In re Humana Health Plan of Texas, Inc.--Appeal from 57th Judicial District Court of Bexar County

MEMORANDUM OPINION

No. 04-05-00382-CV

IN RE HUMANA HEALTH PLAN OF TEXAS, INC.

Original Mandamus Proceeding //

Opinion by: Alma L. L pez, Chief Justice

Sitting: Alma L. L pez, Chief Justice

Karen Angelini, Justice

Phylis J. Speedlin, Justice

Delivered and Filed: July 13, 2005

PETITION FOR WRIT OF MANDAMUS CONDITIONALLY GRANTED

Humana Health Plan of Texas, Inc. seeks mandamus relief from the trial court s order granting a motion to compel. Because we conclude that the documents the trial court ordered to be produced are privileged on their face, we conditionally grant the relief requested.

Background

John Peter Smelik, Individually and as Executor of the Estate of Joan Diane Smelik, Janice Ann Smelik, and John Andrew Smelik, Sr. (the Smeliks ) sued Humana and others for damages arising from the death of Joan Diane Smelik. The Smeliks asserted, among other claims, that Humana failed to meet its responsibilities in regard to utilization management, concurrent review, medical case management, disease management, and quality assurance. During discovery, the Smeliks filed a motion to compel the production of various documents, including: (1) documents relating to compliance audits and credentialing; (2) written utilization programs and annual plans submitted to Humana by other defendants; (3) monthly utilization data and quarterly narrative summaries submitted to Humana by other defendants; (4) monthly and quarterly financial reports regarding status, amounts of and deficits in certain settlement funds; (5) all monthly reports and/or deficit/surplus letters of any kind or nature whatsoever provided by Humana to other defendants; (6) Quality Assurance and Utilization Guidelines referred to in the Physician Service Agreement between an entity and a physician; and (7) all documents relating to the criteria for admission of a patient into a Human End Stage Renal Disease Program.

On May 12, 2005, a hearing was held on the Smeliks motion to compel and on a motion for partial summary judgment filed by the defendants regarding the Smeliks gross negligence claim. With regard to the motion to compel, the Smeliks noted that Humana had produced a privilege log of materials, specifically noting, She mentioned, for example, we did quality assurance audits, but then she said we re not going to show them to you. ... What we have done is filed a motion to compel and asked the Court to review them in camera briefly. I don t know that there s too many documents in that area. We certainly agree that anything that relates to peer review, we don t want, but quality assurance audits is something they promised the Texas Department of Insurance they would do. Humana responded, Our privilege log has peer review committee minutes, which are privileged; quality assurance committee minutes, which are privileged, and medical records review and case management, which are HIPPA protected and quality assurance privileged. Humana produced the privilege log for the court. The Smeliks continued to argue that quality assurance documents were not privileged because: (1) they involve third parties; and (2) Humana represented to the Texas Department of Insurance and to Humana s members that it engages in quality assurance. The Smeliks noted that Humana had produced its quality assurance policies and procedures. Humana responded that the policies and procedures are not themselves privileged, rather the information gathered as part of a quality assurance program is privileged. The parties then agreed that Humana would produce the documents for which it claimed a privilege to the trial judge.

By cover letter dated May 18, 2005, Humana forwarded the documents to the trial judge. On May 23, 2005, the respondent, the Honorable Janet Littlejohn, signed an order granting the motion to compel and ordered Humana to produce the documents that were provided to the court for in camera inspection. In response, Humana filed an emergency motion to stay the trial court s order, which the trial court granted pending Defendants immediate mandamus to the 4th Court of Appeals.

On June 1, 2005, Humana filed a motion for rehearing of the trial court s order granting the motion to compel. Humana attached the affidavit of Dr. Weston Smith to its motion. Dr. Smith was the medical director of quality assurance and quality improvement for Humana while Joan Smelik was a member of Humana s plan. Although the file-stamp is unclear on the document contained in the appendix to Humana s petition, it appears that the Smeliks filed an emergency motion to lift the trial court s stay on the same day Humana filed its motion for rehearing.

On June 5, 2005, the trial court conducted a hearing on the motion for rehearing and the emergency motion to lift stay. The Smeliks presented the court with a motion to strike Dr. Smith s affidavit. At the hearing, the Smeliks argued that the stay should be lifted because Humana never pursued the mandamus and trial was to commence in one week. The Smeliks argued that Humana s failure to file the mandamus created a squeeze play, tipping the balance in favor of the Smeliks obtaining the documents to prepare for trial.

Humana noted that the Smeliks had Humana s responses to the discovery on April 2nd, but the motion to compel was not filed until May 12, 2005. Thus, Humana responded that the squeeze play was created by the Smeliks failure to file the motion to compel earlier. Humana further responded that the reason Dr. Smith s affidavit was not presented at the first hearing was due to the late notice it received. Humana also argued that the asserted privilege was apparent from the nature of the discovery request as well as the documents themselves. Humana noted that Request 4 and Request 18 flat out ask for quality assurance and quality improvement and credentialing documents. I mean, these are privileged under statute. It is, on its face, improper discovery. Humana further explained the delay in seeking mandamus relief was based on Humana s belief that, after researching the issues, the most efficient way to resolve the matter was through a motion to reconsider. The Smeliks responded that the documents may be confidential but they are not privileged, asserting, And the only privileged documents are the ones where somebody calls in with a complaint and there s an investigation. It s like work product in a lawsuit, Judge. But the things that the quality assurance department does, like medical records review, which they promise, even tell members they do these things, those things are not privileged. The Smeliks further argued that by requiring HMOs to conduct quality assurance, the documents relating to quality assurance become part of the HMO s regular course of business. Humana referred the trial court to the statutes containing the privilege. The trial court responded, I was not under the impression that this section covered HMOs, though. I thought it covered only physicians and review of physicians to determine the quality of their work and to evaluate any actions that should be taken. After further discussion, the trial court ruled that the stay would be lifted but the documents would be marked confidential and the patients names would be redacted.

Discussion

Mandamus is an appropriate remedy when a party is harmed by an order requiring the disclosure of privileged information. Dallas Morning News Co. v. Garcia, 822 S.W.2d 675, 679 (Tex. App. San Antonio 1991, orig. proceeding). A trial court order that compels disclosure of privileged matters constitutes an abuse of discretion which may be corrected by mandamus. Id. The test for abuse of discretion is whether the trial court acted without regard to any guiding rules or principles. Id.

Initially, the Smeliks assert that Humana waived the privilege by not satisfying its evidentiary burden at the initial hearing and that the affidavit attached to the motion for rehearing cannot cure the waiver. We agree that the affidavit could not cure Humana s waiver if it failed to satisfy its evidentiary burden at the initial hearing. At the initial hearing, however, the parties agreed that the documents would be produced to the trial court for an in camera review. The documents themselves may constitute sufficient evidence to make a prima facie showing of privilege. In re E.I. DuPont de Nemours & Co., 136 S.W.3d 218, 223 (Tex. 2004); In re Univ. of Tex. Health Cen. at Tyler, 33 S.W.3d 822, 825 (Tex. 2000). Accordingly, if the documents on their face reveal their privileged nature, the trial court would have abused its discretion in ordering that the documents be produced.

Three statutory provisions are relevant to our analysis of whether the trial court abused its discretion. Section 843.102(a) of the Texas Insurance Code requires HMOs to establish procedures to ensure that health care services are provided to enrollees under reasonable standards of quality of care that are consistent with prevailing professionally recognized standards of medical practice. Tex. Ins. Code Ann. 843.102(a) (Vernon Supp. 2004-2005). Section 843.102(b) provides, A health maintenance organization shall operate a continuing internal quality assurance program to monitor and evaluate its health care services, including primary and specialist physician services and ancillary and preventive health care services, in all institutional and noninstitutional settings. Tex. Ins. Code Ann. 843.102(b) (Vernon Supp. 2004-2005). Section 843.102(d) provides, A health maintenance organization shall record formal proceedings of quality assurance program activities and maintain documentation in a confidential manner. The health maintenance organization shall make the quality assurance program minutes available to the commissioner. Tex. Ins. Code Ann. 843.102(d) (Vernon Supp. 2004-2005). Finally, section 843.102(g) provides, The clinical records of enrollees shall be available to the commissioner for examination and review to determine compliance. The records are confidential and privileged and are not subject to the public information law, Chapter 552, Government Code, or to subpoena, except to the extent necessary to enable the commissioner to enforce this section. Tex. Ins. Code Ann. 843.102(g) (Vernon Supp. 2004-2005).

The Smeliks rely on these sections of the Insurance Code to assert that a quality assurance committee s minutes are confidential but not privileged. This reliance ignores: (1) that the purpose of the Insurance Code s provisions are to enable the Texas Department of Insurance to regulate HMOs and to ensure compliance with requirements through enforcement actions, injunctions, and criminal penalties; see Tex. Ins. Code Ann. 843.461-843.464 (Vernon Supp. 2004-2005) (listing enforcement authority); and (2) other statutory provisions provide that medical committee documents are privileged.

Section 161.032(a) of the Texas Health and Safety Code provides that records and proceedings of a medical committee are confidential and are not subject to court subpoena. Tex. Health & Safety Code Ann. 161.032(a) (Vernon Supp. 2004-2005). A medical committee is defined to include committees of HMOs. Tex. Health & Safety Code Ann. 161.031(a) (Vernon Supp. 2004-2005). Section 161.032(c) further provides that records, information, or reports of a medical committee are not subject to disclosure under Chapter 552, Government Code. Tex. Health & Safety Code Ann. 161.032(c) (Vernon Supp. 2004-2005). Section 161.032(f) contains an exception for documents made or maintained by an HMO in the regular course of business; however, the Texas Supreme Court has held that committee minutes are not necessarily records made or kept in the regular course of business for purposes of this section because construing this section in such a manner would be self-defeating. Memorial Hosp. - The Woodlands v. McCown, 927 S.W.2d 1, 10 (Tex. 1996); Tex. Health & Safety Code Ann. 161.032(f) (Vernon Supp. 2004-2005). The court reasoned, The Legislature could not have meant to forbid the discovery of committee proceedings and then immediately allow their discovery because they were ordinary business records. McCown, 927 S.W.2d at 10.

Section 160.007(a) of the Texas Occupations Code provides that each proceeding or record of a medical peer review committee is confidential, and any communication made to a medical peer review committee is privileged. Tex. Occ. Code Ann. 160.007(a) (Vernon 2004). Section 160.007(e) provides, Unless disclosure is required or authorized by law, a record or determination of or a communication to a medical peer review committee is not subject to subpoena or discovery and is not admissible as evidence in any civil judicial or administrative proceeding without waiver of the privilege of confidentiality executed in writing by the committee. Tex. Occ. Code Ann. 160.007(e) (Vernon 2004). The term medical peer review committee is defined to include a committee of a health care entity, which includes health maintenance organizations, that operates under written bylaws approved by the policy-making body or the governing board of the health care entity and is authorized to evaluate the quality of medical and health care services or the competence of physicians. Tex. Occ. Code Ann. 151.002(8) (Vernon 2004).

The Smeliks argue that absent Dr. Smith s affidavit Humana did not establish that the documents were prepared by or at the direction of a committee, the authority of the committee, the applicable bylaws governing the committee, etc. The Fort Worth court addressed a similar complaint in Northeast Community Hosp. v. Gregg, 815 S.W.2d 320, 326 (Tex. App. Fort Worth 1991, orig. proceeding). In that case, the plaintiffs attacked the sufficiency of the affidavits on the ground that the affidavits failed to aver that the documents withheld were: (1) prepared by or at the direction of a committee for committee purposes; (2) not gratuitously submitted to the committee; (3) generated for purposes of reviewing a specific incident or conducting a specific investigation; and (4) not routine records prepared by a hospital committee in the ordinary course of business. Id. The Fort Worth court rejected the plaintiffs argument, noting that these elements may be shown by the documents themselves. Id. In addition, several of the requirements referenced by the Smeliks may be necessary to establish the peer review privilege but not the medical committee privilege. In Martinez v. Abbott Laboratories & Abbott Laboratories, Inc., 146 S.W.3d 260, 265-68 (Tex. App. Fort Worth 2004, pet. denied), the court considered the sufficiency of an affidavit under both the peer review privilege and the medical committee privilege and concluded that the affidavit was sufficient to establish the medical committee privilege even though it failed to establish the peer review privilege.

In this case, the face of the documents reveal that they fall within the privileges set forth in the Health and Safety Code and Occupations Code. McCown, 927 S.W.2d at 7 (initial credentialing documents privileged); Texarkana Memorial Hosp., Inc. v. Jones, 551 S.W.2d 33, 35 (Tex. 1977) (minutes of standing medical committee engaged in deliberations privileged). We disagree with the Smeliks contention that Section 843.102 of the Insurance Code was intended to eliminate these privileges or re-define the quality assurance committee s minutes as business records. Instead, we believe section 843.102 was intended to provide the Department of Insurance with access to documents that otherwise would be privileged to enable the Department of Insurance to regulate HMOs. Because the trial court should have been able to determine the privileged nature of the documents from their face, the trial court abused its discretion in ordering their production.

Conclusion

The petition for writ of mandamus is conditionally granted. The writ will only issue if the relator certifies to this court that Judge Littlejohn has failed to withdraw the following orders within ten days from the date of our opinion and order: (1) Order Granting the Plaintiffs Motion to Compel the Production of Documents From Defendant Humana Health Plan of Texas, Inc. signed on May 23, 2005; (2) Order Granting the Plaintiffs Emergency Motion to Lift Stay of Order on Motion to Compel signed on June 6, 2005; and (3) Order on Humana Health Plan of Texas Motion for Rehearing on Plaintiffs Motion to Compel signed on June 6, 2005.

Alma L. L pez, Chief Justice