’s failure to serve an
expert report within 120 days of the defendant’s answer mandates the
dismissal of the action. Section 74.351 therefore cannot be applied in federal
court. Cf. id. at 400-401 (rejecting the argument that a New York law
concerned a subject separate from the subject of Rule 23, because they both
answered the disputed question of whether a given class action may proceed).
Moreover, section 74.351 undeniably regulates discovery, contrary to the
defendants’ attempt to portray the Texas statute as completely divorced from
such issues. As noted above, one of the functions of a section 74.351 expert
report is to “inform the defendant of the specific conduct the plaintiff has called
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into question.” Potts, 392 S.W.3d at 630 (citation and internal quotation marks
omitted). In that respect, the Texas statute serves a similar function to that of
Rule 26. See Sheek v. Asia Badger, Inc., 235 F.3d 687, 693-94 (1st Cir. 2000)
(noting that Rule 26 expert testimony disclosure requirements promote “the
broader purpose of discovery, which is the narrowing of issues and the
elimination of surprise”) (citation and internal quotation marks omitted)).
Importantly, section 74.351 provides for a mandatory stay of most discovery
until the plaintiff has filed the requisite expert report. § 74.351(s), (u). As one
district court noted, “[t]his aspect of the statute is in direct and unambiguous
conflict with the [F]ederal [R]ules, which plainly tie the opening of discovery
to the timing of the Rule 26(f) conference.” Garza v. Scott & White Mem’l Hosp.,
234 F.R.D. 617, 623 (W.D. Tex. 2005); accord FED. R. CIV. P. 26(d)(1) (“A party
may not seek discovery from any source before the parties have conferred as
required by Rule 26(f).”). And, although section 74.351 generally prohibits the
parties from using expert reports produced pursuant to this statute at trial, see
§ 74.351(k), the parties are free to use these reports at trial once the plaintiff
uses them in any substantive way, see § 74.351(t); Spectrum Healthcare Res.,
Inc. v. McDaniel, 306 S.W.3d 249, 254 (Tex. 2010).
If applied in federal court, section 74.351 would therefore significantly
interfere with federal control of discovery, an area governed exclusively by
federal law. See Univ. of Tex. at Austin v. Vratil, 96 F.3d 1337, 1340 n.3 (10th
Cir. 1996) (“[D]iscovery is a procedural matter, which is governed [in federal
court] by the Federal Rules of Civil Procedure.”) (citation and internal
quotation marks omitted); Dixon v. 80 Pine St. Corp., 516 F.2d 1278, 1280 (2d
Cir. 1975) (discovery procedure is governed by federal law); see also 8 CHARLES
ALAN WRIGHT ET AL., FEDERAL PRACTICE AND PROCEDURE § 2005 (4th ed.)
(except for matters of privilege and Rule 69 discovery in aid of execution, it is
“wholly settled that discovery in a federal court is governed only by [the
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Federal Rules of Civil Procedure] and that state discovery practices are
irrelevant”).
In a final attempt to defend section 74.351’s application in federal court,
the defendants point to “certificate-of-merit” and “affidavit-of-merit” cases.
These cases involved state laws requiring that a plaintiff’s complaint be
accompanied by an affidavit or certificate in which an attorney or an expert
witness states that the claim meets certain threshold requirements relating to
the defendant’s alleged wrongdoing and the strength of the allegations. In the
cases cited by the defendants, courts have held that state law certificate- and
affidavit-of-merit requirements applied in federal courts. 5
However, these cases are plainly distinguishable from the instant case.
Section 74.351’s expert report rule is a special post-filing requirement. Yet,
the cases cited by the defendants all deal with pre-suit requirements. Unlike
section 74.351, the state laws involved in those cases did not affect discovery
and therefore did not implicate Rules 26 and 37. Section 74.351’s regulation
of discovery and discovery-related sanctions sets it apart from the pre-suit
requirements in the cases cited by the defendants and brings it into direct
collision with Rules 26 and 37. The Texas statute therefore cannot apply in
federal court unless Rules 26 and 37 exceed Congress’ rulemaking authority.
We turn briefly to that question.
B
A Federal Rule is invalid if it exceeds either constitutional constraints or
the constraints of the Rules Enabling Act, 28 U.S.C. § 2072. See Burlington,
480 U.S. at 5. A Rule is constitutionally valid if it is regulates matters that
5 See, e.g., Hahn v. Walsh, 762 F.3d 617, 629 (7th Cir. 2014) (Illinois affidavit-of-merit
requirement does not conflict with Federal Rules 8 and 11); Liggon-Redding v. Estate of
Sugarman, 659 F.3d 258, 265 (3d Cir. 2011) (Pennsylvania affidavit-of-merit statute applied
in federal courts).
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“are rationally capable of classification” as procedural. Hanna v. Plumer, 380
U.S. 460, 472 (1965). And, a Rule is valid under the Rules Enabling Act if it
“really regulates procedure,—the judicial process for enforcing rights and
duties recognized by substantive law and for justly administering remedy and
redress for disregard or infraction of them.” Sibbach v. Wilson & Co., 312 U.S.
1, 14 (1941).
Rules 26 and 37 regulate discovery, a matter that is certainly capable of
classification as procedural. These Rules therefore satisfy the constitutional
standard. As to whether these Rules “really regulate[ ] procedure,” id. at 14,
in Shady Grove, the Supreme Court indicated that rules governing pretrial
discovery are procedural, see 559 U.S. at 404 (majority opinion) (rules
governing pretrial discovery are rules “addressed to procedure”); accord
Houben v. Telular Corp., 309 F.3d 1028, 1033 (7th Cir. 2002) (Rules 26-37 are
“obvious rules of procedure”). It therefore follows that Rules 26 and 37 are
valid under the Rules Enabling Act. Cf. Abbas v. Foreign Policy Grp., LLC,
783 F.3d 1328, 1337 (D.C. Cir. 2015) (relying on Shady Grove to hold that Rules
12 and 56 are valid under the Rules Enabling Act).
In sum, section 74.351 answers the same question as Rules 26 and 37,
and these Rules represent a valid exercise of Congress’ rulemaking authority.
Accordingly, a federal court entertaining state law claims may not apply
section 74.351.
IV
For these reasons, we REVERSE the district court’s judgment
dismissing the Passmores’ action and REMAND for further proceedings.
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