Dr. Emmanuel E. Ubinas-Brache, MD. v. Surgery Center of Texas, LP

• Court: Court of Appeals of Texas
• Decided: December 7, 2018
• Docket: 05-17-01334-CV
• Status: Published

Opinion

AFFIRM; Opinion Filed December 7, 2018.

In The Court of Appeals Fifth District of Texas at Dallas No. 05-17-01334-CV

DR. EMMANUEL E. UBINAS-BRACHE, MD., Appellant V. SURGERY CENTER OF TEXAS, LP, Appellee

On Appeal from the 193rd Judicial District Court Dallas County, Texas Trial Court Cause No. DC-17-14588

MEMORANDUM OPINION Before Justices Francis, Stoddart, and Schenck Opinion by Justice Schenck Dr. Emmanuel E. Ubinas-Brache appeals the trial court’s summary judgment on his breach

of contract claim against appellee Surgery Center of Texas, LP (“Surgery Center”). In his first

issue, Dr. Ubinas1 argues the trial court abused its discretion by implicitly denying his motion to

continue the summary judgment hearing. In his second issue, Dr. Ubinas urges Surgery Center

breached its contract with him by requiring him to perform under the contract in a manner he

alleges violates federal law. In his third issue, he asserts that a partner to a partnership agreement

that allows termination without cause cannot be terminated for an illegal reason. We affirm the

trial court’s judgment. Because all issues are settled in law, we issue this memorandum opinion.

TEX. R. APP. P. 47.4.

1 In his brief, appellant refers to himself as “Dr. Ubinas.” We will do the same. BACKGROUND

Emmanuel Ubinas is a medical doctor specializing in plastic, hand, and craniomaxillofacial

surgery. Surgery Center owns and operates an ambulatory surgery center (“ASC”). In October

2010, Dr. Ubinas contributed $400,000 to become a physician limited partner in Surgery Center

pursuant to the partnership agreement (“Agreement”), which, among other provisions, states that

a partner (1) must derive at least one-third of his medical practice income from the performance

of procedures in ASCs (one-third rule) and (2) may be terminated “for any reason, or no reason.”

From 2011 through 2014, Dr. Ubinas performed fifty-seven to sixty-five ASC procedures at

Surgery Center’s facility each year.2 In 2015, the number of ASC procedures Dr. Ubinas

performed dropped to thirty-seven, but he still fulfilled the Agreement’s one-third requirement.

That same year, two board members of Surgery Center’s general partner told Dr. Ubinas that he

needed to perform more procedures at their facility and one of them threatened his partnership

would be terminated if he did not do so. On September 2, 2015, Dr. Ubinas was notified that other

partners determined an Adverse Terminating Event under the Agreement had occurred, his

partnership was terminated, and the amount determined to be owed to Dr. Ubinas for his

partnership interest was $100.3

On December 7, 2016, Dr. Ubinas sued Surgery Center for breach of contract, urging

Surgery Center violated a federal anti-kickback statute by requiring him to originate procedures at

its facility in excess of the Agreement’s one-third rule. The next month, Surgery Center

counterclaimed for (1) breach of contract, (2) a declaratory judgment that Dr. Ubinas was adversely

2 Dr. Ubinas testified in an affidavit that “[i]n 2011, I performed 63 cases at SCOT [Surgery Center’s facility]; in 2012 I performed 57 cases at SCOT; in 2013, I performed 65 cases at SCOT; in 2014, I performed 63 cases at SCOT . . . .” 3 The Agreement provides for both a “Terminating Event” and an “Adverse Terminating Event.” In the event of the former, the partnership would have the right to purchase the terminated partner’s interest for an amount equal to the fair market value price of that interest. In the event of the latter, as here, the amount to be paid by the partnership would be limited to the terminated partner’s initial contribution less the aggregate amount of any previous distributions to that terminated partner, but no less than $100.

–2– terminated consistent with the Agreement and Surgery Center owed no further payment to him,

and (3) attorney’s fees.

On March 1, 2017, Surgery Center filed a motion for traditional partial summary judgment,

requesting dismissal of Dr. Ubinas’s claim for breach of contract and grant of declaratory

judgment. Dr. Ubinas filed a motion for continuance and a response to Surgery Center’s motion

for summary judgment, complaining of Surgery Center’s lack of responses to his requests for

production, as well as the short length of time since he filed his petition. The trial court did not

rule on the motion for continuance and, instead, on April 10, 2017, held a hearing on Surgery

Center’s partial motion for summary judgment.4 After the hearing and at the trial court’s request,

both Dr. Ubinas and Surgery Center provided the trial court with supplemental briefing on

illegality as a defense to a claim for breach of contract and as a breach of the Agreement. On April

20, 2017, the trial court granted Surgery Center partial summary judgment on Dr. Ubinas’s claim

for breach of contract, but ruled against Surgery Center on its motion for summary judgment on

its counterclaim for declaratory judgment. The trial court later severed Surgery Center’s remaining

counterclaims for breach of contract and attorney’s fees. Dr. Ubinas appealed.

DISCUSSION

In his first issue, Dr. Ubinas complains that the trial court abused its discretion by failing

to grant his motion for continuance when Surgery Center sought summary judgment less than three

months after Dr. Ubinas filed suit and before it produced any documents. In his motion for

continuance, Dr. Ubinas argued that in order to respond to Surgery Center’s motion, he needed

additional time to conduct discovery to establish that he was terminated for an illegal purpose and

that Surgery Center thus breached the Agreement. In his second issue, Dr. Ubinas urges Surgery

4 The appellate record contains no reporter’s record from this hearing. After this Court ordered the court reporter to file the record for this hearing, the court reporter responded with a letter that she had done a thorough search of her records and was certain that no record was made of that hearing.

–3– Center breached the Agreement by requiring him to derive more than one-third of his income from

performance of ASC procedures at Surgery Center’s facility in violation of federal law. In his

third issue, Dr. Ubinas asserts that a partner to a partnership agreement cannot be terminated for

an illegal reason. We begin by addressing Dr. Ubinas’s second and third issues.

Because summary judgment is a question of law, a trial court’s summary judgment decision

is reviewed de novo. Learners Online, Inc. v. Dallas Indep. Sch. Dist., 333 S.W.3d 636, 640 (Tex.

App.—Dallas 2009, no pet.). The standard of review for a traditional summary judgment motion

pursuant to Texas Rule of Civil Procedure 166a(c) is threefold: (1) the movant must show there is

no genuine issue of material fact and he is entitled to judgment as a matter of law; (2) in deciding

whether there is a disputed, material fact issue precluding summary judgment, the court must take

as true evidence favorable to the nonmovant; and (3) the court must indulge every reasonable

inference from the evidence in favor of the nonmovant and resolve any doubts in the nonmovant’s

favor. See id. (citing TEX. R. CIV. P. 166a(c)).

Dr. Ubinas maintains that Surgery Center’s requirement that he perform in excess of the

Agreement’s one-third rule violates the following federal anti-kickback statute and a related safe

harbor provision:

Whoever knowingly and willfully solicits or receives any remuneration (including any kickback, bribe, or rebate) directly or indirectly, overtly or covertly, in cash or in kind—

in return for referring an individual to a person for the furnishing or arranging for the furnishing of any item or service for which payment may be made in whole or in part under a Federal health care program, . . .

....

shall be guilty of a felony and upon conviction thereof, shall be fined not more than $100,000 or imprisoned for not more than 10 years, or both.

42 U.S.C. § 1320a-7b (b)(1) (anti-kickback statute).

The following payment practices shall not be treated as a criminal offense under section 1128B of the Act and shall not serve as the basis for an exclusion: –4– ....

Ambulatory surgical centers.

At least one-third of each physician investor’s medical practice income from all sources for the previous fiscal year or previous 12-month period must be derived from the physician’s performance of procedures . . . .

42 C.F.R. § 1001.952(r) (exceptions to anti-kickback statute). Dr. Ubinas points out that the one-

third rule of the Agreement mirrors the language of the exception to the anti-kickback statute and

argues that any requirement that he perform more than one-third of his procedures in ASCs, in

excess of the Agreement’s one-third requirement, would exceed the exception and thus violate the

anti-kickback statute.5

Dr. Ubinas asserts that, by requiring him (and terminating him for his failure) to perform

under the Agreement in a manner that violates the law, Surgery Center breached the Agreement.

In his brief, Dr. Ubinas emphasizes that he does not assert illegality as a defense or ground to

invalidate the Agreement, nor does he urge that the Agreement was illegal on its face or incapable

of being performed in a legal manner.

What Dr. Ubinas thus urges this Court to conclude, as a matter of law, is that a party

breaches a contract by requiring (and terminating for failure to provide) performance that violates

a law. We decline to do so. Although Dr. Ubinas specifically declines to assert illegality in

performance of a contract as a defense, that is exactly how Texas courts address illegality in

performance of a contract. See Leibovitz v. Sequoia Real Estate Holdings, L.P., 465 S.W.3d 331,

348 (Tex. App.—Dallas 2015, no pet.) (holding contract that could be performed in legal manner

will not be declared void unless record establishes its illegality).

5 We emphasize here that Dr. Ubinas is only pursuing a claim for breach of contract, not a claim under the anti-kickback statute, which does not provide any right for a private cause of action. See Rzayeva v. United States, 492 F.Supp.2d 60, 78 (D. Conn. 2007) (“No private cause of action exists under the federal health care fraud statute, 42 U.S.C. § 1320a-7b; only the federal government may bring lawsuits for the recovery of loss caused by alleged Medicare fraud . . .”).

–5– Even assuming without deciding that Surgery Center violated federal law by requiring Dr.

Ubinas to derive more than one-third of his income from performance of ambulatory surgery center

procedures at Surgery Center’s facility, we conclude such a requirement was not a breach of the

Agreement. Instead, Surgery Center’s summary judgment evidence establishes that it properly

acted under the Agreement in that it establishes that (1) the Agreement provides that an Adverse

Terminating Event occurs when a partner “has been deemed to be unsuitable to remain a Limited

Partner for any reason, or no reason” and (2) all of the limited partners other than Dr. Ubinas, as

well as the general partner to the Agreement, “unanimously determined that an Adverse

Terminating Event had occurred such that [Dr.] Ubinas was no longer suitable to be a Limited

Partner.” We overrule Dr. Ubinas’s second issue.

In his third issue, Dr. Ubinas further urges that, as a matter of first impression, this Court

should hold a partner cannot be terminated for an illegal reason. He relies on an opinion from the

Texas Supreme Court, holding that “public policy . . . requires a very narrow exception to the

employment-at-will doctrine . . . [that] covers only the discharge of an employee for the sole reason

that the employee refused to perform an illegal act.” Sabine Pilot Serv., Inc. v. Hauck, 687 S.W.2d

733, 735 (Tex. 1985). In Sabine Pilot, the employee was a deckhand employed at-will who was

fired for refusing to follow his employer’s instructions to pump the bilges of the boat on which he

worked despite (1) a placard posted on the boat stating it was illegal to pump the bilges into the

water and (2) confirmation from an officer of the United States Coast Guard that pumping bilges

into the water was illegal. Id. at 734. As pointed out by the Sabine Pilot court, “this court is free

to judicially amend a judicially created doctrine.” See id. Here, Dr. Ubinas seeks to judicially

amend a partnership agreement he negotiated and signed as one of five limited partners and

pursuant to which he received approximately $1,200,000 over five years.

–6– On the facts of this case, we decline to extend Sabine Pilot to a partner’s termination from

a partnership agreement that explicitly contemplates and allows termination without cause. See

Hancock v. Express One Int’l, Inc., 800 S.W.2d 634, 636 (Tex. App.—Dallas 1990, writ denied)

(“It is not for an intermediate appellate court to undertake to enlarge or extend the grounds for

wrongful discharge under the employment-at-will doctrine.”). We overrule Dr. Ubinas’s third

issue.

As for Dr. Ubinas’s first issue regarding whether the trial court erred by failing to grant his

request for continuance, his request was premised on his desire for an opportunity to conduct

discovery to establish that he was terminated for an illegal purpose and that Surgery Center thus

breached the Agreement. The trial court may order a continuance of a summary judgment hearing

if it appears from the affidavits of a party opposing the motion that he cannot for reasons stated,

present by affidavit facts essential to justify his opposition. TEX. R. CIV. P. 166a(g). When

reviewing a trial court’s order denying a motion for continuance, we consider whether the trial

court committed a clear abuse of discretion on a case-by-case basis. Joe v. Two Thirty Nine Joint

Venture, 145 S.W.3d 150, 161 (Tex. 2004). We consider the following nonexclusive factors when

deciding whether a trial court abused its discretion in denying a motion for continuance seeking

additional time to conduct discovery: the length of time the case has been on file, the materiality

and purpose of the discovery sought, and whether the party seeking the continuance has exercised

due diligence to obtain the discovery sought. Id. Because we have decided against Dr. Ubinas’s

theory of breach, we conclude the trial court did not abuse its discretion in failing to grant Dr.

Ubinas’s request for a continuance. See id. A continuance would not have produced evidence to

defeat Surgery Center’s motion.

We overrule Dr. Ubinas’s first issue.

–7– CONCLUSION

We affirm the trial court’s judgment.

/David J. Schenck/ DAVID J. SCHENCK JUSTICE

171334F.P05

–8– Court of Appeals Fifth District of Texas at Dallas JUDGMENT

DR. EMMANUEL E. UBINAS-BRACHE, On Appeal from the 193rd Judicial District MD., Appellant Court, Dallas County, Texas Trial Court Cause No. DC-17-14588. No. 05-17-01334-CV V. Opinion delivered by Justice Schenck, Justices Francis and Stoddart participating. SURGERY CENTER OF TEXAS, LP, Appellee

In accordance with this Court’s opinion of this date, the judgment of the trial court is AFFIRMED.

It is ORDERED that appellee SURGERY CENTER OF TEXAS, LP recover its costs of this appeal from appellant DR. EMMANUEL E. UBINAS-BRACHE, MD.

Judgment entered this 7th day of December, 2018.

–9–