In Re: Home State County Mutual Insurance Company--Appeal from 273rd District Court of Sabine County

NO. 12-06-00144-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 filed a petition for writ of mandamus challenging the trial court s refusal to grant its motion to compel the real party in interest, George Horn, Jr., to sign an authorization form for the release of his Medicare/Medicaid1 records in the underlying Stowers2 action. We deny the petition.

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 and 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., 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 negligent failure to settle a Stowers 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 covered by Medicare were provided to Horn on or before the June 25, 1999 payment deadline specified in the June 10 letter.3

On February 8, 2006, Home State s attorney sent a letter to Horn s attorney containing, in pertinent part, the following request:

Attached are two original HIPAA Complaint authorizations for the signature of Mr. Horn. If you will please have Mr. Horn sign these two originals and return them to me or notify me when you have them in your office and I will come pick them up.

By Mr. Horn completing these HIPAA complaint authorizations we can obtain billing records from Memorial Health System of East Texas concerning the amounts charged to Mr. Horn immediately after his accident and we can also obtain the Medicare and Medicaid records which will show payment of many of these bills prior to June 25, 1999.

Would you also fill in the date of birth of Mr. Horn as well as his Social Security number on the HIPAA complaint authorization.

Your prompt completion of this authorization will greatly speed up being able to obtain appropriate summary judgment evidence and get the summary judgment heard as soon as possible.

....

If you will not agree to have the enclosed HIPAA complaint authorizations completed by your client[,] please advise me immediately in order that we can move forward with obtaining those records in another appropriate manner.

On March, 10, 2006, Horn filed objections to Home State s letter request that he sign Medicare payments authorizations, arguing that (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) construing Home State s letter as a production request, as requested, would avail Home State nothing in that the production request rule, Rule 196, does not authorize a party to request another party to sign an authorization, (3) the only type of authorization prescribed by the discovery rules is provided in the request for disclosure rule, which is not applicable to the facts of the instant case and which does not authorize discovery of Medicare payments of medical records and bills, and (4) signing authorizations for Home State to unilaterally obtain Medicare payment records would deprive 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 release of Medicare lien information. In its motion, Home State outlined its theory of relevance with regard to the medical records it sought and chronicled various methods by which it had attempted to discover such information prior to filing its motion to compel. The trial court denied Home State s motion on April 19, 2006. Thereafter, Home State filed this petition for writ of mandamus.

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 declining to compel Horn to execute the release. 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. 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 confined by the subject matter of the case and the reasonable expectation of obtaining information that will aid resolution of the dispute. Tex. R. Civ. P. 192.7 cmt. 1; In re CSX Corp., 124 S.W.3d at 152.

The discovery rules provide the only permissible forms of discovery. See Tex. R. Civ. P. 192.1. However, a court may order, or the parties may agree to, discovery methods other than those provided in the discovery rules. See Tex. R. Civ. P. 191.1 & cmt. 1. Here, the record reflects no agreement between the parties nor a court order that enlarges the discovery methods available. Thus, we must determine whether the rules entitle Home State to an executed release from Horn.

Texas Rule of Civil Procedure 194.2 provides that, in a suit alleging physical or mental injury and damages from the occurrence that is the subject of the case, a party may request an authorization permitting the disclosure of medical records and bills reasonably related to the injuries or damages asserted. See Tex. R. Civ. P. 194.2(j). In the case at hand, while Horn has sustained injuries that were the subject of a previous lawsuit, the injuries and damages he alleges in the instant suit relate to Home State s negligent failure to settle a Stowers claim on behalf of its insured.4 As such, we conclude that Home State is not entitled to seek a release pursuant to Rule 194.2(j).

Texas Rule of Civil Procedure 196.1(c) also makes reference to obtaining a release of medical records. See Tex. R. Civ. P. 196.1(c)(2)(A). However, this rule is an exception to a request to a party to produce medical records regarding a nonparty and, therefore, is inapplicable to the instant request inasmuch as Home State seeks a release of a party s medical records.

While Home State cites no particular rule of procedure supporting the method by which it sought to have Horn sign an authorization for medical records, the record reflects that Home State s attorney argued to the trial court that the letter amounted to a request for production. Yet, even if we assume that the letter was substantively a request for production or other form of discovery prescribed by the rules of civil procedure, such a request is nonetheless 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). Furthermore, to be subject to discovery, the thing or document must be in the custody, control, or possession of a party on whom the request is served. See In re Colonial Pipeline Co., 968 S.W.2d 938, 942 (Tex. 1998). The rules also set forth that possession, custody, or control of an item means that the person either has physical possession of the item or has a right to possession of the item that is equal or superior to the person who has physical possession of the item. Tex. R. Civ. P. 192.7. Rule 196 cannot be used to compel a party to create a document that does not exist. See In re Colonial Pipeline Co., 968 S.W.2d at 942. A document that does not exist is not within a party's possession, custody or control. Id. Since the letter sent by Home State s attorney to Horn s attorney sought the creation of a release of records rather than the discovery records themselves,5 it was outside the scope of discovery. Therefore, we hold that the trial court did not abuse its discretion in denying Home State s motion to compel.

Disposition

Having held that the trial court did not abuse its discretion in denying Home State s motion to compel, we need not address whether Home State has an adequate remedy by appeal. Home State s petition for writ of mandamus is denied.

SAM GRIFFITH

Justice

Opinion delivered September 29, 2006.

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

(PUBLISH)

1 Medicare/Medicaid is referred to collectively as Medicare.

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

3 The theory of relevance proposed by Home State for discovering such information is that if Medicare covered any medical services provided to Horn, it would have a claim that amounted to a lien against the settlement proceeds. Ergo, Home State contends, since Horn s offer to settle did not offer to satisfy Medicare s claim, then it failed to offer a full release from all potential claims and does not impose a Stowers duty on Home State. See, e.g., Trinity Universal Ins. Co. v. Bleeker, 966 S.W.2d 489, 491 (Tex. 1998).

4 As set forth previously, Horn claims to be an assignee of the administrator of the insured driver s estate. However, the administrator of the insured driver s estate is presently a plaintiff.

5 Presumably, the rationale behind limiting discovery pursuant to Texas Rule of Civil Procedure 196.1(c) to records regarding nonparties is that records for which a party would be authorized to execute a release would be within his possession, custody, or control. See Tex. R. Civ. P. 192.7(b). However, in the instant case, we need not resolve such a question. Furthermore, we do not reach the question of whether the information sought by Home State is reasonably calculated to lead to the discovery of admissible evidence.