Laredo Medical Group Corp. v. Mireles

155 S.W.3d 417, 2004 WL 2346252
CourtCourt of Appeals of Texas
DecidedNovember 30, 2004
Docket04-03-00729-CV
StatusPublished
Cited by17 cases

This text of 155 S.W.3d 417 (Laredo Medical Group Corp. v. Mireles) 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
Laredo Medical Group Corp. v. Mireles, 155 S.W.3d 417, 2004 WL 2346252 (Tex. Ct. App. 2004).

Opinion

OPINION

Opinion by

KAREN ANGELINI, Justice.

Pursuant to Sabine Pilot Service, Inc. v. Hauch, 687 S.W.2d 733 (Tex.1985), Josefina Míreles sued Laredo Medical Group Corporation and Mercy Health System of Texas, Inc. for allegedly firing her because she refused to perform an illegal act. The jury agreed, awarding Mireles more than $1.5 million. Appellants Laredo Medical Group and Mercy Health System bring nine issues on appeal. We reverse and remand pursuant to Crown Life Insurance Co. v. Casteel, 22 S.W.3d 378, 390 (Tex.2000).

Background

In 1995, a group of doctors practicing at Mercy Hospital in Laredo, Texas, discussed forming a single medical group which would attract new doctors to Lare *420 do. Instead of starting a practice in Laredo, a new doctor could join this existing medical group and receive a guaranteed salary for three years. After three years, the physician would rely on his own collections for income, minus a percentage to be retained by the medical group to cover overhead expenses. The doctors presented their idea to Mercy Hospital, a tax-exempt, not-for-profit hospital that is part of the Sisters of Mercy Health System, a national Catholic healthcare system. Agreeing that the idea was a good one, in October 1995, the Sisters of Mercy Health System formed Mercy Health System of Texas, Inc. (“Mercy”) to serve as the parent holding company of Mercy Hospital and Laredo Medical Group Corporation (“LMG”), a newly formed not-for-profit health corporation. Mercy was the sole corporate member of LMG, and its Chief Executive Officer served on LMG’s board of directors as a nonvoting “corporate member.” All of the voting members were doctors.

In November 1995, the LMG board voted to hire Josefina B. Mireles, a certified public accountant, as the Director of Finance for their medical group. Billings and collections were the responsibility of Mireles and her staff. In its first year, LMG’s billings and collections were below national benchmarks. The board concluded that Mireles and her staff could not keep up with LMG’s growth. The board decided to hire an outside firm, one with experience in establishing centralized billing infrastructures for medical groups, to help resolve the problem. In January 1997, Professional Healthcare Consultants (“PHC”) and its president, Gina Volmert, began working with LMG on a consulting basis. PHC and Volmert helped LMG establish a central billing office and develop procedures for improving collections. As a result, LMG’s collections improved.

Pleased with the results, LMG’s board asked Volmert to assume the role of LMG’s acting Chief Operating Officer (“COO”). LMG and PHC formalized their relationship with a five-year contract, which was approved by the board. Vol-mert remained president of PHC but also continued in her role as LMG’s acting COO. Mireles was instructed that she would report to Volmert and that Volmert was her superior. Mireles remained responsible for LMG’s payroll and accounts payable, but all responsibility for billings and collections was transferred to Volmert and PHC.

Mireles became concerned about Vol-mert’s billing department’s practices and reported these concerns to various superiors at LMG. In response, Mireles was told that these practices were not her concern; rather, they were the billing department’s area. In December 1999, Mireles was fired. LMG and Mercy claim that Mireles was fired because of cost-cutting and downsizing concerns. Mireles believes that she was fired because she refused to perform an illegal act.

Sabine Pilot Claim

In Sabine Pilot Service, Inc. v. Hauck, 687 S.W.2d 733, 735 (Tex.1985), the supreme court held that public policy requires a very narrow exception to the employment-at-will doctrine. “That narrow exception covers only the discharge of an employee for the sole reason that the employee refused to perform an illegal act.” Id. The court further held that “in the trial of such a case it is the plaintiffs burden to prove by a preponderance of the evidence that his discharge was for no reason other than his refusal to perform an illegal act.” Id.

According to LMG and Mercy, Mireles failed to prove a Sabine Pilot claim. Instead, LMG and Mercy argue that her *421 allegations, if taken as true, only state a whistleblower claim. And, there is no whistleblower cause of action against a private employer. See City of Midland v. O’Bryant, 18 S.W.3d 209, 215-16 (Tex.2000) (“We declined to recognize a common-law whistleblower cause of action in Winters v. Houston Chronicle Publishing Co., 795 S.W.2d 723, 724-25 (Tex.1990), and reaffirmed our decision not to do so in Austin v. HealthTrust, Inc., 967 S.W.2d 400 (Tex.1998).”).

A. Various Accounting and Billing Allegations

For there to be legally sufficient evidence of Mireles’s Sabine Pilot claim, there must be evidence that (1) Míreles was ordered to perform an illegal act and (2) that she refused to do so. See Bradford v. Vento, 48 S.W.3d 749, 754 (Tex.2001) (in conducting legal sufficiency review, we consider only that evidence favorable to jury’s decision and disregard all evidence and inferences to contrary). Mí-reles alleges in her brief various illegal acts by LMG and Mercy: violation of federal anti-kickback laws, violation of excess compensation laws, violation of laws prohibiting health care fraud, and unapplied credits which in turn, violate federal laws prohibiting excess compensation to physicians. The question, however, is not whether LMG and Mercy were performing illegal acts; the question instead is whether LMG and Mercy ordered Míreles to perform an illegal act and whether she refused to do so. With respect to the above allegations, we cannot find any evidence that Míreles was ordered to perform an illegal act or that she refused to do so.

Míreles argues that as a CPA and Director of Finance, she had an undisputed duty to prepare accurate reports and to not conceal illegal activity. According to Míreles, she “was told to prepare financial reports which were based on information which was not truthful.” Míreles was concerned about various billing practices; these billing practices, however, were being conducted by LMG’s billing department, headed by Volmert. Mireles’s department, the accounting department, was not in charge of the billing. Míreles only used information supplied by Volmert’s billing department to determine whether a particular doctor owed money to LMG (i.e. the doctor had drawn more money than billed and taken in) or whether the doctor was to receive money (i.e.

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Bluebook (online)
155 S.W.3d 417, 2004 WL 2346252, Counsel Stack Legal Research, https://law.counselstack.com/opinion/laredo-medical-group-corp-v-mireles-texapp-2004.