Thursday, April 12, 2018

Anticipated Increase in Federal Court Healthcare Liability Claims

By Stuart O'Neil

Expect more healthcare liability claims to be filed in United States District Courts throughout Texas.   In Passmore v. Baylor Health Care System, 823 F.3d 292 (2016), the Fifth Circuit Court  of Appeals held that Texas’ Chapter 74 threshold expert report requirement in medical malpractice cases does not apply in federal court.  Robert Leroy Passmore III underwent two back surgeries at Baylor Regional Medical Center of Plano.  After the operations, Passmore claimed to be completely disabled.  He filed suit in the Northern District of Texas, alleging medical negligence.  In this case, Passmore elected to file suit in federal court because the doctor, who performed the two surgeries, had filed for bankruptcy protection.

Had Passmore’s claim been filed in a state court, Chapter 74 of the Texas Civil Practice and Remedies Code requires a plaintiff, like Passmore, to serve all defendants with an expert report within 120 days of the defendant filing its original answer. Failure to comply with the applicable section results in dismissal of the plaintiff’s claim.  The requirement of a threshold expert report serves two purposes. First, it provides notice to the defendant of the specific medical negligence alleged to have occurred. Second, it provides information necessary for the court to conclude that the plaintiff’s claims have merit.

The Fifth Circuit’s decision in Passmore provides clarification on the role of expert reports for cases pending in federal district court.  As Passmore holds, the threshold expert report requirement of Chapter 74 is not a prerequisite to filing and maintaining a healthcare liability claim in federal district court. The court reviewed the statute at issue and dissected the federal rules to determine whether or not the statute collided with a valid federal rule of civil procedure.  A thorough examination resulted in the following finding. “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.’” Passmore at  295.

Federal Rule of Civil Procedure 26(a) governs pretrial disclosures and discovery, including expert designations and reports. The rule requires parties to disclose expert information, including expert reports “at the times and in the sequence that the court orders.” Reading the plain language of the rule, there is no requirement for the plaintiffs to serve an expert report within 120 days of the defendant’s original answer.

Federal Rule 37(c) provides broad discretion to federal courts that fail to comply with discovery, including expert disclosures. The rule permits a federal court to dismiss a noncomplying plaintiff, but it does not mandate dismissal. Because the mandatory dismissal provision of section 74 collides with Federal Rule 37,  the Court held that state law must yield to the federal rule.  

In summary, the Fifth Circuit Court of Appeals reversed the dismissal order, holding that the Texas expert disclosure statute does not apply to cases in federal court.  If applied in federal court, the court reasoned, the statute would “significantly interfere with federal control of discovery, an area governed exclusively by federal law.” Passmore at 297.

In summary, the Fifth Circuit Court of Appeals reversed the dismissal order, holding that for cases in federal court, the Texas expert disclosure statute does not apply.  The court reasoned:  if applied at the federal level, the statute would “significantly interfere with federal control of discovery, an area governed exclusively by federal law.”  Passmore at 297.

The court also found that the rules in question “regulate discovery, a matter that is certainly capable of classification as procedural,“ thus concluding that the federal rules in question “are valid under the Rules Enabling Act.”  Thus, a federal court presiding over healthcare liability claims governed by Texas substantive law may not apply the Texas statute mandating service of expert reports.
 

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