in Re: Home State County Mutual Insurance Company

Opinion

                                                NO. 12-07-00033-CV

IN THE COURT OF APPEALS

TWELFTH COURT OF APPEALS DISTRICT

TYLER, TEXAS

§         

IN RE: HOME STATE COUNTY

MUTUAL INSURANCE COMPANY,        §                      ORIGINAL PROCEEDING

RELATOR

MEMORANDUM OPINION

            Home State County Mutual Insurance Company (“Home State”) filed a petition for writ of mandamus challenging the trial court’s denial of its motion to compel real party in interest, George Horn, Jr., to produce medical records related to Medicare/Medicaid¹ payments, if any, he received.  We conditionally grant the petition.²

Background

            Horn was severely injured in a single vehicle automobile accident.  Horn was the passenger.  The driver was killed.  Prior to filing suit with regard to the automobile accident, Horn’s attorney sent a letter dated June 10, 1999 to Home State, the driver’s insurance provider, in which he offered to settle Horn’s claim for policy limits.  He also promised to fully release the insured from all liability and satisfy the hospital lien(s), provided the settlement check was received in his office on or before 5:00 p.m. on June 25, 1999.  The letter further stated that Horn’s hospital bills as of the date of the letter totaled $213,971.55.

            Home State sent a settlement check to Horn’s attorney, which he refused to accept claiming that it was not received by the deadline set forth in the June 10 letter.  Horn subsequently caused an administrator to be appointed for the driver’s estate, sued the administrator, and ultimately recovered a judgment for $10,231,844.06.

            Two years later, Horn, as assignee of the administrator of the driver’s estate, sued Home State for unfair settlement practices alleging that it negligently failed to settle a Stowers³ claim.  The administrator later joined in the suit.  In the course of litigation, Home State sought to conduct discovery concerning, among other things, whether any medical services provided to Horn on or before the June 25, 1999 payment deadline were covered by Medicare.

            On February 8, 2006, Home State’s attorney sent a letter to Horn’s attorney requesting that Horn execute a medical records authorization form so that it could determine whether Medicare had paid any of Horn’s medical bills prior to June 25, 1999.  On March 10, 2006, Horn filed the following objections to Home State’s letter request: (1) a letter from a party requesting the other party to sign an authorization is not a proper discovery request under the discovery rules; (2) even if Home State’s letter were construed as a production request, Texas Rule of Civil Procedure 196 does not authorize a party to request that another party sign such a medical records authorization form; (3) Texas Rule of Civil Procedure 194, which  provides that a party may sign a medical records authorization, is inapplicable to the instant case and does not authorize discovery of Medicare payments of medical records and bills; and (4) the request that Horn sign authorizations for Home State to unilaterally obtain Medicare payment records deprived Horn and the administrator of their right to cross examine the custodian of the records.  

            On April 5, 2006, Home State filed a motion to compel, in which it outlined its theory of relevance with regard to the medical records it sought.  The trial court denied Home State’s motion on April 19, 2006.  Thereafter, Home State filed its first petition for writ of mandamus, which this court denied.

            While the first petition for writ of mandamus was pending, Home State sent a request for production of documents to Horn.  By its request, Home State sought production of, among other things, Horn’s medical records to determine if Medicare had made any payments on his behalf before the June 25 deadline Horn imposed in his settlement offer.  In July 2006, Horn initially responded to the requests by stating, “See response to Defendant’s Deposition on Written Questions to the Custodian of Records of Memorial Medical Center of East Texas.” 

            Apparently dissatisfied with Horn’s response to its request, Home State filed a motion to compel arguing that the information sought was relevant because if Medicare covered any medical services provided to Horn, it would have a claim that amounted to a lien against Horn’s settlement proceeds.  Therefore, Home State contended, since Horn’s offer to settle did not offer to satisfy Medicare’s claim, it failed to offer a full release from all potential claims and, thus, did not impose a Stowers duty on Home State.⁴

            In December 2006, Horn amended his responses to include several objections.  Specifically, Horn objected that the requests were not timely and constituted a fishing expedition.  The trial court conducted a hearing on Home State’s motion to compel on December 8, 2006 and denied the motion on that same day.  Home State then filed the instant petition for writ of mandamus.⁵

Availability of Mandamus

            Mandamus will issue to correct a clear abuse of discretion where there is no adequate remedy by appeal.  In re Cerberus Capital Mgmt., L.P., 164 S.W.3d 379, 382 (Tex. 2005); Walker v. Packer, 827 S.W.2d 833, 839–40 (Tex. 1992).  The trial court abuses its discretion if it reaches a decision so arbitrary and unreasonable as to amount to a clear and prejudicial error of law or if it clearly fails to correctly analyze or apply the law.  Id.  Moreover, an appellate remedy may be adequate even though it involves more delay or cost than mandamus.  See Walker, 827 S.W.2d at 842.  An appeal from a trial court’s discovery order is not adequate if (1) the appellate court would not be able to cure the trial court’s error on appeal; (2) the party’s ability to present a viable claim or defense is vitiated or severely compromised; or (3) missing discovery cannot be made a part of the appellate record.  Id. at 843.

Abuse of Discretion

            We first consider whether the trial court abused its discretion in denying Home State’s motion to compel production of the requested documents.  The purpose of discovery is the administration of justice by allowing the parties to obtain the fullest knowledge of facts prior to trial.  West v. Solito, 563 S.W.2d 240, 243 (Tex. 1978); Hill and Griffith Co. v. Bryant, 139 S.W.3d 688, 695 (Tex. App.–Tyler 2004, pet. denied).  Discovery rules must be given a broad and liberal treatment.  Bryant, 139 S.W.3d at 695.  A party must be allowed to inquire into the facts underlying his opponent’s case.  Id.  Discovery is permitted of any unprivileged information relevant to the subject of the lawsuit, including inadmissible evidence, as long as the request is reasonably calculated to lead to the discovery of admissible evidence.  See Tex. R. Civ. P. 192.3(a); In re CSX Corp., 124 S.W.3d 149, 152 (Tex. 2003).  While the scope of discovery is quite broad, it is nevertheless confined by the subject matter of the case and the reasonable expectations of obtaining information that will aid resolution of the dispute.  Tex. R. Civ. P. 192.7 cmt. 1; see In re CSX Corp., 124 S.W.3d at 152.  Thus, discovery requests must be “reasonably tailored” to include only relevant matters.  In re CSX Corp., 124 S.W.3d at 152.
            A request for production is limited to items within the scope of discovery.  See Tex. R. Civ. P. 196.1(a).  The rules outline the scope of discovery with regard to documents and tangible things as follows:

A party may obtain discovery of the existence, description, nature, custody, condition, location, and contents of documents and tangible things (including papers, books, accounts, drawings, graphs, charts, photographs, electronic or videotape recordings, data, and data compilations) that constitute or contain matters relevant to the subject matter of the action.  A person is required to produce a document or tangible thing that is within the person’s possession, custody, or control.

Tex. R. Civ. P. 192.3(b). 

            Horn’s medical records that were previously produced show that Medicare paid portions of Horn’s medical expenses.  Horn has not produced all of his medical records, however, and those medical records that have been produced are unclear as to the timing of the Medicare payments.  As discussed above, the timing is important because, as Home State contends, if Medicare covered any medical services provided to Horn, Medicare would have a claim that amounts to a lien against the settlement proceeds.  It reasonably follows that Horn’s settlement letter would not have provided Home State a full release as required for a Stowers action.  Therefore, Horn’s medical records pertaining to payments made by Medicare on or before June 25, 1999 for the injuries caused by the automobile accident that is the subject of the underlying lawsuit are relevant to the subject matter of Horn’s Stowers action.  Additionally, all of those medical records are within his possession, custody, or control, as he either has actual possession of them or the records can be obtained after he provides a medical authorization.  Therefore, we hold that such records are discoverable.

            Furthermore, Horn’s objections to the production of the records were untimely.  See Tex. R. Civ. P. 193.2(e).  Nothing in the record indicates that the trial court by any means excused such late filed objections for good cause.  See id.  Moreover, Horn’s objections were unfounded.  Home State’s request for the medical records was made sufficiently far in advance of the discovery deadline.  See Tex. R. Civ. P. 190, cmt. 4; Pape v. Guadalupe-Blanco River Auth., 48 S.W.3d 908, 913 (Tex. App.–Austin 2001, pet. denied).  Further still, the requested information does not constitute a fishing expedition.  See, e.g., Bryant, 139 S.W.3d at 695 (“No longer can the time-honored cry of ‘fishing expedition’ serve to preclude a party from inquiring into the facts underlying his opponent’s case.”).  Home State sought relevant, nonprivileged information pursuant to Rule 196.  Horn should have responded fully.  We hold that the trial court abused its discretion in denying Home State’s motion to compel.

Adequacy of Remedy by Appeal

            We next consider whether Home State has an adequate remedy by appeal.  See Walker, 827 S.W.2d at 843.  If Home State is denied access to the medical records in question, it cannot pursue its defense that Horn’s settlement letter failed to provide a full release as required by Stowers.  See, e.g., Trinity Universal Ins. Co., 966 S.W.2d at 491.  As such, the trial court’s failure to compel the production of such records vitiates a viable defense available to Home State.  Moreover, such missing discovery cannot be made a part of the appellate record.  See Walker, 827 S.W.2d at 843.  Therefore, we hold that mandamus relief is appropriate because Home State has no adequate remedy by appeal.  Id.

Conclusion

            Having held that the trial court abused its discretion in denying Home State’s motion to compel and that Home State has no adequate remedy by appeal, we conditionally grant Home State’s petition for writ of mandamus.  We trust that the trial court will promptly vacate its order of December 8, 2006 denying Home State’s motion to compel and issue an order compelling Horn to provide the requested medical records to Home State.  The writ will issue only if the trial court fails to comply with this court’s opinion and order within ten days.  The trial court shall furnish this court, within the time for compliance with this court’s opinion and order, a certified copy of its order evidencing such compliance.  The stay imposed by order dated April 5, 2007, is lifted to the extent necessary to allow the trial court to compel the production of documents as set forth herein.  The stay shall remain in effect for all other purposes.  We overrule Horn’s motion to dismiss.

                                                                                  BRIAN HOYLE   

                                                                                        Justice

Opinion delivered June 6, 2007.

Panel consisted of Worthen, C.J., Griffith, J., and Hoyle, J.

(PUBLISH)

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¹ Medicare/Medicaid is referred to collectively as “Medicare.”

² The respondent is the Honorable Charles R. Mitchell, Judge of the 273rd Judicial District Court of Sabine County, Texas.

³ See G.A. Stowers Furniture Co. v. American Indem. Co., 15 S.W.2d 544, 547 (Tex. Comm’n App. 1929, holding approved).

⁴ See, e.g., Trinity Universal Ins. Co. v. Bleeker, 966 S.W.2d 489, 491 (Tex. 1998).

⁵ Horn filed a motion to dismiss Home State’s petition for writ of mandamus.