The Fifth District of Texas has held that an order which compelled discovery and the testimony of the attorney for a party to a mediation settlement violated the confidentiality protections afforded by the Texas Civil Practice and Remedies Code. In In re Empire Pipeline Corp., No. 05-10-01044-CV, (Tex.-App.—Dallas Sept. 15, 2010), the relators, Empire Pipeline Corporation, Empire Exploration, L.P. and Empire Exploration Corporation, sought relief in a mandamus proceeding from a trial court order which granted the opposing party’s motion to compel discovery and to compel testimony relating to a mediation settlement between the party and the relators. H. Glenn Gunter sued the realtors in early 2006 alleging breach of an oil and gas exploration contract, “among other theories.” Both parties signed a settlement agreement during a December 2007 mediation. The relators’ attorney, Robert L. Harris, was present at the mediation. Shortly thereafter, Gunter moved to “’vacate’ the agreement” on the grounds that it was invalid and unenforceable due to duress and fraud, among other reasons. The relators responded to Gunter’s motion and requested a judgment which enforced the settlement agreement and dismissed Gunter’s claims. On March 25, 2008, after an evidentiary hearing, the trial judge issued an order enforcing the agreement and dismissing Gunter’s claims without prejudice. Gunter appealed and while the appeal was pending sought a declaratory judgment against the relators. Harris, the relator’s attorney, was served a Notice of Deposition duces tecum which stated that Harris’ deposition would be taken and requested Harris to produce: (1) all documents in the nature of notes and drafts from the mediation in this case held on or about December 12-13, 2007; (2) any form overriding royalty agreements or assignments to which he has access or which he utilizes or has utilized; and (3) all drafts or final version of overriding royalty agreements or assignments relating to Relators. On April 20, 2010 Gunter filed a motion to compel discovery which sought Harris’ deposition and the production of the requested documents. The relators counterclaimed asserting mediation, attorney-client and attorney work-product privileges, and argued the request was beyond the proper scope of discovery. Gunter filed an answer which asserted various affirmative defenses against the agreement, including withdrawal of consent, duress and coercion, mistake and fraudulent inducement. On July 9, 2010, the trial court signed an order following a hearing which granted in part and denied in part Gunter’s motion to compel. The order allowed for the deposition of Harris and the production of “any notes or drafts or documents given to the mediator or [Gunter . . . in connection the mediation or the preparation of documents relating to the alleged mediated settlement agreement.” The relators then sought relief in a mandamus proceeding before the Texas Fifth Court of Appeals, contending that the trial court abused its discretion in granting the order and that no adequate remedy could exist by appeal. In conditionally granting relators request for mandamus, the Fifth District noted that the confidentiality of mediation proceedings is protected by Texas Civil Practice and Remedies Code Section 154.073. Gunter contended that the confidentiality protection is not absolute and relied on Avary v. Bank of America (72 S.W.3d 779 (Tex.App.—Dallas 2002, pet. Denied)) and “two additional cases [which] Gunter asserts ‘underscore the continuing validity of Avary.’” In Avary, the Texas Fifth District Court of Appeals permitted discovery related to a court-ordered mediation settlement arising from a wrongful death claim. At the conclusion of the settlement, the guardian of the decedent’s estate sued the executor of the estate for breach of fiduciary duty, fraud, negligence and conspiracy. The executor moved for summary judgment, arguing that Section 154.073 rendered all communications during the mediation confidential. On appeal, the Court of Appeals reversed and remanded the lower court’s grant of the executor’s summary judgment. While making it clear that the holding was limited to the very specific facts before it, the Avary Court concluded that “only that where a claim is based upon a new and independent tort committed in the course of the mediation proceedings, and that tort encompasses a duty to disclose, section 154.073 does not bar discovery of the claim where the trial judge finds . . . disclosure is warranted.” As Gunter’s attempts to compel testimony and discovery were not “based on a ‘new and independent tort,’ the pursuit of which would not disturb the settlement reached at the mediation proceeding,” the narrow holding of Avary was not applicable. Likewise, the Court was not persuaded by Gunter’s argument that Cadle Co. v. Castle (913 S.W.2d 627 (Tex. App.—Dallas 1995, writ denied)) “renders the confidentiality provisions of chapter 154 of the civil practice and remedies code inapplicable on these facts.” The Court concluded that “all such discovery is barred by sections 154.073(a) and 154.073(b) of the civil practice and remedies code. . . [a]ccordingly, . . . the trial court abused its discretion by ordering the testimony and production of documents at issue.” The Court further concluded that the rights of the relators and Harris “would be materially affected by disclosure of the confidential information at issue” and that “Relators have shown that the trial court abused its discretion and that they have no adequate remedy by appeal.” The Court granted relator’s request for a writ of mandamus, unless the lower court vacates its July 9, 2010 order and denies Gunter’s “’Motion to Compel Discovery’ to the extent that motion pertains to such deposition and documents.” Technorati Tags: ADR, law, mediation

We have heard a lot about reforming healthcare through clinical integration lately. On October 5, 2010, the Federal Trade Commission “will co-host a workshop on several issues associated with Accountable Care Organizations (ACOs), organizations authorized by the new Affordable Care Act that seek to deliver high-quality and efficient health care services to consumers. Joining the FTC in hosting the event are the Centers for Medicare & Medicaid Services (CMS) and the Department of Health and Human Services’ Office of Inspector General.” The Federal Trade Commission (FTC) and U.S. Department of Justice define clinical integration as the implementation of: …an active and ongoing program to evaluate and modify practice patterns by the network’s physician participants and create a high degree of interdependence and cooperation among the physicians to control costs and ensure quality. This program may include: (1) establishing mechanisms to monitor and control utilization of health care services that are designed to control costs and assure quality of care; (2) selectively choosing network physicians who are likely to further these efficiency objectives; and (3) the significant investment of capital, both monetary and human, in the necessary infrastructure and capability to realize the claimed efficiencies. According to the American Hospital Association, several legal barriers to the implementation of clinical integration currently exist. They include: Antitrust laws designed to protect competition in order to protect consumers. The Ethics in Patient Referrals Act (Stark Law) enacted to keep doctors from referring patients to hospital and other facilities in which the doctor has a financial interest. The Civil Monetary Penalty Law which prohibits hospitals from rewarding doctors for reducing or withholding services to Medicare or Medicaid recipients. The anti-kickback law which makes it a felony to knowingly and willfully receiving or paying anything of value to influence the referral of federal health program business, including Medicare and Medicaid. The Internal Revenue Code which prohibits a tax-exempt not-for-profit organization such as a hospital from providing payments to benefit any private individual, including physicians. ACOs may provide a structure through which clinical integration can be achieved. What are your thoughts? Technorati Tags: Mediation

by Holly Hayes When we saw this link on mediate.com about nurses requesting mediation to achieve safe staffing levels, we wondered where else mediation was being requested in healthcare conflict. A search found that in September, mediation was used, but failed, between the Minnesota Nurses Association and St. Luke’s Hospital in Duluth, MN. A nurses’ union in New Jersey requested mediation in July for their negotiations with hospital management. In June, negotiators for Twin Cities nurses and 14 hospitals met with federal mediators to attempt to resolve differences regarding a new labor contract. We welcome your comments on the use of mediation in health care labor relations. _________________________________________________________________________ Holly Hayes is a mediator at Karl Bayer, Dispute Resolution Expert where she focuses on mediation of health care disputes. Holly holds a B.A. from Southern Methodist University and a Masters in Health Administration from Duke University. She can be reached at holly@karlbayer.com. Tags: Mediation

In a very troubling opinion, the First Court of Appeals of Texas has held that providing a special master with unrestricted access to all documents on a hard drive and discretion to employ or modify search terms is impermissible when discovery is ordered in a special appearance context. In In re Howard K. Stern, No. 01-09-00438-CV, (Tex. App.—Houston [1st Dist.] August 25, 2010) celebrity Anna Nicole Smith’s mother, Virgie Arthur, alleged in an underlying lawsuit that she had been defamed by the relator, Howard K. Stern, and others who conspired with him to defame her. Arthur alleged that Stern’s actions damaged her ability to gain custody and visitation of her granddaughter. Stern, Smith’s former attorney and companion, filed a special appearance in which he denied all bases for personal jurisdiction in Texas. Arthur alleged that a Texas resident acted as Stern’s agent and because of this, personal jurisdiction attached to Stern. Stern objected to discovery beyond communications relevant to the establishment of personal jurisdiction and agreed to provide Arthur with e-mails from October 12th, 2006 to March 14th, 2008. Stern’s counsel stated that due to the type of email provider used by Stern, no emails would exist on his personal computer or hard drive, but offered to file a subpoena with Stern’s email provider, Yahoo! Business, in order to obtain the relevant emails maintained on the company’s server. Arthur then supplemented an earlier motion to compel by requesting that Stern be ordered to submit his “computers, external hard drives, jump drives, and other such electronic media” to a forensic examiner appointed by the trial court. Prior to resolution of Stern’s special appearance, the trial court ordered him to produce his computer hard drive to a special master for forensic examination. Stern then filed a petition for a writ of mandamus challenging the scope of the discovery ordered both in general and as ordered prior to the hearing on his special appearance. The trial court’s May 11, 2009 order appointed a special master and forensic expert, providing in part: (3) To facilitate production of such documents . . . the Court previously appointed . . . a Special Master . . . to conduct an independent forensic examination of relevant computer hard drives, external hard drives, jump drives, and other such repositories of electronic communications. . . . That appointment now is extended to include examination of Howard K. Stern’s electronic media. (4) To facilitate the work of the Special Master, this Court ORDERS Defendant Howard K. Stern to contact the Special Master . . . within 10 days of the signing of this order to make arrangements for capture and examination of Howard K. Stern’s electronic media. (5) At the option and expense of Defendant Howard K. Stern, [the] Special Master . . . may travel to California, where the electronic media is currently located, to examine and copy the electronic media. If Stern chooses this option, he will pay in advance for [the Special Master]’s time, portal-to-portal, 24-hours per day, at the rate of $250 per hour. Defendant Howard K. Stern will also pay for First Class or Business Class airfare and a good hotel. . . . (6) Also at the option and expense of Defendant Howard K. Stern, [the] Special Master . . . shall produce a copy of Defendant Howard K. Stern’s electronic media and present that copy to the computer forensic expert of Defendant Howard K. Stern’s choosing. If Defendant Howard K. Stern chooses this option, [the special master] will hold the original of Defendant Howard K. Stern’s electronic media without viewing its contents for a period of 10 days after delivery of the copy to Defendant Stern’s expert to allow that expert an opportunity to view the contents first. At the expiration of that 10-day period, [the] Special Master . . . will begin forensic examination of the electronic media and shall: a. have discretion to employ or to modify search terms; b. capture all remaining electronic communications, including but not limited to emails to or from the persons, entities and email addresses listed in parts 1 and 3 of Plaintiff’s Requests for Production, and submit them to Defendant Howard K. Stern for privilege review prior to production. (7) Within 14 days after receipt of the captured documents from the Special Master . . . Defendant Howard K. Stern shall produce a privilege log to [the] Special Master . . . and to [Arthur] listing all documents submitted by [the] Special Master . . . to Defendant Howard K. Stern, which Defendant Howard K. Stern has not produced to [Arthur] and the reasons for withholding the documents from production. [The] Special Master . . . shall then produce all documents within the scope of paragraph one above that are not listed on the privilege log to [Arthur]. . . . (8) [Arthur] shall have an opportunity to challenge any designation listed on the log and, in the event that a designation is challenged, [the] Special Master . . . shall submit the log, along with the disputed document(s), to the Court for in camera inspection. . . . . (10) No waiver of privilege or confidentiality occurs if any otherwise privileged or confidential information is observed by [the] Special Master . . . during the imaging and review process. (11) [The] Special Master . . . is expressly prohibited from using or disclosing any information obtained through the imaging and examination of Defendant Howard K. Stern’s electronic media other than providing to Defendant Howard K. Stern documents captured during his examination, except as specified in this order. The Court of Appeals held that the trial court abused its discretion by ordering discovery without a showing that the discovery was relevant to the jurisdictional facts because the plain language of Texas Rule of Civil Procedure 120(a)(3) authorizes discovery prior to a ruling on a special appearance only with respect to those facts essential to justify an opposition to the special appearance. According to the court, […]