Group Hospital Services, Inc. v. Daniel

704 S.W.2d 870
CourtCourt of Appeals of Texas
DecidedFebruary 6, 1986
Docket13-84-467-CV
StatusPublished
Cited by26 cases

This text of 704 S.W.2d 870 (Group Hospital Services, Inc. v. Daniel) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Group Hospital Services, Inc. v. Daniel, 704 S.W.2d 870 (Tex. Ct. App. 1986).

Opinion

OPINION

UTTER, Justice.

Appellee brought suit against appellants for breach of contract, fraud, negligence, gross negligence and violations of the Texas Insurance Code and the DTP A. 1 The jury awarded appellee the unpaid medical bills, $125,000.00 for mental anguish, $21,-000.00 for attorneys fees, and $10,000,-000.00 for punitive damages. We Reverse and Remand.

Appellee is a chronic allergy sufferer. From the record there appears to be very few substances to which appellee is not allergic. In May of 1982, after years of apparently unsuccessful allergy treatments by a local allergy specialist in Harlingen, Texas, appellee was referred to'the Environmental Care Unit (ECU) at the Carroll-ton Hospital in Dallas, Texas. The ECU is a somewhat controversial allergy treatment facility where allergies are identified by isolation of the patient from other factors in the patient’s environment. Ap-pellee was a beneficiary under a group health insurance policy issued by appellant *874 to appellee’s husband. Before undergoing treatment at the ECU, appellee called appellant’s customer service number. She spoke briefly with an unidentified customer representative who told her the treatment was covered. Appellee then called appellants’ customer service representative again, a few minutes later and added that the treatment would cost around $10,-000.00. She was again assured by the customer representative that the treatment was covered.

In July of 1982, appellee went to Dallas to begin treatment. At the time of her admission to the ECU her insurance coverage was again verified, this time by an employee of the Carrollton Hospital. Ap-pellee spent thirty-one days in the ECU. Upon completion of the treatment, Carroll-ton Hospital billed appellants $9,970.55. This claim was initially paid by appellants. The physicians who treated appellee in the ECU submitted a separate bill to the appellants in the amount of $5,019.55. Appellants rejected the doctors’ claim and then sought reimbursement from appellee on part of the hospital’s claims which appellants had already paid. The total amount of doctor and hospital bills rejected by appellants amounted to $12,118.68.

After making demand on appellee for reimbursement for amounts already paid, appellants turned the matter over to a collection agency. Ultimately, appellee was able to work out a pay off of the disputed claims. Subsequently, appellee, after notice to appellants brought this suit which resulted in a jury verdict in her favor.

Appellants’ first, third and eighth points of error challenge the legal and factual sufficiency of the evidence to support the jury’s finding of fraud. In response to special issues 6 through 11 the jury found that appellants recklessly represented to appellee that they would pay for the medical services in question. However, in response to special issue 12 the jury found that at the time such representation was made, the speaker did not know the representation was false.

We find sufficient evidence to support the jury’s findings. Appellants argue further [that even if there is sufficient evidence to support the jury’s findings of fraud] these findings will not support an award of punitive damages and mental anguish. It is appellants’ position that the requisite scienter necessary for punitive damages is established only where the speaker has knowledge of the falsity; i.e., intends to deceive or makes a malicious statement or makes the statement with conscious indifference to the rights of the plaintiff. See Ware v. Paxton, 359 S.W.2d 897, 899 (Tex.1962). Appellants argue that since the jury refused to find in special issue No. 12 that the representations made by the appellants to appellee were made with knowledge of their falsity a mere finding of recklessness will not support punitive damages and mental anguish.

In a fraud case, a finding that the deception was done with the intent to harm or with conscious indifference to the rights of others will support an award of exemplary damages. Trenholm v. Ratcliff, 646 S.W.2d 927, 933 (Tex.1983); Burk Royalty Co. v. Walls, 616 S.W.2d 911 (Tex.1981); Dennis v. Dial Finance & Thrift Co., 401 S.W.2d 803 (Tex.1966). Clearly under the facts of this case the act of appellants in verifying appellee’s coverage without making further inquiry into the nature of appel-lee’s treatment, especially where the policy contained numerous exclusions, was a reckless act. However, the question of whether this misrepresentation was made with the intent to injure appellee or with conscious indifference to appellee’s rights remains. When the jury refused to find that the statement was made with knowledge of its falsity it precluded a finding that the statement was made with the intent to injure appellee. No issue was submitted to the jury on whether the statements were made with conscious indifference to appel-lee’s rights. This leaves the question of whether the finding that the statement was made recklessly establishes the necessary intent. The question is really not one of semantics, but rather of subjective intent.

“Generally, in order to recover exemplary damages, the plaintiff must show that *875 the offending party acted intentionally, willfully or with a degree of gross negligence which approximated a fixed purpose to bring about the injury of which plaintiff complains.” International Armament Corp. v. King, 674 S.W.2d 413 (Tex.App.—Corpus Christi 1984), aff'd, 686 S.W.2d 595 (Tex.1985).

The mere fact that an act is intentional or is legally wrongful will not support an award of punitive damages. The act must be intentionally wrongful, or must be motivated by ill will and a desire to injure the other party. Fraudulent or grossly reckless conduct may sometimes justify a finding of such motivation. The Texas Supreme Court in Chastain v. Koonce, 700 S.W.2d 579 (1985) reiterated its definition of gross negligence as follows:

In Burk Royalty Co. v. Walls, 616 S.W.2d 911, 920 (Tex.1981), this court defined gross negligence as:
[T]hat entire want of care which would raise the belief that the act or omission complained of was the result of a conscious indifference to the right or welfare of the person or persons to be affected by it.

We also wrote:

What lifts oridinary negligence into gross negligence is the mental attitude of the defendant; that is what justifies the penal nature of the imposition of exemplary damages. The plaintiff must show that the defendant was consciously, i.e., knowingly, indifferent to his rights, welfare and safety. In other words, the plaintiff must show that the defendant knew about the peril, but his acts or omissions demonstrated that he didn’t care.

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Bluebook (online)
704 S.W.2d 870, Counsel Stack Legal Research, https://law.counselstack.com/opinion/group-hospital-services-inc-v-daniel-texapp-1986.