Group Medical and Surgical Service, Inc. v. Leong

• Decision Date: 02 March 1988
• Docket Number: No. 08-86-00241-CV,08-86-00241-CV
• Citation: 750 S.W.2d 791
• Parties: GROUP MEDICAL AND SURGICAL SERVICE, INC. and Group Hospital Service, Inc., d/b/a Blue Cross/Blue Shield of Texas, Appellants, v. Daniel LEONG, D.O., Appellee.
• Court: Texas Court of Appeals

Page 791

750 S.W.2d 791

GROUP MEDICAL AND SURGICAL SERVICE, INC. and Group Hospital Service, Inc., d/b/a Blue Cross/Blue Shield of Texas, Appellants, v. Daniel LEONG, D.O., Appellee.

No. 08-86-00241-CV.

Court of Appeals of Texas El Paso.

March 2, 1988.

Rehearing Denied April 6, 1988.

Yvonne K. Puig, Grambling & Mounce, El Paso, for appellants.

Raymond C. Caballero, El Paso, for appellee.

Before OSBORN, C.J., and FULLER and WOODARD, JJ.

OPINION

OSBORN, Chief Justice.

Based upon a jury verdict, a judgment was entered for Dr. Daniel Leong against Blue Cross/Blue Shield of Texas, which contained findings of negligent conduct, tortious interference with a business and violations of the Texas Insurance Code. We affirm in part, and we reverse and remand for entry of judgment in accordance with this opinion.

Dr. Leong obtained a doctor of osteopathy degree in 1958 and came to El Paso, Texas, the following year. He was associated with another doctor until 1968 and since that time has practiced medicine by himself under the name of Leong & Associates. Beginning in the early 1970s, the Utilization Review Department of Medicaid reviewed services and bills of Dr. Leong and concluded that the charges he had made exceeded the norm established by his peer group, and in 1975 sought repayment of $13,414.31 under Title XVIII and $23,652.40 under Title XIX. The doctor denied that he had provided unnecessary services or made any excessive charges. Much correspondence was exchanged between the parties and their attorneys without any resolution of the problem. In 1977 and 1978, Blue Cross/Blue Shield of Texas as administrator of the Medicare-Medicaid programs initiated a procedure to collect the overpayments claimed to be owed by Dr. Leong. For a period during those two years, all checks for services rendered by Dr. Leong and billed to Blue Cross/Blue Shield were duly issued and mailed to "Leong, Daniel D.O., 2201 Main Street, Dallas, Texas 75222," which was the Dallas address of Blue Cross/Blue Shield. Copies of Explanation of Benefit Payments were sent to patients to reflect the payments made by Blue Cross/Blue Shield and those copies also reflected payments to the doctor at the Dallas address. In Dallas, the checks were sorted and private payment checks were forwarded to the doctor or his patients, and checks for Medicare-Medicaid services were retained and credited against the amount of overpayment claimed against the doctor. Throughout this period of time, Dr. Leong sought a change of the process and contended that sending information to patients with a Dallas address was interfering with his business and causing a loss of patients because of their belief that he had moved to Dallas.

In February 1979, Dr. Leong filed suit against Blue Cross/Blue Shield and sought a restraining order and injunction to enjoin the continued collection process. A restraining order was issued and the case set for hearing on the issue of a temporary injunction. In March 1979, the Regional Medical Director for the Department of Health, Education and Welfare wrote to Blue Cross/Blue Shield confirming a decision to refund to Dr. Leong the amounts held in suspense as well as the amount previously paid by him as a partial payment. In April 1979, an agreed order was entered in the pending suit reciting that a full refund had been made and the doctor removed from a suspended status. There was no release or order disposing of the claim for damages, and that part of the case was tried in 1986.

The jury found: (1) Blue Cross/Blue Shield (A) wrongfully interfered with the relationship the doctor had with his patients, (B) committed acts of negligence, and (C) committed ten acts or practices which were unfair, misleading or deceptive in the conduct of an insurance business; (2) failed to find the wrongful interference was malicious; (3) that Blue Cross/Blue Shield knowingly committed the acts or practices in the conduct of an insurance business; (4) that the interference and negligent conduct were each a proximate cause of the damages to the doctor; (5) that the acts found as to the insurance business were a producing cause of damage to the doctor; (6) past damages of $200,000.00; (7) that the manner in which Blue Cross/Blue Shield represented plaintiff's address was a heedless and reckless disregard of the rights of others affected by it; (8) exemplary damages of $400,000.00; (9) failed to find the doctor negligent in failing to take steps to alleviate the problem; (10) that Blue Cross/Blue Shield's negligence was ninety percent and Dr. Leong's ten percent; and (11) that suit was not brought in bad faith or for harassment. The trial court entered judgment for $845,564.68 plus interest, costs and attorney's fees for an appeal, such sum including $600,000.00 as treble the actual damages, $205,564.68 for prejudgment interest and $40,000.00 for attorney's fees in the trial court. The judgment was based upon the findings as to violations of the Deceptive Trade Practices Act which became actionable under Tex.Ins.Code Ann. art. 21.21, sec. 16(a) (Vernon Supp.1988). The issues as to wrongful interference with a business relationship and negligence became immaterial, but we have addressed some of those issues which could become material if we are in error as to the application of the provisions of the Texas Insurance Code and the Deceptive Trade Practices Act.

The Appellants initially contend Dr. Leong was not the proper party plaintiff and that judgment should have been entered for defendants. Blue Cross/Blue Shield filed a sworn denial that "[p]laintiff, DANIEL LEONG, D.O [sic], is not entitled to recover in the capacity in which he sues." It alleged the damages were sustained by "Leong & Associates." At the hearing on various motions and special exceptions, all counsel and the court assumed "Leong & Associates" to be a professional association. No evidence was developed as to the actual status of "Leong & Associates." Tex.Rev.Civ.Stat.Ann. art. 1528(e), sec. 3(a) (Vernon Supp.1988), specifically excludes doctors of medicine from the provisions of the Texas Professional Corporation Act. Dr. Leong testified that all receipts from his practice were turned over to the corporation and that he owned 100% of the corporation. The record contains tax returns for Leong & Associates filed on Internal Revenue Service Form 1120 for a corporation. The Texas Business Corporation Act, Tex.Rev.Civ.Stat.Ann. art. 2.01, sec. B(2) (Vernon Supp.1988), provides no corporation may be organized under this Act if its purpose is to engage in an activity which requires a license, and such a license cannot lawfully be granted to a corporation. We assume that "Leong & Associates" is an unincorporated association or joint stock company, since it could not be a professional association or a corporation for profit in this state.

The pleadings in this case all are in the name of the doctor individually. All of his business was conducted as a corporation, according to his testimony and tax returns. His only earnings were a salary from the corporation. Although the sworn denial under Tex.R.Civ.P. 93(2) and various motions for judgment and new trial raised issues as to his capacity, he did not sue in a capacity such as a stockholder, a trustee, guardian, executor or administrator or other recognized capacity other than individually for himself. His suit is to recover damages for himself. He does not seek to recover damages sustained by a corporation.

Clearly, individual stockholders have no cause of action to recover damages sustained by a corporation. Commonwealth of Massachusetts v. Davis, 140 Tex. 398, 168 S.W.2d 216 (1942). An individual stockholder has no cause of action even if he owns a majority of the stock. Cullum v. General Motors Acceptance Corporation, 115 S.W.2d 1196 (Tex.Civ.App.--Amarillo 1938, no writ). But, where an individual sues to recover for damages sustained by another entity, such as a corporation, the issue should be raised by a special exception or plea in abatement to question whether the plaintiff has standing or a justiciable interest in the controversy. Cozad v. Roman, 570 S.W.2d 558 (Tex.Civ.App.--Corpus Christi 1978, no writ); 2 R. McDonald, Texas Civil Practice in District and County Courts, sec. 7.12 (1982). Also see Davis v. Davis, 734 S.W.2d 707 (Tex.App --Houston [1st Dist.] 1987, writ ref'd n.r.e.), and Dickey v. Jansen, 731 S.W.2d 581 (Tex.App.--Houston [1st Dist.] 1987, writ ref'd n.r.e.). Had Dr. Leong sued as stockholder for Leong & Associates, a corporation, "capacity" would have been a proper issue; but having sued individually, the issue was not capacity but "standing" which has not been raised. Point of Error No. One is overruled.

The Appellants assert in their second point that the trial court erred in its submission of Special Issue No. Five on causation as a producing cause of damages because there was no evidence, or insufficient evidence, to raise the issue. First, we note that a court may not refuse to submit an issue because of insufficient evidence. Brown v. Goldstein, 685 S.W.2d 640 (Tex.1985); Volkswagen of America, Inc. v. Licht, 544 S.W.2d 442 (Tex.Civ.App.--El Paso 1976, no writ). In reviewing a no-evidence point, we consider only the evidence and inferences favorable to the verdict and disregard all evidence and inferences to the contrary. Garza v. Alviar, 395 S.W.2d 821 (Tex.1965). The record contains correspondence of the doctor and his lawyers suggesting his patients were confused over the procedure which reflected a Dallas address on the Explanation of Benefits forms sent to patients. There is evidence of decrease in business, or at least a decrease in revenue and a reduction in the number of patients after 1976.

Dr. Leong presented the testimony of four patients, a medical secretary and medical assistant, all of whom testified concerning confusion among patients about whether or not the doctor had in fact moved...