Tex. Health Harris Methodist Hosp. Fort Worth v. Featherly

Decision Date14 April 2022
Docket Number02-19-00199-CV
Parties TEXAS HEALTH HARRIS METHODIST HOSPITAL FORT WORTH, Appellant and Appellee v. Stephen FEATHERLY, Appellee and Appellant
CourtTexas Court of Appeals

Grant D. Blaies, Fort Worth, for Appellant.

Thomas M. Michel, Fort Worth, James Jinks, for Appellee.

Before Birdwell, Wallach, and Walker, JJ.

Opinion by Justice Birdwell In this case, a hospital filed a statutory lien against an emergency room patient's personal injury cause of action, and the patient brought this declaratory judgment action to challenge the validity of the hospital's lien. The trial court ultimately declared the lien partially valid for a lesser amount and partially invalid for the remainder and awarded the patient attorney's fees in an amount almost quadruple the lien amount originally asserted by the hospital. Both sides appealed. Due to the erroneous exclusion of the hospital's evidence of ratification, we reverse and remand for a new trial.


On March 13, 2014, Appellee Stephen Featherly was injured in a motor vehicle accident. He was transported to Appellant Texas Health Harris Methodist Hospital Fort Worth (the Hospital) for treatment. After signing an admission acknowledgment and consent form confirming his agreement to pay for any treatment to be provided, Featherly was treated in the emergency room for roughly three and a half hours before he asked to be discharged.

Shortly thereafter, the billing department of the Hospital sent Featherly a patient account statement, dated March 20, 2014, seeking payment in the amount of $13,575.10 for the medical care rendered in its emergency room. The statement identified Featherly as a "self-pay" patient and credited him with an uninsured discount/adjustment of $11,106.90 against the total charges of $24,682.00, resulting in the $13,575.10 account balance. The statement indicated that the deadline for payment was April 7, 2014.

On April 1, 2014, the Hospital's legal department received a letter from attorney James Jinks, who stated that he and his law firm represented Featherly for injuries sustained. The letter enclosed a HIPAA-compliant medical authorization executed by Featherly and requested "a copy of an itemized billing statement for services" rendered as a result of the accident on March 13, 2014.

The billing department of the Hospital thereafter sent Featherly a second statement, dated April 14, 2014, seeking past due payment of the original adjusted account balance of $13,575.10. Neither this statement nor the original statement that was sent to Featherly personally itemized the individual charges for the services rendered.

Subsequently, the Hospital forwarded to Jinks two sworn affidavits of billing records, dated May 8, 2014, and June 5, 2014, respectively. Each affidavit attested to an account balance for services rendered in the "full amount" of $24,682.00, and each attached a "Patient Account Summary" and either an itemized statement or computer printout of the charges and codes for the individual services rendered. The affidavits further attested: "The service(s) provided were necessary and the amount charged for the service(s) was reasonable at the time and place that the service(s) were provided." In this manner, the affidavits met the admissibility requirements of Section 18.001 of the Texas Civil Practice and Remedies Code, which provides for civil actions asserting claims for personal injuries:

Unless a controverting affidavit is served as provided by this section, an affidavit that the amount a person charged for a service was reasonable at the time and place that the service was provided and that the service was necessary is sufficient evidence to support a finding of fact by judge or jury that the amount charged was reasonable or that the service was necessary.

Tex. Civ. Prac. & Rem. Code Ann. § 18.001(b) (setting forth admissibility requirements).

With the Hospital newly aware of the possibility that Featherly could obtain a judgment or settlement for damages arising out of the underlying accident, on May 9, 2014, the Hospital filed a statutory hospital lien with the county clerk of Tarrant County. See Tex. Prop. Code Ann. § 55.002(a) ("A hospital has a lien on a cause of action or claim of an individual who receives hospital services for injuries caused by an accident that is attributed to the negligence of another person."). The lien did not specify an amount due. See id. § 55.005(b) (providing that the notice filed need only contain the injured individual's name and address, the date of the accident, the name and location of the hospital claiming the lien, and the name of the person alleged to be liable for damages arising from the injury, if known). Once it filed the executed lien, the Hospital faxed a copy of it to Jinks.

After filing its lien, the Hospital sent three additional statements to Featherly dated May 15, June 15, and July 25, 2015. The amount due reflected on each of these statements was $24,682.00; they no longer reflected an uninsured discount/adjustment. The Hospital explained that this was due to the possibility of Featherly's recovery of damages against a negligent third party, thereby rendering him "insured" for purposes of payment.

On August 20, 2015, Jinks filed a personal injury lawsuit on Featherly's behalf against the driver of the other vehicle involved in the accident, Jennifer Rose Applebaum. In addition to alleging a negligence cause of action, the original petition sought damages including "reasonable expenses for necessary health care, including rehabilitative services and devices, resulting from the injuries he sustained in the occurrence in question." More specifically, the petition alleged that Featherly had "incurred $149,481.75 in past medical expenses."

On October 19, 2015, Featherly responded to an interrogatory propounded by Applebaum seeking the specific amounts "of any and all hospital, doctor, medical or pharmaceutical expenses" that he claimed to have incurred because of the underlying accident. His sworn response identified fifteen health care providers, including the Hospital, and enumerated the charges for all fifteen, including $24,682.00 for the Hospital, with the cumulative amount incurred of $159,367.33. On January 27, 2016, Jinks responded to a request for disclosure of the amount and method of calculating Featherly's economic damages by identifying the same providers and enumerating the same individual and cumulative amounts charged. See Tex. R. Civ. P. 194.2(d).

On March 2, 2016, Featherly executed a "Confidential Settlement Agreement and Release" with Applebaum whereby he agreed to accept $500,000.00 in full and final settlement of his cause of action against her and, upon payment of this amount, to fully release and discharge her from any further liability arising from the underlying accident.

To effectuate the settlement, on March 4, 2016, the claims adjuster for Applebaum's liability insurer sent her defense attorney a check payable to "STEPHEN FEATHERLY & JAMES JINKS AND COURT CLERK FOR THE BE[NEFIT] OF HARRIS METHODIST FORT[ ] WORTH" in the amount of $24,682.00, the same amount the Hospital had claimed since first contacted by Jinks on behalf of Featherly and the same amount asserted by Featherly and Jinks as reasonable and necessary charges by way of Featherly's pleadings and discovery responses.

On March 10, 2016, Featherly and Applebaum filed a joint motion in the trial court seeking dismissal of the lawsuit in its entirety with prejudice. The next day, March 11, 2016, the trial court entered an Agreed Order of Dismissal with Prejudice granting the relief jointly requested.

On April 14, 2016, the claims adjuster for Applebaum's liability insurer sent Jinks another check payable to "DISTRICT CLERK OF TARRANT COUNTY FOR THE BENEFIT OF HARRIS METHODIST FORT [WORTH,] STEPHEN FEATHERLY, & HIS ATTORNEY, JAMES [JINKS]" in the same amount of $24,682.00.

On May 24, 2016, Featherly filed this lawsuit against the Hospital and Texas Health Huguley, Inc. (Huguley) seeking a declaratory judgment that the liens filed by both hospitals were invalid because the amounts charged for the services rendered by each exceeded "a reasonable and regular rate" for hospital and emergency medical services, citing Texas Property Code Section 55.004(d)(1), (g)(1).1 See Tex. Prop. Code Ann. § 55.004(d)(1), (g)(1) ; see also Daughters of Charity Health Servs. of Waco v. Linnstaedter , 226 S.W.3d 409, 411 (Tex. 2007) (confirming that the amount of a hospital lien cannot exceed a reasonable and regular rate). As to the Hospital, the original petition asserted that an independent audit commissioned by Featherly had determined that the $24,682.00 charge exceeded the reasonable and regular rates for its services. On this basis, the prayer for relief sought a declaration that the Hospital's lien was invalid and sought attorney's fees and court costs for obtaining such relief.

On June 6, 2016, the claims adjuster for Applebaum's liability insurer sent yet another check to Jinks, this one made payable to "STEPHEN FEATHERLY AND HIS ATTORNEY JAMES A JINKS" in the exact amount for which the new lawsuit sought a declaration of invalidity for the Hospital's lien due to its exceeding reasonable and regular rates.

On June 30, 2016, the Hospital filed a general denial. On September 29, 2016, the Hospital filed an amended answer adding to its general denial the affirmative defenses of waiver, equitable estoppel, and quasi-estoppel, asserting that Featherly should be precluded from contesting the reasonableness and regularity of the rates charged for its emergency room services given his use of the full charges to negotiate the settlement agreement in the underlying personal injury lawsuit.

On February 21, 2017, the Hospital filed a counterclaim for the full $24,682.00 charged for its services, asserting breach of contract and...

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