State v. Emeritus Corp.
| Decision Date | 26 March 2015 |
| Docket Number | NUMBER 13–13–00529–CV |
| Citation | 466 S.W.3d 233 |
| Parties | The State of Texas, Appellant, v. Emeritus Corporation, Appellee. |
| Court | Texas Court of Appeals |
Douglas Geyser, Office of the Attorney General, Austin, TX, for Appellant.
Charles A. Deacon, Norton Rose Fulbright US LLP, San Antonio, TX, for The State.
Before Chief Justice Valdez and Justices Rodriguez and Longoria
Emeritus Corporation (“Emeritus”) operates an assisted living facility called Canterbury Court in Cameron County, Texas. In August 2012, a resident of Canterbury Court, suffering from dementia with a “history of exit[-]seeking behaviors,” was left unsupervised and left the facility through its activity-room courtyard. The resident was found dead shortly thereafter. After an investigation, the State of Texas, acting by and through the Office of the Attorney General (“OAG”), filed suit against Emeritus seeking statutory civil penalties, injunctive relief, and attorney's fees under the Texas Deceptive Trade Practices—Consumer Protection Act (“DTPA”) and the Assisted Living Facility Licensing Act (“ALFLA”). See Tex. Bus. & Com.Code Ann. § 17.47(a) (West, Westlaw through 2013 3d C.S.); Tex. Health & Safety Code Ann. § 247.045(d) (West, Westlaw through 2013 3d C.S.).
Emeritus moved to dismiss the case on grounds that it constituted a health care liability claim under the Texas Medical Liability Act (TMLA) and the State had failed to file an expert report. See Tex. Civ. Prac. & Rem.Code Ann. § 74.351(b) (West, Westlaw through 2013 3d C.S.). The trial court agreed and granted Emeritus's motion to dismiss, dismissed the State's claims with prejudice, and awarded attorney's fees and costs to Emeritus. The State appealed. We conclude that the State, acting in its sovereign capacity on behalf of the public interest, seeking the imposition of statutory civil penalties and injunctive relief, does not constitute a claimant seeking damages under the TMLA. Accordingly, we reverse and remand.
The State of Texas, acting by and through the OAG, “acting within the scope of his official duties under the Constitution and the laws of the State of Texas,” and “at the request of the Commission of the Texas Department of Aging and Disability Services” (“DADS”), filed a petition against Emeritus under the DTPA and ALFLA seeking civil penalties, attorney's fees, and injunctive relief on grounds that Emeritus violated the minimum standards applicable to assisted living facilities in Texas, thereby threatening the health and safety of its residents, and Emeritus misrepresented the services being offered at Canterbury Court. The State further asserted that:
The State has reason to believe that Defendant is engaging in, has engaged in, or is about to engage in, the unlawful acts or practices set forth below, that Defendant has, by means of these unlawful acts and practices, caused damage to or acquired money or property from persons, and that Defendant adversely affects the lawful conduct of trade and commerce, thereby directly or indirectly affecting the people of this State. Therefore, the Consumer Protection Division of the Office of the Attorney General of the State of Texas has determined that these proceedings are in the public interest.
The State's petition alleged that DADS had investigated an incident at Canterbury Court regarding “a resident who was found dead in a nearby field three days after he eloped from the facility.” According to the DADS report, on August 17, 2012, Emeritus had conducted a preadmission assessment of the resident stating that the resident had a “history of exit seeking behaviors.” On August 20, 2012, Emeritus admitted the resident to the Memory Care unit, a locked unit at Canterbury Court, with diagnoses of dementia
and hypertension. On August 21, 2012, an Emeritus staff member accompanied the resident to a doctor's appointment where the resident attempted to leave without the staff member, thereby causing Emeritus to place the resident on an “alert charting” status to document his behavior every shift, and Emeritus instructed the staff that a staff member should monitor the patient “at all times.” Nevertheless, on August 23, 2012, the resident was left unsupervised and eloped from the Memory Care unit through its activity room courtyard. The resident broke the boards from the fence enclosing the air conditioning unit, climbed on the air conditioning unit, and climbed a second fence to gain access to the public parking lot. Emeritus staff did not observe the resident's activities or departure. The DADS report also stated that on the day that the resident eloped, the alarm to the activity patio door was not activated, the bell to that door had been broken for at least one year, and the door was not functional insofar as it locked people outside, preventing them from entering the facility.
The State's petition further alleged that Emeritus's acts and omissions failed to comply with representations made on its website that its facilities provided trained staff and monitoring twenty-four hours each day and helped residents maintain their dignity while aging, and advertised “specialized units for residents with Alzheimer's or dementia.” The State also asserted that Emeritus failed to implement its own policies and procedures and misrepresented its services insofar as its policies and procedures protected residents from neglect.
The State sought a temporary and permanent injunction requiring Emeritus to: (1) keep its facilities' alarms, doorbells, and chimes activated; inspect or test the alarms, doorbells, and chimes at least once a month to assure adequate performance; replace malfunctioning alarms, doorbells, and chimes within twenty four hours; and keep records regarding such replacement; (2) require its employees to take a training course at least once a year regarding State laws, including but not limited to ALFLA, and policies and procedures relating to the duty to protect and safeguard residents' rights to be free from abuse, neglect, and exploitation, and require the employees to provide a signed acknowledgment that they had completed the training; (3) ensure that residents are able to enter and re-enter the facility without hindrance; (4) post signs informing employees that they are prohibited from violating residents' rights to be free from abuse, neglect, and exploitation, including but not limited to disabling alarms, door bells, and chimes; and (5) represent that the trial court, the OAG, or DADS has approved any good or service sold or offered for sale by Emeritus, or has approved any of its business practices.
The State sought “civil penalties” against Emeritus including “not less than $100.00 nor more than $10,000.00 for each day” an ALFLA violation occurred, an amount “not to exceed more than $20,000.00 per violation of the DTPA,” and an additional amount of not more than $250,000.00 if the false, misleading, or deceptive acts or practice alleged was calculated to acquire or deprive money or other property from a consumer who was 65 years or older when the acts or practice occurred. The State also sought attorney's fees, investigation costs, and prejudgment and post judgment interest. See Tex. Gov't Code Ann. § 402.006(c) (West, Westlaw through 2013 3d C.S.) (“In a case in which the state is entitled to recover a penalty or damages the attorney general is entitled, on behalf of the state, to reasonable attorney's fees and court costs.”). The State requested that the trial court rule that the fines, penalties, or forfeitures payable to it were not dischargeable under bankruptcy.
Emeritus answered the State's lawsuit and asserted the affirmative defense that each of the State's claims constitutes a “health care liability claim” under the TMLA. Emeritus subsequently moved to dismiss the lawsuit pursuant to Texas Civil Practice and Remedies Code section 74.351 because the State failed to file an expert report. See Tex. Civ. Prac. & Rem.Code Ann. § 74.351(b). On August 23, 2013, the trial court held a hearing on the motion to dismiss, at which time Emeritus put on evidence regarding attorney's fees.
On September 10, 2013, the trial court issued an order dismissing the State's claims with prejudice pursuant to section 74.351(b). The trial court also awarded Emeritus $55,000 in attorney's fees for the trial proceedings, $5,000 for appellate proceedings in this Court, and an additional $5,000 for appellate proceedings in the Texas Supreme Court.
This appeal ensued. By two issues, the State contends: (1) the State is not subject to the expert report requirement in the TMLA when it, pursuant to its police power, seeks only statutory civil penalties and injunctive relief for violations of the DTPA and ALFLA; and (2) Emeritus is not entitled to attorney's fees and costs under section 74.351(b) of the civil practice and remedies code. Emeritus contends, in contrast, that the State is a claimant seeking the recovery of damages in a health care liability claim, and is thus subject to the TMLA expert report requirement.
This case involves three separate statutory schemes: the DTPA, the ALFLA, and the TMLA. We briefly examine each in the context of the pleadings filed in this case.
The DTPA's underlying purposes “are to protect consumers against false, misleading, and deceptive business practices, unconscionable actions, and breaches of warranty and to provide efficient and economical procedures to secure such protection.” Tex. Civ. Prac. & Rem.Code Ann. § 17.44(a) (West, Westlaw through 2013 3d C.S.); see PPG Indus., Inc. v. JMB/Houston Ctrs. Partners Ltd. P'ship, 146 S.W.3d 79, 84 (Tex.2004). While one of the DTPA's primary purposes was to encourage consumers themselves to file complaints, the statute also allows the attorney general to bring consumer protection actions. PPG Indus., Inc., 146 S.W.3d at 84. Section 17.46(a) of the DTPA provides,...
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