Bramlett et al v. The Medical Protective Company of Fort Wayne, Indiana et al
Filing
133
MEMORANDUM OPINION AND ORDER denying 79 Motion for Summary Judgment, filed by Medical Protective Insurance Services, Inc., The Medical Protective Company of Fort Wayne, Indiana, and denying 104 Supplemental Motion for Summary Judgment filed by Medical Protective Insurance Services, Inc., The Medical Protective Company of Fort Wayne, Indiana. (Ordered by Chief Judge Sidney A Fitzwater on 3/5/2013) (Chief Judge Sidney A Fitzwater)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
DALE BRAMLETT, INDIVIDUALLY,
AND AS INDEPENDENT
ADMINISTRATOR OF THE ESTATE
OF VICKI BRAMLETT, DECEASED,
et al.,
Plaintiffs,
VS.
THE MEDICAL PROTECTIVE
COMPANY OF FORT WAYNE,
INDIANA, et al.,
Defendants.
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§ Civil Action No. 3:10-CV-2048-D
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MEMORANDUM OPINION
AND ORDER
In this direct Stowers-type1 action, defendants The Medical Protective Company and
Medical Protective Insurance Services, Inc. (collectively, “MedPro”) move for summary
judgment, contending that a reasonable jury could not find that MedPro unreasonably
rejected plaintiffs’ demands to settle within policy limits their underlying medical
malpractice lawsuit against Benny P. Phillips, M.D. (“Dr. Phillips”), and that plaintiffs’ suit
is time-barred.
For the reasons that follow, the court denies MedPro’s motion and
supplemental motion for summary judgment.
1
G.A. Stowers Furniture Co. v. Am. Indem. Co., 15 S.W.2d 544 (Tex. Comm’n App.
1929, holding approved).
I
Because the relevant background facts and procedural history of this case are set out
extensively in prior opinions of this court and of Texas state courts, the court will focus on
the facts and procedural history pertinent to this decision.2 In October 2002 plaintiffs’
decedent, Vicki Bramlett (“Mrs. Bramlett”), underwent a hysterectomy performed by Dr.
2
The court is deciding today MedPro’s motion for summary judgment, filed October
31, 2011, and its supplemental motion for summary judgment, filed April 23, 2012. Briefing
on these motions concluded on January 22, 2013. Because there are several sets of briefs and
appendixes, it may be helpful to summarize the procedural history related to the summary
judgment motions themselves.
MedPro filed its October 31, 2011 motion for summary judgment while its motion to
dismiss was pending. Plaintiffs responded to the motion on November 20, 2011, but they
also sought a continuance under Fed. R. Civ. P. 56(d). MedPro replied to plaintiffs’ response
on December 5, 2011. In a December 12, 2011 order, the court denied plaintiffs’
continuance motion without prejudice, stating that it intended to decide first defendants’
pending motion to dismiss. On March 5, 2012, the same day the court decided the motion
to dismiss, it granted plaintiffs permission to stand on their November 20, 2011 summary
judgment response or move anew for a continuance. Plaintiffs requested a continuance.
MedPro sought leave to file a supplemental or amended summary judgment motion. While
MedPro’s motion for leave was pending, it filed on April 23, 2012 the supplemental motion
for summary judgment that is pending for decision today. Because that motion was
prematurely filed, the court excused plaintiffs from responding unless the court later granted
MedPro leave to file the motion. After the court granted MedPro such leave, plaintiffs filed
on June 26, 2012 a response to MedPro’s October 31, 2011 and April 23, 2012 summary
judgment motions, and they also moved for a continuance under Rule 56(d). MedPro replied
to plaintiffs’ summary judgment response on July 10, 2012. In a September 7, 2012
memorandum opinion and order, Bramlett v. Medical Protective Co. of Fort Wayne, Ind.,
2012 WL 3887059, at *4 (N.D. Tex. Sept. 7, 2012) (Fitzwater, C.J.), the court granted
plaintiffs’ continuance motion. In accordance with the court’s decision, plaintiffs filed their
supplemental summary judgment response, brief, and appendix on January 7, 2013. MedPro
filed its supplemental reply, brief, and (with leave of court) appendix on January 22, 2013.
In sum, after three rounds of briefing, MedPro’s October 31, 2011 and April 23, 2012
summary judgment motions are now ripe for decision.
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Phillips, MedPro’s insured.3 Four days following her surgery, she died from complications
due to post-operative bleeding. Shortly thereafter, Benjamin H. Davidson, II, Esquire
(“Davidson”), Dr. Phillips’ attorney, notified a MedPro claims adjuster, Debra Crawford
(“Crawford”), of a potential claim against Dr. Phillips arising from Mrs. Bramlett’s death,
and he sent Crawford a copy of Mrs. Bramlett’s hospital records. Crawford also met with
Dr. Phillips and Davidson to discuss the case. In February 2003 Crawford was informed that
Mrs. Bramlett’s death certificate indicated that she died as a result of post-operative bleeding
and that the cause of death was listed as an “accident.”
In late May 2003 Davidson notified Crawford that a medical malpractice suit had been
filed against Dr. Phillips and other parties in connection with Mrs. Bramlett’s death (the
“Underlying Suit”). He enclosed a copy of the state court petition, although the petition did
not specify how Dr. Phillips had negligently contributed to Mrs. Bramlett’s death. Crawford
knew at this point, however, that this was a very serious case. Apart from having the medical
records, she was aware that Dr. Phillips left the hospital to work out with his personal trainer
after his office was informed that a blood test he had ordered showed that Mrs. Bramlett’s
hemoglobin level was low, an indication of internal bleeding. MedPro knew that, despite Dr.
Phillips’ suspicion that Mrs. Bramlett was suffering from internal bleeding, he did not check
3
In recounting the factual background, the court summarizes the evidence in the light
most favorable to plaintiffs as the summary judgment nonmovants and draws all reasonable
inferences in their favor. See, e.g., Owens v. Mercedes-Benz USA, L.L.C., 541 F.Supp.2d
869, 870 n.1 (N.D. Tex. 2008) (Fitzwater, C.J.) (citing U.S. Bank Nat’l Ass’n v. Safeguard
Ins. Co., 422 F.Supp.2d 698, 701 n.2 (N.D. Tex. 2006) (Fitzwater, J.)).
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the results of this test before leaving the hospital. By the time he learned of Mrs. Bramlett’s
status and returned to the hospital, it was too late to save her.
On December 17, 2003, more than one year after Mrs. Bramlett’s death, plaintiffs4
made their first policy limits settlement demand (“first Stowers demand”). Plaintiffs stated
that they would settle the case for policy limits, i.e., $200,000. Crawford had the authority
to settle the case for this amount, but she declined.
On March 23, 2004 plaintiffs made their second policy limits settlement demand
(“second Stowers demand”). It was not until March 31, 2004, however, that MedPro
obtained plaintiffs’ expert report setting out the specifics of plaintiffs’ theory of Dr. Phillips’
negligence. The second Stowers demand expired on April 9, 2004.
The Underlying Suit eventually went to trial. Based on a jury verdict in plaintiffs’
favor, the trial court entered judgment against Dr. Phillips for $9,196,364.50 in actual
damages and $2,972,000 in punitive damages. See Phillips v. Bramlett, 258 S.W.3d 158, 164
(Tex. App. 2007), rev’d, 288 S.W.3d 876 (Tex. 2009). On appeal, the court of appeals
largely affirmed the judgment (it reversed on the issue of gross negligence, and it suggested
a remittitur that plaintiffs accepted, id. at 182-83, 183-84), but the Supreme Court of Texas
granted Dr. Phillips’ petition for review and reversed and remanded. The Supreme Court
ordered the trial court to cap Dr. Phillips’ personal liability and render judgment pursuant to
4
In this suit and the Underlying Suit, plaintiffs are Dale Bramlett, individually, and
as independent administrator of the Estate of Vicki Bramlett, Deceased, Shane Fuller, and
Michael Fuller.
-4-
Tex. Rev. Civ. Stat. Ann. Art. 4590i, § 11.02(a) (repealed Sept. 1, 2003), a provision of the
now-repealed Texas Medical Liability and Insurance Improvement Act of 1977 (“MLIIA”)
that limited a physician’s civil liability for damages in an action on a health care liability
claim (the “Physician’s Liability Cap”). Phillips v. Bramlett, 288 S.W.3d 876, 883 (Tex.
2009) (“Phillips II”). In doing so, the court “reserv[ed] for another case any suit against the
insurer under section 11.02(c)’s Stowers exception.” Id. at 882 (emphasis added). This
exception provided that § 11.02 did not limit an insurer’s liability where facts existed that
would enable a party to invoke the Stowers doctrine.
Following the Supreme Court’s decision in Phillips II, plaintiffs filed the instant
lawsuit in Texas state court against MedPro and others.5 Following removal of the case to
this court, MedPro filed a motion to dismiss, which the court granted in part and denied in
part. See Bramlett v. Med. Protective Co., 855 F.Supp.2d 615, 625 (N.D. Tex. 2012)
(Fitzwater, C.J.) (“Bramlett III”). In pertinent part, the court held in Bramlett III that
plaintiffs could bring a direct Stowers-type action against MedPro. Id. at 621-22 (“Having
studied Phillips II, the court concludes that the opinion can only reasonably be understood
as interpreting § 11.02(c) to grant an injured third party a direct cause of action against the
physician’s insurer when Stowers facts exist.”).6
5
The suit also named Dr. Phillips as a defendant, but he was dismissed with prejudice
on his motion.
6
The court dismissed all of plaintiffs’ claims except their direct Stowers action.
-5-
MedPro moves for summary judgment dismissing plaintiffs’ direct Stowers action.7
Plaintiffs oppose the motions.
II
Because plaintiffs will bear the burden of proof on their claim at trial, MedPro can
meet its summary judgment obligation by pointing the court to the absence of admissible
evidence to support the claim. See Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986). Once
MedPro does so, plaintiffs must go beyond their pleadings and designate specific facts
showing there is a genuine issue for trial. See id. at 324; Little v. Liquid Air Corp., 37 F.3d
1069, 1075 (5th Cir. 1994) (en banc) (per curiam). An issue is genuine if the evidence is
such that a reasonable jury could return a verdict in plaintiffs’ favor. Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 248 (1986). Plaintiffs’ failure to produce proof as to any essential
element of their claim renders all other facts immaterial. See Trugreen Landcare, L.L.C. v.
Scott, 512 F.Supp.2d 613, 623 (N.D. Tex. 2007) (Fitzwater, J.). Summary judgment is
mandatory if they fail to meet this burden. See Little, 37 F.3d at 1076.
Because MedPro is also moving for summary judgment on a limitations defense for
which it will have the burden of proof at trial, to be entitled to summary judgment based on
limitations, it “must establish ‘beyond peradventure all of the essential elements of the . . .
7
MedPro’s October 31, 2011 motion for summary judgment has been mooted by the
court’s decision in Bramlett III. The grounds for summary judgment that the court discusses
in this memorandum opinion and order are the ones contained in MedPro’s April 23, 2012
motion. To the extent MedPro has presented new arguments for summary judgment in its
reply briefs filed on July 10, 2012 and January 22, 2013, the court has considered only the
grounds fairly presented in the April 23, 2012 motion itself.
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defense.’” Bank One, Tex., N.A. v. Prudential Ins. Co. of Am., 878 F. Supp. 943, 962 (N.D.
Tex. 1995) (Fitzwater, J.) (quoting Fontenot v. Upjohn Co., 780 F.2d 1190, 1194 (5th Cir.
1986)). This means that MedPro must demonstrate that there are no genuine and material
fact disputes and that it is entitled to summary judgment as a matter of law. See Martin v.
Alamo Cmty. Coll. Dist., 353 F.3d 409, 412 (5th Cir. 2003). “The court has noted that the
‘beyond peradventure’ standard is ‘heavy.’” Carolina Cas. Ins. Co. v. Sowell, 603 F.Supp.2d
914, 923-24 (N.D. Tex. 2009) (Fitzwater, C.J.) (quoting Cont’l Cas. Co. v. St. Paul Fire &
Marine Ins. Co., 2007 WL 2403656, at *10 (N.D. Tex. Aug. 23, 2007) (Fitzwater, J.)).
III
In two grounds that the court discusses separately below, MedPro moves for summary
judgment on the basis that, as a matter of law, its decisions not to accept the first and second
Stowers demands were reasonable. MedPro maintains that its decision not to accept the first
Stowers demand was reasonable because plaintiffs had not provided the statutorily-required
expert report before their settlement demand expired. It posits that the decision not to accept
the second Stowers demand was reasonable because the demand was left open for only 17
days.
Under the Stowers doctrine,8 an insurer owes an implied duty of ordinary care to its
8
Although plaintiffs’ claim is a direct Stowers action rather than a common-law
Stowers action, neither side argues that the common-law Stowers doctrine requirements are
inapposite when determining MedPro’s liability. The court has found no indication that the
Stowers liability standard (i.e., the ordinarily prudent insurer test) should not apply in the
case of a direct Stowers action. As Bramlett III recognized, § 11.02(c) was designed to
transfer the Stowers action from the insured to the injured-third party, who would otherwise
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insured to accept a reasonable settlement demand that is within policy limits. See, e.g., Am.
Physicians Ins. Exch. v. Garcia, 876 S.W.2d 842, 849 (Tex. 1994); G.A. Stowers Furniture
Co. v. Am. Indem. Co., 15 S.W.2d 544, 547 (Tex. Comm’n App. 1929, holding approved)
(holding that insurer “is held to that degree of care and diligence which a man of ordinary
care and diligence would exercise in the management of his own business.”).
The Stowers duty is not activated by a settlement demand unless
three prerequisites are met: (1) the claim against the insured is
within the scope of coverage, (2) the demand is within the
policy limits, and (3) the terms of the demand are such that an
ordinarily prudent insurer would accept it, considering the
likelihood and degree of the insured’s potential exposure to an
excess judgment.
Garcia, 876 S.W.2d at 849. “As a threshold matter, ‘a settlement demand must propose to
release the insured fully in exchange for a stated sum of money.’” Trinity Universal Ins. Co.
v. Bleeker, 966 S.W.2d 489, 491 (Tex. 1998) (quoting Tex. Farmers Ins. Co. v. Soriano, 881
S.W.2d 312, 314 (Tex. 1994)). “In the context of a Stowers lawsuit, evidence concerning
claims investigation, trial defense, and conduct during settlement negotiations is necessarily
subsidiary to the ultimate issue of whether the claimant’s demand was reasonable under the
circumstances, such that an ordinarily prudent insurer would accept it.” Garcia, 876 S.W.2d
at 849. “[S]hifting the risk of an excess judgment onto the insurer is not appropriate unless
there is proof that the insurer was presented with a reasonable opportunity to settle within
policy limits.” Rocor Int’l, Inc. v. Nat’l Union Fire Ins. Co., 77 S.W.3d 253, 263 (Tex. 2002)
bear the consequences of the Physician Liability Cap, and thereby prevent the insurer from
benefiting. See Bramlett III, 855 F.Supp.2d at 620.
-8-
(citing Garcia, 876 S.W.2d at 849).
IV
MedPro contends that it is entitled to summary judgment because, as a matter of law,
its decision not to accept plaintiffs’ first Stowers demand was reasonable.
A
There is no dispute regarding the first two Stowers elements: plaintiffs’ claim was
within the scope of coverage and the demand was within policy limits. MedPro maintains,
however, that its decision not to accept the first Stowers demand was reasonable as a matter
of law because plaintiffs failed to furnish an expert report that complied with the statutory
prerequisites regarding Dr. Phillips and his practice group. MedPro argues that the report
that plaintiffs did furnish focused on, and criticized, other defendants (hospital entities and
nurses); when the expert mentioned Dr. Phillips, he offered no complaints or criticisms
regarding him or his practice group; and that “[n]either Dr. Phillips nor his practice group
[was] implicated in the slightest sense, either in [the expert’s] opinions regarding the
applicable standard of care, any departures from the applicable standard of care, or the
medical consequences caused by any failure to satisfy an applicable standard of care.” Ds.
Apr. 23, 2012 Br. 6. MedPro therefore maintains that, as a matter of law, the decision not
to accept the first Stowers demand was reasonable because the expert report did not include
any of the statutorily-required opinions regarding Dr. Phillips or his practice group, and the
report indicated that plaintiffs and their expert held the hospital and its nurses wholly
responsible for plaintiffs’ damages and for the death of Mrs. Bramlett.
-9-
B
MedPro is not entitled to summary judgment based on this basis. Under § 13.01(d)
of Article 4590i, the absence of the statutorily-required expert report regarding Dr. Phillips
would only have resulted in plaintiffs’ taking a nonsuit, which would not have prevented
them from refiling their suit against Dr. Phillips.9 And despite the fact that the expert’s report
was critical of other defendants and did not implicate Dr. Phillips and his practice group,
MedPro was aware of other facts that would enable a reasonable jury to find that a
reasonably prudent insurer would have accepted the first Stowers demand despite the absence
of an expert report.10
For example,11 plaintiffs have produced evidence that, at the time of the first Stowers
9
Under Texas law, when a nonsuit is taken, it restores the plaintiffs to the position they
would have been in before they filed suit. See, e.g., America’s Favorite Chicken Co. v.
Galvan, 897 S.W.2d 874, 877 (Tex. App. 1995, pet. denied) (“It is true that orders of
nonsuits or dismissals without prejudice are not an adjudication on the rights of the parties
because the parties are simply returned to the positions they were in before suit was brought.”
(citing Thompson v. Tex. Dep’t of Human Res., 859 S.W.2d 482, 484 (Tex. App. 1993, no
writ)). Absent evidence that plaintiffs could not have refiled their suit because, for example,
it would have been time-barred (and, as the court explains below, the suit would not have
been time-barred), they could have refiled their suit and obtained additional time to furnish
an expert report that implicated Dr. Phillips.
10
There is no per se requirement that an insurer know all, or even most, of the facts
of the case in order to have a Stowers duty. Indeed, early settlement is encouraged. See
Garcia, 876 S.W.2d at 851 n.18 (“If the claimant makes such a settlement demand early in
the negotiations, the insurer must either accept the demand or assume the risk that it will not
be able to do so later. In cases presenting a real potential for an excess judgment, insurers
have a strong incentive to accept.” (emphasis added)).
11
“When this court denies rather than grants summary judgment, it typically does not
set out in detail the evidence that creates a genuine issue of material fact.” Valcho v. Dall.
Cnty. Hosp. Dist., 658 F.Supp.2d 802, 812 n.8 (N.D. Tex. 2009) (Fitzwater, C.J.) (citing
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demand, MedPro (or Crawford as its claims adjuster) (1) had received a copy of Mrs.
Bramlett’s hospital records; (2) knew that Dr. Phillips performed a hysterectomy on Mrs.
Bramlett; (3) knew that Mrs. Bramlett died from complications due to post-operative
bleeding; (4) knew that Dr. Phillips was suspicious that Mrs. Bramlett was suffering from
internal bleeding and therefore ordered a blood test; (5) knew that Dr. Phillips’ office was
informed that the blood test indicated that Mrs. Bramlett was bleeding internally; (6) knew
that Dr. Phillips left the hospital to work out without checking the results of the blood test
he had ordered; (7) knew that by the time Dr. Phillips learned of Mrs. Bramlett’s status and
returned to the hospital, it was too late to save her; (8) Crawford had met with Dr. Phillips
and Davidson to discuss the case; (9) knew the case was very serious; and (10) Crawford had
authority to settle the claim for $200,000, the policy limits. A reasonable jury could find
from the evidence in the summary judgment record that, in response to plaintiffs’ first
Stowers demand, a reasonably prudent insurer would have settled within policy limits.
This is not to say, of course, that plaintiffs’ failure to furnish an expert report that
implicated Dr. Phillips and his practice group plays no role in the Stowers equation. The jury
in this case may well be persuaded that MedPro acted as would an ordinarily prudent insurer,
considering that plaintiffs’ expert report was highly critical of other defendants and gave Dr.
Phillips and his practice group slight attention and no criticism. But there is ample evidence
Swicegood v. Med. Protective Co., 2003 WL 22234928, at *17 n.25 (N.D. Tex. Sept. 19,
2003) (Fitzwater, J.)). The court will therefore summarize or provide examples of evidence
that presents genuine and material fact issues that require a trial.
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in the summary judgment record that would enable a reasonable jury to find in plaintiffs’
favor as well. MedPro therefore is not entitled to summary judgment on this ground.
V
MedPro maintains that it is entitled to summary judgment concerning plaintiffs’
second Stowers demand because its decision not to accept the demand was reasonable as a
matter of law. As with plaintiffs’ first Stowers demand, there is no dispute regarding the first
two Stowers elements.
MedPro contends that, following the expert’s first report and the decision of the other
defendants to settle for $2.3 million, plaintiff’s expert wrote a new report on March 17, 2004
that for the first time opined that Dr. Phillips and his practice group were culpable for Mrs.
Bramlett’s death. On March 23, 2004 plaintiffs sent MedPro the second Stowers demand,
imposing a deadline of April 9, 2004 at 5:00 p.m., i.e., 17 days later. Citing State Farm
Lloyds Insurance Co. v. Maldonado, 963 S.W.2d 38 (Tex. 1998), MedPro contends that a
period of 17 days was insufficient as a matter of law to evaluate and accept a policy limits
settlement demand.
MedPro is not entitled to summary judgment on this basis. To begin with, the court
recognizes that there may be cases in which an insurer has so little time to respond to a
Stowers demand that no reasonable jury could find that it failed to act as a reasonably prudent
insurer by rejecting the demand. But apart from such cases, the question whether an insurer
has had a reasonable amount of time to respond to a Stowers demand will generally present
a quintessential, constituent fact issue that is subsumed within the jury’s application of the
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reasonably prudent insurer standard. In the present case, the court cannot say, as a matter of
law, that MedPro had insufficient time to accept the second Stowers demand. This question
is one of fact that must be resolved by the trier of fact.
VI
MedPro contends that it is entitled to summary judgment based on the statute of
limitations.
A
MedPro argues that the limitations period for plaintiffs’ claim accrued when facts
existed that authorize them to seek judicial relief, and that this occurred at the time of the jury
verdict. They point out that plaintiffs seek to recover as their damages all or part of the jury
verdict, which was returned on August 26, 2005. MedPro maintains that because plaintiffs
assert that their damages were established on that date, and since the allegedly wrongful
conduct of which they complain occurred no later than April 9, 2004 (the deadline to accept
the second Stowers demand), then regardless whether the limitations period is two years or
four years, it expired no later than August 26, 2009, before they filed the instant case on
September 7, 2010.
Plaintiffs respond that the limitations period does not commence until the judgment
in the Underlying Suit becomes final and that it is not yet final because the case is still on
appeal.
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B
Section 11.02(c) does not specify a specific limitations period, but the Texas Supreme
Court has held that “[w]hen a statute lacks an express limitations period, courts look to
analogous causes of action for which an express limitations period is available either by
statute or by case law.” Johnson & Higgins of Tex., Inc. v. Kenneco Energy, Inc., 962
S.W.2d 507, 518 (Tex. 1998). Because a common-law Stowers claim is governed by a twoyear limitations period, see Street v. Second Court of Appeals, 756 S.W.2d 299, 301 (Tex.
1988), the court holds that a two-year limitations period also governs plaintiffs’ direct
Stowers action.
Because limitations is an affirmative defense on which MedPro will have the burden
of proof at trial, to be entitled to summary judgment on this defense, it must satisfy the heavy
“beyond peradventure” standard, demonstrating that there are no genuine and material fact
disputes and that it is entitled to summary judgment as a matter of law. See supra § II.
The court holds that MedPro has failed to establish beyond peradventure that
plaintiffs’ lawsuit is time-barred. In fact, a reasonable jury could only find from the evidence
in the summary judgment record that this suit is not barred by limitations. Texas law allows
an insured to bring a Stowers action as soon as there is a jury verdict exceeding policy limits.
See Archer v. Med. Protective Co. of Fort Wayne, IN, 197 S.W.3d 422, 426 (Tex. App. 2006,
pet. denied) (“[W]hile one need not await until all appeals have ended to sue, all the elements
to an enforceable Stowers claim have yet to accrue [for the purpose of limitations] while
appeals remain pending.”). But although Texas law permits such an action to be brought, a
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common-law Stowers action does not accrue until the judgment is final. See Street, 756
S.W.2d at 301. This rule is in part animated by the premise that “[n]o valid public policy is
served by forcing an insured to bring an action which may ultimately prove unnecessary.”
Id. at 302. Here, the final judgment in the Underlying Suit is not final. At the time plaintiffs
specifically responded to this ground of MedPro’s motion (June 26, 2012), and when
plaintiffs adopted their prior brief on January 7, 2013, the case was still pending in the
Supreme Court of Texas.12 Accordingly, the limitations period has not yet commenced, and
a reasonable jury could only find that this lawsuit is not time-barred.
VII
Finally, MedPro moves for summary judgment on the ground that plaintiffs cannot
prove the elements of their direct Stowers action.
A
MedPro argues that, even if in some circumstances a tort plaintiff might be able to
pursue a direct claim against a defendant’s insurance company (as this court held in Bramlett
III), such circumstances are not present in this case. MedPro contends that, because a
Stowers claim is a negligence claim, plaintiffs must be able to prove the elements of a
negligence claim: a duty, a breach of the duty, and damages proximately caused by the
breach. MedPro contends that plaintiffs cannot establish a duty because, as a matter of law,
MedPro did not owe any duty to plaintiffs because the insurer’s duties are owed only to its
12
This court can also take judicial notice that Case No. 12-0257, Phillips v. Bramlett,
is still pending in the Supreme Court of Texas and was argued on February 6, 2013.
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insured, not to third-party claimants. It contends that plaintiffs cannot satisfy the proximate
cause element because their alleged damages were proximately caused by Dr. Phillips, not
by a negligent act or omission of MedPro, who has fully and completely paid and satisfied
the judgment in the Underlying Suit.
B
MedPro’s first argument appears to be a form of reargument or motion for
reconsideration of the court’s decision in Bramlett III. The court is not unsympathetic to
MedPro’s concerns. In Bramlett III the court referred to Phillips II as an opinion that “is at
times difficult to comprehend and that has perplexed four dissenting justices as to its
reasoning and effect.” Bramlett III, 855 F.Supp.2d at 621. But the fact remains that Bramlett
III answers all of MedPro’s arguments, explaining how its interpretation of Phillips II
“allow[s] the injured third party to recover from the insurer the difference between the jury
verdict and what would otherwise have been recoverable under the Physician Liability Cap.”
Id. at 622.
Under Phillips II, § 11.02(c) “grant[s] an injured third party a direct cause of action
against the physician’s insurer when Stowers facts exist.” Id. Section 11.02(c) provides this
direct Stowers action because, although the insurer’s legal duty is to the physician and not
the injured third-party, if the injured third-party could not maintain a direct action, the insurer
would benefit from the Physician’s Liability Cap, in direct contravention of § 11.02(c).
MedPro’s arguments are inadequate to withstand the force of Phillips II’s interpretation and
application of § 11.02(c) to the facts of this very case.
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MedPro’s contention that plaintiffs cannot prove proximate cause because their
damages were caused by Dr. Phillips is also foreclosed by Phillips II. Under Phillips II, the
injury to the third-party is “for the amount from the Physician Liability Cap up to the amount
of the jury verdict.” Bramlett III, 855 F.Supp.2d at 623. This injury is caused by the
insurer’s negligent failure to settle, not by the physician’s malpractice. See id. at 622
(“Under this interpretation, the Stowers Exception ensures that insurers will face excess
liability if they fail to reasonably settle within policy limits, just as a traditional Stowers
action did before the Physician Liability Cap was enacted.”). And MedPro’s payment of the
judgment is not controlling because, if plaintiffs prove their Stowers claim, they are entitled
to recover up to the amount of the jury verdict, not the judgment amount. See id. at 622
(“The result of this interpretation is to allow the injured third party to recover from the
insurer the difference between the jury verdict and what would otherwise have been
recoverable under the Physician Liability Cap.”); id. (“Thus, according to the [Phillips II]
majority, to maintain an insurer’s incentive to reasonably settle, the Texas Legislature
enacted § 11.02(c) to provide injured third parties a direct cause of action to recover the
difference between the Physician Liability Cap and the jury verdict.”); id. at 623 (“The
injured third party has a direct Stowers Exception claim created by the Texas Legislature in
§ 11.02(c) for the amount from the Physician Liability Cap up to the amount of the jury
verdict.”).
Accordingly, MedPro is not entitled to summary judgment on this basis.
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*
*
*
For the reasons explained, the court denies MedPro’s motion and supplemental motion
for summary judgment.
SO ORDERED.
March 5, 2013.
_________________________________
SIDNEY A. FITZWATER
CHIEF JUDGE
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