Houston Court of Appeals Holds That a Doctor’s Employment-Related Claim Is Not a Health Care Liability Claim

Chapter 74 of the Texas Civil Practice and Remedies Code requires the dismissal of a health care liability claim unless the plaintiff files an expert report within 120 days. This is generally applicable in malpractice cases, but the courts have expanded the scope of the statute to cover other sorts of claims. In Methodist Hospital v. Halat, No. 01-13-00121-CV (Tex. App. -- Houston [1st Dist.] 2013), a hospital attempted to apply the statute in the context of an employment contract dispute.

Dr. Halat had a contract with Methodist Hospital that provided for termination without cause on 120 days notice. Dr. Halat had a number of issues with the hospital, and he submitted a resignation letter giving the 120 days notice. On the next day, the hospital purported to terminate him for cause. Dr. Halat asserted a number of claims:

Dr. Halat asserted claims of breach of contract, quantum meruit, unjust enrichment, fraud in the inducement, and negligent misrepresentation. For all of his claims, Dr. Halat alleges that his employment agreement with Methodist Hospital gave him five weeks of paid time off per year and that, during the approximately five years he worked for Methodist Hospital, he was never permitted to use any of his paid time off. In addition, for his claims of breach of contract, quantum meruit, and unjust enrichment, Dr. Halat alleges that he resigned pursuant to the without-cause termination provision of his employment agreement, that he attempted to apply his paid time off to the 120-day notice period, that Methodist Hospital terminated him effective immediately as a result, and that Methodist Hospital has refused to reimburse him for any of his five years of accrued paid time off. Finally, for his fraud in the inducement and negligent misrepresentation claims, Dr. Halat also alleges that Methodist Hospital knew he would not be able to use his paid time off during his employment but represented to him that he would.

The hospital moved to dismiss the case because Dr. Halat did not file an expert report within 120 days. The trial court denied the motion, and the hospital took an interlocutory appeal.

The First Court of Appeals began by considering the definition of a health care liability claim under section 74.001(a)(13) of the Texas Civil Practice and Remedies Code. The court noted that the definition had three elements:

(1) the defendant is a health care provider or physician; (2) the claimant's cause of action is for treatment, lack of treatment, or other claimed departure from accepted standards of medical care, health care, or safety or professional or administrative services directly related to health care; and (3) the defendant's alleged departure from accepted standards proximately caused the claimant's injury or death.

While the first element was present, the court found that the second element was not. The hospital argued that the second element was met because the some of the complaints made by Dr. Halat involved patient safety. The hospital claimed that the complaints were fabricated as a means of getting out of the contract. The court rejected this argument:

For Dr. Halat's breach of contract claim, regardless of how strongly the parties dispute whether Dr. Halat fabricated his complaints about patient health and safety, it has no bearing on the claim. Dr. Halat explains that he terminated his employment agreement under the agreement's without-cause termination provision. He further explains that an earlier for-cause termination provision had been removed before the time of Dr. Halat's resignation. If, under the terms of the without-cause termination provision, Dr. Halat properly and effectively provided notice of his resignation, his reasons for resigning are irrelevant. If, in contrast, Dr. Halat did not properly and effectively provide notice of his resignation, then he breached the employment agreement and it will need to be determined what effect this breach has on any obligation Methodist Hospital may have had to pay Dr. Halat for previously-accrued paid time off. Either way, Dr. Halat's reasons for terminating or breaching the agreement are not relevant to his contractual claim.

The court reached the same conclusion with respect to the other claims. Accordingly, the court affirmed the denial of the motion to dismiss.

David C. Holmes is a Houston employment lawyer with The Law Offices of David C. Holmes

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