RESPONSE TO PETITION FOR WRIT OF MANDAMUS by uuk21822

VIEWS: 46 PAGES: 29

									                    TO THE SUPREME COURT OF TEXAS

                                  NO. 05-1043

   IN RE LIVING CENTERS OF TEXAS, INC ., D /B /A SOUTHFIELD HEALTHCARE CENTER

                           From the Court of Appeals
                          for the First District of Texas
                                   at Houston



       RESPONSE TO PETITION FOR WRIT OF MANDAMUS

                              William B. Curtis
                              State Bar No. 00783918
                              Josh Bernstein
                              State Bar No. 00793335

                              LAW OFFICES OF MILLER AND CURTIS, L.L.P.
                              5489 Blair Road, Suite 500]
                              Dallas, TX 75231
                              Telephone: (214) 987-0005
                              Fax: (214) 987-2545


                              Melvin H. Wolovits
                              State Bar No. 21872390
                              THE LAW OFFICES OF MELVIN H.WOLOVITS, P.C.
                              9400 N. Central Expressway, Ste. 419
                              Dallas, TX 75231
                              Telephone: (214) 373-3777
                              Fax: (214) 373-3388

                              ATTORNEYS FOR PLAINTIFF/REAL PARTY
                              IN INTEREST



ORAL ARGUMENT REQUESTED
                               TABLE OF CONTENTS

INDEX OF AUTHORITIES                                                       Page iii

STATEMENT OF THE CASE                                                      Page vi

ISSUES PRESENTED                                                           Page viii

STATEMENT OF FACTS                                                          Page ix

ARGUMENT AND AUTHORITIES                                                   Page 1

     Issue No. 1: The Houston Court of Appeals did not abuse its discretion in ruling that
     the McCarran-Ferguson Act (“MFA”) exempts the Texas Medical Liability and
     Insurance Improvement Act (“TMLIIA”) from preemption by the Federal Arbitration
     Act (“FAA”).                                                         Page 1

            A.     The Court of Appeals Correctly Followed Fabe            Page 1

            B.     Southfield is Engaged in the “Business of Insurance”
                   Because it Placed Itself in the Position of an Insurer Page 4

            C.     The TMLIIA Regulates the “Business of Insurance”        Page 8

                   (1) Federal Authority Supports Kepka’s Position         Page 8

                   (2) Texas Authority Supports Kepka’s Position           Page 10

     Issue No. 2: The Houston Court of Appeals did not abuse its discretion in ruling
     that the Arbitration Agreement does not cover Mrs. Kepka’s wrongful death claim
     because Mrs. Kepka signed the Arbitration Agreement as the representative of her
     husband and not in her individual capacity.
                                                                      Page 14


PRAYER                                                                     Page 16

VERIFICATION                                                               Page 17

CERTIFICATE OF SERVICE                                                     Page 18

APPENDIX                                                                   Page 19




                                           ii
                                INDEX OF AUTHORITIES

CASES

Allen v. Pacheco, 71 P.3d 375 (Colo. 2003),
(en banc) (cert. denied, 540 U.S. 1212 (2004))                      7, 15

Anderson v. Humana, Inc., 24 F.3d 889 (7th Cir. 1994)               5

Babcock, et al. v. Northwest Memorial Hospital, et al.,
767 S.W.2d 705, (Tex. 1989)                                         10,11

Bekins v. Williams, 947 S.W.2d 568 (Tex. App. - Texarkana, 1997)    6

Cathey v. Metropolitan Life Insurance Co., et al., 764 S.W.2d 286
(Tex. App. - Houston [1st Dist.] 1988)                              3

Cathey v. Metropolitan Life Insurance Company, et al.,
805 S.W.2d 387 (Tex. 1991)                                          3,4

Columbia Hospital Corporation of Houston v. Moore, et al.,          12
92 S.W.3d 470 (Tex. 2002)

Cont'l Ins. Co. v. Equity Residential Props. Trust,
565 S.E.2d 603, 605 (Ga. App. 2002)                                 8,9

Corporate Health Ins., Inc. v. Texas Dep’t of Ins.,
215 F.3d 526, 538 (5th Cir. 2000)                                   5

Cox v. Woodmen of the World Ins. Co.,
556 S.E.2d 397, 401-402 (S.C. App. 2001)                            8

Dallas Fire Insurance Co. v. Texas Contractors Surety & Casualty
Agency, et al., 128 S.W.3d 279 (Tex. App. - Ft. Worth, 2004)        3

Diversicare, et al. v. Rubio, 49 Tex. Sup. J. 19 (Tex. 2005)        10,12

E-Z Mart Stores, Inc. V. Hale, 883 S.W.2d 695
(Tex. App. - Texarkana, 1994)                                       7

Fleetwood v. Gaskamp, 280 F.3d 1069 (5th Cir. 2002)                 14

Friday v. Trinity Universal of Kan.,
939 P.2d 869, 872 (Kan. 1997)                                       9


                                             iii
Gracia v. RC Cola-7-up Bottling Co., 667 S.W.2d 517 (Tex. 1984)            14

Great American Insurance Company v. North Austin Municipal
Utility District No. 1, 908 S.W.2d 415; (Tex. 1995)                        3

Group Life & Health Ins. Co. v. Royal Drug Co., Inc.,
440 U.S. 205, 99 S. Ct. 1067 (1979)                                        2

Horizon/CMS Healthcare Corp., et al. v. Auld,
34 S.W.3d 887 (Tex. 2000)                                                  10,12

Kentucky Association of Health Plans, Inc., v. George Nichols,
227 F.3d 352 (6th Cir. 1999)                                               10

Kimball v. Brothers, 741 S.W.2d 370 (Tex. 1987)                            12

Klamath-lake Pharmaceutical Association, v.
Klamath Medical Service Bureau, 701 F.2d 1276 (9th Cir. 1983)              5

Lucas, et al. v. United States of America,
757 S.W.2d 687; (Tex. 1988)                                                12

McKnight v. Chicago Title Ins. Co.,
358 F.3d 854, 858 (11th Cir. 2004)                                         8

Metropolitan Life Insurance Co. v. Massachusetts,
471 U.S. 724, 85 L. Ed. 2d 728, 105 S. Ct. 2380, 85 L. Ed. 2d 728 (1985)   10

Morrison v. Chan, et al., 699 S.W.2d 205; (Tex. 1985)                      12

Mut. Reinsurance Bureau v. Great Plains Mut. Ins. Co.,
969 F.2d 931, 933 (10th Cir. 1992)                                         8,9

Physicians Health Plan, Inc. v. Citizens Ins. Co. of America,
673 F. Supp. 903, 907 (W.D. Mich. 1987)                                    5

Pegram v. Herdrich, 530 U.S. 211, 218-219 (2000))                          6

SEC v. National Securities, Inc., 393 U.S. 453, 460,                       2
21 L. Ed. 2d 668, 89 S. Ct. 564 (1969)

Smith v. PacifiCare Behavioral Health of California, Inc.,
93 Cal. App. 4th 139, 143 (2001)                                           5,6,9

Standard Security Life Ins. Co. v. West,
267 F.3d 821, 824 (8th Cir. 2001)                                          8,9,10

                                             iv
Stuart Circle Hosp. Corp. v. Aetna Health Management,
995 F.2d 500, 502 (4th Cir. 1993)                                         10

Texas Health Enterprises, Inc. v. Gentry,
787 S.W.2d 604 (Tex. App.-El Paso 1990, no writ)                          6,7

Texas Pharmacy Association, et al. v. the Prudential Insurance
Company of America, 1997 U.S. App. Lexis 12986 (5th Cir. 1997)            10

Union Labor Life Ins. Co. v. Pireno,
458 U.S. 119, 73 L. Ed. 2d 647, 102 S. Ct. 3002 (1982)                    1,2

United States Dep't of Treasury v. Fabe, 508 U.S. 491, 502,               1,2
124 L. Ed. 2d 449, 113 S. Ct. 2202 (1993)

UNUM Life Insurance of America v. Ward,
526 U.S. 358, 119 S. Ct. 1380, 143 L. Ed. 2d 462 (1999)                   3

Washington Physicians Service Ass’n v. Gregoire,
147 F.3d 1039, 1046 (9th Cir. 1998)                                       5

Weiner v. Wasson, 900 S.W.2d 316; (Tex. 1995)                             12

In Re Woman’s Hospital of Texas, Inc., 141 S.W.3d 144 (Tex. 2004)         12



STATUTES
McCarran-Ferguson Act, 15 U.S.C.A. §§ 1011-1015 (2004)
(Mar. 9, 1945, ch 20, § 2, 59 Stat. 34;
July 25, 1947, ch 326, 61 Stat. 448.)                               throughout

Texas Medical Liability and Insurance Improvement Act,
Tex. Rev. Civ. Stat. Art. 4590i, repealed by Acts 2003,
78th Leg., ch. 204, § 10.09, eff. Sept. 1, 2003                     throughout

Colorado Health Care Availability Act, Colo. Rev. Civ. Stat.
§§13-64-101 et seq.                                                     11




                                            v
                               STATEMENT OF THE CASE

       1.     This medical malpractice wrongful death and survivorship lawsuit was

originally filed by Marguerite Kepka, Individually, and as Representative of the Estate of

William G. Kepka, deceased (hereinafter referred to as “Kepka”) on August 28, 2003,

against, inter alia, Living Centers of Texas, Inc., d/b/a Southfield Heathcare Center

(hereinafter referred to as “Southfield”) for its failure to care for its patient, Plaintiff’s

husband, Mr. William Kepka, resulting in his death at age 59. (Clerk’s Record, Exhibit 10).

       2.     After some written discovery was conducted, Kepka complied with the expert

report requirements of Art. 4590i, and Southfield unsuccessfully moved to have this case

dismissed and refiled under the “new law” (Chapter 74, CPRC) to obtain the benefit of the

new $250,000 cap, Southfield filed a Motion to Compel Arbitration and Dismiss, or in the

Alternative, Stay Proceedings. (Clerk’s Record, Exhibit 21).

       3.     On August 20, 2004, the Honorable John T. Wooldridge of the 269th District

Court in Harris County, denied Southfield’s Motion to Compel Arbitration, but on November

10, 2004, on rehearing based on submission only, granted Southfield’s Motion.

(Southfield’s Appendix 2, Exhibits 1 and 2).

       4.     Kepka then filed a Petition for Writ of Mandamus in the Court of Appeals for

the First District of Texas seeking relief from the Trial Court’s Order dated November 10,

2004. The appellate cause number is 01-05-00115-CV and is styled In re Marguerite

Kepka, Individually and as Representative of The Estate of William G. Kepka, deceased.

(Southfield’s Appendix 2).




                                               vi
      5.     The Court of Appeals for the First District of Texas issued an opinion on July

28, 2005 which conditionally granted Ms. Kepka mandamus relief and ordered the trial

court to deny Southfield’s Motion to Compel Arbitration, holding that the MFA prevents the

FAA from preempting former article 4590i, section 15.01(a)’s arbitration notice

requirements. Southfield did not file a motion for rehearing. (Southfield’s Appendix 11).

      6.     About two months later, on September 13, 2005, Southfield filed a Motion for

Extension of Time to File a Petition for Review. The cause number for Southfield’s appeal

was 05-0749, and was styled Living Centers of Texas, Inc. D/b/a Southfield Healthcare

Center v. Marguerite Kepka, Individually and as Representative of the Estate of William G.

Kepka, Deceased. (Appendix 1).

      7.     A few weeks later, Southfield sought to dismiss its Petition. (Appendix 2).

Accordingly, on October 13, 2005, this Court granted Southfield’s Motion to Dismiss, and

November 23, 2005, sent this case to storage. (Appendix 3).

      8.     Then, on December 14, 2005, nearly five months after the Houston Court of

Appeals issued its opinion in July, 2005, Southfield finally filed a Petition for Writ of

Mandamus with the Texas Supreme Court.




                                           vii
                               ISSUES PRESENTED

Issue No. 1: Did the Houston Court of Appeals abuse its discretion in ruling that the
             McCarran-Ferguson Act (“MFA”) exempts the Texas Medical Liability
             and Insurance Improvement Act (“TMLIIA”) from preemption by the
             Federal Arbitration Act (“FAA”)?

Answer:      NO.

Issue No. 2: Did the Houston Court of Appeals abuse its discretion in ruling that the
             Arbitration Agreement does not cover Mrs. Kepka’s wrongful death
             claim because Mrs. Kepka signed the Arbitration Agreement as the
             representative of her husband and not in her individual capacity?

Answer:      NO.




                                         viii
                                         STATEMENT OF FACTS

           1.      Mr. Kepka was admitted to Southfield’s Nursing Home on November 22,

2002, Plaintiff’s Original Petition, (Appendix 4). Due to Southfield’s failure to care for Mr.

Kepka, on December 8, 2002, Mr. Kepka was found unresponsive and was transferred to

Memorial Hermann Southeast Hospital (Clerks Record, Exhibit 10). Notwithstanding

aggressive efforts, Mr. Kepka died on December 10, 2002, at age 59 (Id.).

           2.      As a part of the admitting process and as a precondition to having Mr. Kepka

admitted to Southfield and continue to stay, Southfield’s agent presented Mrs. Kepka with

a stack of documents and requested that she sign them as Mr. Kepka’s representative

(Affidavit of Marguerite Kepka, Southfield’s Appendix 2, Exhibit 8).

           3.      Southfield “is affiliated with Mariner Health which is a foreign corporation with

a nationwide network of over 250 nursing facilities, all of which are fully engaged in

interstate commerce.”1 In an effort to spread its risk among its patients and over time,

Southfield collected a per diem flat fee for the skilled nursing care it provided to Mr. Kepka

regardless of the amount of care actually provided.2

           4.      Mrs. Kepka signed the Arbitration Agreement on the signature line

designated: “If signing on behalf of the resident,” and did not sign the Agreement on the

signature line designated: “if signing on his or her own behalf,” (Arbitration Agreement, at

page 3, Southfield’s Appendix 2, Exhibit 7).                    Southfield admits that the Arbitration

Agreement violates Art. 4590i, §15.01 in that it does not contain the required language and

was not signed or reviewed by an attorney (Southfield’s Appendix 12, at p.17).

                                                        ix


1
    Southfield’s Arbitration Agreem ent, page 1 (Southfield’s Appendix 2, Exhibit 7).

2
    Southfield’s Adm ission and Financial paperwork, specifically bates pages 207-243 (Appendix 4).
           6.      On or about August 28, 2003, Kepka filed this wrongful death and

survivorship lawsuit against Southfield and two other Defendants, Dr. Gopal and Nurse

Chan, for their failure to properly care for Mr. Kepka (Clerk’s Record, Exhibit 10), seeking,

inter alia, (1) Mr. Kepka’s survivorship damages for his conscious, physical pain and

suffering, and mental anguish prior to his death, as well as medical, funeral and burial

expenses, and (2) Mrs. Kepka’s wrongful death damages for the loss of her husband (Id.).

           7.      After some written discovery was conducted, discovery disputes were

litigated,3 Plaintiff complied with the expert report requirements of Art. 4590i and defended

the adequacy of her expert’s report,4 and Southfield unsuccessfully moved to have this

case dismissed and refiled under the “new law” (Chapter 74, CPRC) to obtain the benefit

of the new $250,000 cap,5 Southfield filed a Motion to Compel Arbitration (Clerk’s Record,

Exhibit 21), which was granted by the Trial Court on rehearing.

           8.      Concerning the issue of whether Mrs. Kepka is bound in her individual

capacity and the defenses on which Southfield now seeks to rely, Southfield did not raise

any of such defenses at the Trial Court level (Clerk’s record, Exhibit 21; Reporter’s

Record), or to the Houston Court of Appeals (Southfield’s Appendix 12).

           8.      Since Southfield is engaged in the “business of insurance”, the TMLIIA is a

statute aimed at regulating the “business of insurance’, and Southfield’s Arbitration

Agreement admittedly does not comply with the TMLIIA, Kepka requests that this Court

deny Southfield’s request for mandamus relief.

                                                        x

3
    See, e.g., Plaintiff’s Motion to Com pel Discovery From Defendant Southfield (Clerk’s Record, Exhibit 16).

4
 Plaintiff’s Response to Defendants Gopal and Chan’s Motion to Dismiss, with the expert report of Dr.
Rushing attached (Clerk’s Record, Exhibit 17).

5
    Defendant Southfield’s Motion to Dism iss for Lack of 60 day Notice (Clerk’s Record, Exhibit 18).
                                   ARGUMENT AND AUTHORITIES

Issue No. 1 The Houston Court of Appeals did not abuse its discretion in ruling that
            the McCarran-Ferguson Act (“MFA”) exempts the Texas Medical
            Liability and Insurance Improvement Act (“TMLIIA”) from preemption by
            the Federal Arbitration Act (“FAA”).

           1.      The Texas Medical Liability and Insurance Improvement Act (“TMLIIA”)

(Southfield’s Appendix 2, Exhibit 3) is an Act which relates to the “business of insurance”

under the meaning of the McCarran-Ferguson Act (“MFA”) (Southfield’s Appendix 2,

Exhibit 5) and is therefore exempted from preemption by the FAA. Southfield placed itself

in the position of an insurer by collecting a premium or flat per diem fee regardless of the

care it provided to Mr. Kepka,1 and accordingly, is engaged in the “business of insurance”

under the meaning of the MFA. The Houston Court of Appeals correctly focused on the

analytical framework concerning the “business of insurance” set forth by the U.S. Supreme

Court in United States Dep't of Treasury v. Fabe2, and regardless, the TMLIIA satisfies the

test set forth a decade earlier in Union Labor Life Ins. Co. v. Pireno.3

A. The Houston Court of Appeals Correctly Followed Fabe

           2.      Southfield argues that the Houston Court of Appeal’s “exclusive reliance upon

Fabe without applying the Pireno factors is clear error.” (Southfield’s Petition, page 4).

Southfield bases its argument on the claim that both clauses of the MFA are to be

interpreted narrowly, and that the Pireno factors are mandatory even in a non-antitrust

context such as this. Southfield’s argument is without merit and must be rejected.


1
    Southfield’s Adm ission and Financial paperwork, (Appendix 4).

2
    United States Dep't of Treasury v. Fabe, 508 U.S. 491, 124 L. Ed. 2d 449, 113 S. Ct. 2202 (1993).

3
    Union Labor Life Ins. Co. v. Pireno, 458 U.S. 119, 73 L. Ed. 2d 647, 102 S. Ct. 3002 (1982).

RESPONSE TO PETITION FOR W RIT OF M ANDAM US                                                 PAGE 1
           3.       In Fabe, the U.S. Supreme Court established the analytical framework4 for

determining whether a state statute is exempt from Federal preemption under the first

clause of the MFA. Citing its own precedent, the Court held that statutes that possess the

“‘end, intention, or aim’ of adjusting, managing, or controlling the business of insurance”

and “‘statutes aimed at protecting or regulating this relationship [between insurer and

insured], directly or indirectly, are laws regulating “the business of insurance,”’ within the

meaning of’ the first clause of MFA section 1012(b).5

           4.       A decade earlier, in Pireno, the U.S. Supreme Court considered the meaning

of the phrase “business of insurance” under the second clause (the antitrust exemption)

of the MFA, and developed a list of factors to consider, including whether the state statute

has the effect of transferring or spreading a policyholder’s risk, whether the state statute

is an integral part of the relationship between the insurer and the insured, and whether the

practice is limited to entities within the insurance industry.6

           5.       Fabe specifically distinguished Pireno and Royal Drug7 on the ground that

they were antitrust law cases: “Both Royal Drug and Pireno, moreover, involved the scope

of the antitrust immunity located in the second clause of § 2(b). We deal here with the first

clause, which is not so narrowly circumscribed.”8 Similarly, this Court in Great American



4
    There is no dispute in the instant case re: the first and third prongs of this test (Southfield’s Petition, p.4).

5
 United States Dept. Of the Treasury v. Fabe, 508 U.S. 491, 501, 113 S. Ct. 2202, 2208 (1993) quoting
SEC V. Nat’l Secs., Inc., 393 U.S. 453, 460, 89 S.Ct. 564, 568 (1969).

6
    Pireno, 458 U.S. at 129.

7
    Group Life & Health Ins. Co. v. Royal Drug Co., Inc., 440 U.S. 205, 99 S. Ct. 1067 (1979).

8
    Fabe, 508 U.S. at 504, 113 S. Ct. at 2209, 124 L. Ed. 2d at 461.

RESPONSE TO PETITION FOR W RIT OF M ANDAM US                                                        PAGE 2
Insurance Co.,9 held that case law interpreting the phrase “business of insurance” in an

antitrust setting has “no application” to whether state laws are protected under the

commerce clause, and moreover, that the reference to the MFA in former Art. 21.21

evidences an intent to “utilize the broad grant of power to the states under the MFA.”10

           6.       Nor is Pireno mandatory. The U.S. Supreme Court has made clear that the

most important aspect of the analytical approach concerning the “business of insurance”

is whether from a common sense view the contested statute regulates insurance. The

High Court has stated that the three Pireno factors are of secondary importance, serving

only as "checking points" or "guideposts" and not as essential elements.11

           7.       Southfield cites in a footnote one Texas Court of Appeals opinion, Cathey,12

in support of its misplaced and erroneous argument that the Houston Court of Appeal’s

exclusive reliance on Fabe without applying the Pireno factors is clear error. (Southfield’s

Petition, at p.4). In Cathey, the court addressed whether the general tort and contract

principles of bad faith were exclusive to the insurance industry, and concluded they were

not.      Cathey actually supports Kepka’s position in that the Court of Appeals, while

mentioning the Pireno factors, actually bases its ruling on the broader test of whether the

statute at issue is specifically directed toward the insurance industry. (Id. at 290).




9
    Great Am er. Ins. Co. v. North Austin Municipal Utility District No. 1, 908 S.W .2d 415, 420 (Tex. 1995).

10
  Great Am erican, at 421. See also Dallas Fire Ins. Co. v. Texas Contractors Surety, 128 S.W .3d 279
(Tex. App. - Fort W orth, 2004).

11
  See, e.g., UNUM Life Insurance of Am erica v. W ard, 526 U.S. 358, 119 S. Ct. 1380, 143 L. Ed. 2d 462
(1999), where the Court ignored the first factor altogether in its analysis of the challenged statute.

12
     Cathey v. Metropolitan Life Insurance Co., et al., 764 S.W .2d 286 (Tex. App. - Houston [1 st Dist.] 1988).

RESPONSE TO PETITION FOR W RIT OF M ANDAM US                                                    PAGE 3
Moreover, this Court, in its review of the Cathey13 case (which is not cited by Southfield),

based its ruling on ERISA preemption and did not conduct an analysis of the Pireno factors

or even base its ruling on the MFA, as Southfield implies. (Id. at 390-391.)

           8.      Accordingly, the Houston Court of Appeals did not abuse its discretion in

relying on Fabe to conclude that the TMLIIA is directly or indirectly aimed at regulating the

business of insurance under the meaning of the McCarran-Ferguson Act.

B. Southfield is Engaged in the “Business of Insurance” Because it Placed Itself in
the Position of an Insurer
           9.      Southfield argues that it and Kepka are strangers to the insured-insurer

relationship, and therefore the MFA does not apply; Southfield concedes that if it were an

insurance carrier or an HMO, then the MFA would apply. (Southfield’s Petition, p 7).

           10.     It is undisputed that Southfield “is affiliated with Mariner Health which is a

foreign corporation with a nationwide network of over 250 nursing facilities, all of which are

fully engaged in interstate commerce.”14 In an effort to spread its risk among its patients

and over time, Southfield collected a per diem flat fee for the skilled nursing care it

provided to Mr. Kepka regardless of the amount of care actually provided;15 in this way,

Southfield made the unqualified decision to place itself in the position of an insurer and

therefore is engaged in the “business of insurance” for purposed of the MFA.

           11.     Courts consistently hold that entities other than traditional insurance carriers

engage in the “business of insurance” when they function in the same way as a traditional


13
     Cathey v. Metropolitan Life Insurance Com pany, et al. 805 S.W .2d 387 (Tex. 1991).

14
     Southfield’s Arbitration Agreem ent, page 1 (Southfield’s Appendix 2, Exhibit 7).

15
     Southfield’s Adm ission and Financial paperwork, (Appendix 4).

RESPONSE TO PETITION FOR W RIT OF M ANDAM US                                               PAGE 4
health insurer, by, for example, allowing a policyholder to pay a fee for a promise of

services in the event that they are needed–precisely as Southfield did in this case. For

example, in Corporate Health Ins., Inc. v. Texas Dep’t of Ins.,16 the 5th Circuit held that “in

determining whether a statute regulates the insurance industry, courts have examined

whether a statute governs only entities acting as insurers” (215 F.3d at 538). In Anderson

v. Humana, Inc.,17 the 7th Circuit noted that “[b]ecause HMOs spread risk–both across

patients and over time for any given person–they are insurance vehicles” (24 F.3d at 892).

In Washington Phys. Service Ass’n v. Gregoire,18 the 9th Circuit concluded “this is a

distinction without a difference. . . In the end, HMOs function the same way as a traditional

health insurer: The policyholder pays a fee for a promise of medical services in the event

that he should need them.”19 And in Klamath-Lake20 the court held that a basic health care

contract with a health care provider was protected by the MFA because the arrangement

“settles the distribution of the risk that insureds will need medical goods and services,

including prescription drugs. It defines the relationship between insurer and insured. And

it is limited to these two traditional actors in the insurance industry.” “We do not believe that

the Court intended to remove the business of health insurance from the McCarran-

Ferguson exemption. . . . Nor does Pireno suggest otherwise.” (Id. at 1286)

16
     Corporate Health Ins., Inc. v. Texas Dep’t of Ins., 215 F.3d 526, 538 (5 th Cir. 2000).

17
     Anderson v. Hum ana, Inc., 24 F.3d 889 (7th Cir. 1994).

18
     W ashington Physicians Service Ass’n v. Gregoire, 147 F.3d 1039, 1046 (9 th Cir. 1998).

19
  The sam e point was made in Physicians Health Plan, Inc. v. Citizens Ins. Co. of Am erica: “The
difference is im m aterial. In either schem e, the principle is the sam e: for a fixed fee, the risk and
responsibility of providing benefits is shifted from the beneficiary to a third party insurer. Physicians Health
Plan, Inc. v. Citizens Ins. Co. of Am erica, 673 F. Supp. 903, 907 (W .D. Mich. 1987).

20
     Klam ath-lake Pharm aceutical Assoc., v. Klam ath Medical Service Bureau, 701 F.2d 1276 (9 th Cir. 1983).

RESPONSE TO PETITION FOR W RIT OF M ANDAM US                                                   PAGE 5
           12.      In Smith v. PacifiCare Behavioral Health of California, Inc.,21 a case cited by

Southfield, a California Court of Appeals considered whether a statute which imposed

certain disclosure requirements (similar to Art. 4590i, Sec. 15.01) as a predicate to

enforcement of arbitration clauses contained in health care service plans was preempted

by the FAA. As Southfield does in the instant case, Pacificare argued that it was not

engaged in the business of insurance, and that the applicable statute was not a statute

which regulated the business of insurance. In holding that PacifiCare was engaged in the

“business of insurance” the California court explained:
                    Beginning in the late 1960's, insurers and others developed new m odels for health-
           care delivery, including HMOs. The defining feature of an HMO is receipt of a fixed fee for
           each patient enrolled under the term s of a contract to provide specified health care if
           needed. The HMO thus assum es the financial risk of providing the benefits prom ised: if a
           participant never gets sick, the HMO keeps the m oney regardless, and if a participant
           becom es expensively ill, the HMO is responsible for the treatm ent agreed upon even if its
           cost exceeds the participant's prem ium s.22

Similarly, Southfield spreads its risk over its patients and over time, and takes the risk that

the patient will become seriously ill or injured, but stands to gain if Kepka does not need

a significant amount of skilled nursing care.

           13.      Southfield relies exclusively on the case of Texas Health Enterprises, Inc. v.

Gentry23 in support of its argument that it bears no relationship with Kepka which

resembles that of insurer and policyholder. Gentry is entirely distinguishable from the

instant case, as well as other decisions addressing the “business of insurance” which

support Kepka’s position. In Gentry, a nursing home provided medical care for its

employees as a benefit of employment; it was not a service sold to the employee, and the


21
     Sm ith v. PacifiCare Behavioral Health of California, Inc., 93 Cal. App. 4 th 139, 143 (2001).

22
     Sm ith, at 147-148 (citing Pegram v. Herdrich, 530 U.S. 211, 218-219 (2000)).

23
     Texas Health Enterprises, Inc. v. Gentry, 787 S.W .2d 604 (Tex. App.-El Paso 1990, no writ).

RESPONSE TO PETITION FOR W RIT OF M ANDAM US                                                      PAGE 6
employee paid nothing to the employer for medical care. Unlike in Bekins v. Williams,24

and E-Z Mart Stores, Inc. v. Hale,25–and unlike in the instant case--the El Paso Court in

Gentry concluded that the benefit program was incidental to its business and to the

relationship between the parties, and could not be construed as an insurance policy.26

Southfield’s significant efforts to establish a fixed method of payment with Kepka (see

Appendix 4), as well as its significant efforts to enforce its illegal Arbitration Agreement

support that this arrangement was not merely incidental to its business.

           14.     The Houston Court of Appeals acknowledged that the instant case does not

involve a traditional insurance company-insured relationship, or HMO-patient relationship;

however, the Houston Court correctly dismissed this fact as not dispositive, relying on the

Colorado Supreme Court’s reasoning in Allen v. Pacheco27:
           the fact that [the Colorado statute’s arbitration provision section] apply to "health care
           providers" instead of exclusively to insurers such as HMOs does not nullify our conclusion
           that [these sections] were enacted for the "purpose of regulating the business of insurance."
           As long as the statute is not one of general applicability, it is not necessary that the state
           statute relate only to insurance or that the statute be in the form of an insurance code.
           Therefore, the fact that [these sections] technically include non-insurer "health care
           providers" such as physicians does not prevent these sections of the [Colorado statute] from
           qualifying as statutes enacted "for the purpose of regulating the business of insurance" under
           the m eaning of the McCarran-Ferguson Act.28

           15.     The Houston court of appeals did not abuse its discretion in applying this

analysis. Southfield acts in a capacity similar to an HMO and an insurance carrier in that



24
 Bekins v. W illiam s, 947 S.W .2d 568 (Tex. App. - Texarkana, 1997) (the em ployer [selling] a set dollar
am ount of coverage “was an integral part of Bekins' overall sale of its m oving services.”)

25
 E-Z Mart Stores, Inc. V. Hale, 883 S.W .2d 695 (Tex. App. - Texarkana, 1994) (the em ployer “m ade the
unqualified decision to place itself in the position of an insurer.”)

26
     Gentry, at

27
     Allen v. Pacheco, 71 P.3d 375, 381 (Colo. 2003) (en banc) (cert. denied, 540 U.S. 1212 (2004)).

28
     Houston Court of Appeals opinion, at p.20, Southfield’s Appendix 11.

RESPONSE TO PETITION FOR W RIT OF M ANDAM US                                                    PAGE 7
it collects a premium or flat per diem fee regardless of the care it provides in an effort to

spread the risk of providing an unknown quantity of care to its patients. This arrangement

is a type of health insurance, and accordingly, the well-established authority holding that

this is the “business of insurance” is applicable and controlling.

C. The TMLIIA Regulates the “Business of Insurance”

        (1) Federal Authority Supports Kekpa’s Position

        16.      Federal and State Courts have consistently held that restrictions on

arbitration clauses transfer and distribute risk by limiting the way in which disputed claims

may be resolved, and that the dispute resolution process is an integral “core” part of the

policy relationship.29 Consequently, courts consistently agree that where a state legislature

explicitly prevents enforcement of mandatory arbitration provisions in insurance contracts,

or imposes conditions on the use of arbitration in health care and insurance-related

settings, a Legislature directly and indirectly affect the relationship between policyholders

and their insureds concerning disputed claims and costs of insurance, and regulates the




29
  See, e.g., McKnight v. Chicago Title Ins. Co., 358 F.3d 854, 858 (11th Cir. 2004) (Georgia Code § 9-9-
2(c)(3) transfers or spreads insured's risk by introducing possibility of jury verdicts and by lim iting
enforceability of parties' agreem ent to spread risk); Standard Sec. Life Ins. Co. v. W est, 267 F.3d 821, 824
(8th Cir. 2001) (statute regulates an integral part of the insurer-insured relationship and transfers or
spreads the risk by introducing the possibility of jury verdicts into the process for resolving disputed
claim s); Mut. Reinsurance Bureau v. Great Plains Mut. Ins. Co., 969 F.2d 931, 933 (10th Cir. 1992)
(explaining that the provision prohibiting enforcem ent of arbitration agreem ents "directly regulates the
relationship between the insurance com pany and its policyholder" and lim ited enforceability of parties'
agreem ent to spread risk); Cont'l Ins. Co. v. Equity Residential Props. Trust, 565 S.E.2d 603, 605 (Ga.
App. 2002) (Georgia Code § 9-9-2(c)(3) has the effect of transferring or spreading risk by preserving the
possibility of a jury verdict (as opposed to com pelled arbitration) to resolve the claim ); Cox v. W oodm en of
the W orld Ins. Co., 556 S.E.2d 397, 401-402 (S.C. App. 2001) (by excepting insurance contracts from
arbitration statute, S.C. legislature placed lim its on the enforceability of an agreem ent to spread risk).

RESPONSE TO PETITION FOR W RIT OF M ANDAM US                                                  PAGE 8
"business of insurance" for purposes of the McCarran-Ferguson Act.30

           17.      Southfield apparently concedes this point (Southfield’s Petition, at 8-9), as

the cases cited by Southfield show. For example, in Continental Ins. Co. v. Equity

Residential Properties Trust,31 the court held that statutory requirements for arbitration

agreements are “integral to the policy relationship between the insured and the insurer, and

ha[ve] the effect of transferring or spreading risk by preserving the possibility of a jury

verdict (as opposed to compelled arbitration) to resolve the claim.” And similarly, in

Standard Security Life Ins. Co. of New York v. West,32 the Eighth Circuit held that a statue

regulating arbitration agreements “does regulate the business of insurance because it

applies to the processing of disputed claims. This processing, in turn, has a substantial

effect upon the insurer-insured relationship and the policy interpretation and enforcement,

both of which are ‘core’ components of the business of insurance.” (267 F.3d at 823). The

statute “transfers or spreads the risk by introducing the possibility of jury verdicts into the

process for resolving disputed claims.” (Id. at 824). The statute “regulates an integral part


30
  See, e.g., Mut. Reinsurance Bureau v. Great Plains Mut. Ins. Co., 969 F.2d 931, 932 (10th Cir. 1992)
(explaining that the Kansas statute which excluded insurance contracts from general statute validating
arbitration agreem ents regulated the "business of insurance" even though it was not in the state insurance
code and inversely preem pted the FAA through Section 2(b) of the McCarran-Ferguson Act); Friday v.
Trinity Universal of Kan., 939 P.2d 869, 872 (Kan. 1997) (explaining that the Kansas statute which
excluded insurance contracts from general statute validating arbitration agreem ents regulated the
"business of insurance" even though it was not in the state insurance code and inversely preem pted the
FAA through Section 2(b) of the McCarran-Ferguson Act); Sm ith v. Pacificare Behavioral Health of Cal.,
Inc., 113 Cal. Rptr. 2d 140, 151 (Cal. App. Dep't Super. Ct. 2001) (stating that disclosure requirem ents
relating to arbitration in Cal. Stat. § 1363.1 constituted regulation of insurance, regulating the relationship
between insurer and insured under the protection of the McCarran-Ferguson Act, and thus, health service
plan's arbitration provisions that did not satisfy statutory disclosure requirem ents were not enforceable; the
law regulated the relationship between the insured and the policyholder, which was at the core of the
business of insurance).

31
     Continental Ins. Co. v. Equity Residential Properties Trust, 565 S.E. 2d 603, 605 (2002).

32
     Standard Security Life Ins. Co. of New York v. W est, 267 F.3d 821 (8 th Cir. 2001).

RESPONSE TO PETITION FOR W RIT OF M ANDAM US                                                     PAGE 9
of the insurer-insured relationship.” Id.33

           (2) Texas Authority Supports Kepka’s Position

           18.      In order to conclude that the TMLIIA is intended to spread risk, is an integral

part of the medical liability insurance and claims scheme, and is limited to the health care

liability industry, this Court needs to look no further than its own published opinions. For

example, in Diversicare v. Rubio,34 this Court this Court held that the TMLIIA was such an

integral part of the health care liability and insurance scheme that it governed a sexual

assault in a health care facility. Adopting the contrary position:

           would open the door to splicing health care liability claim s into a m ultitude of other causes of
           action with standards of care, dam ages, and procedures contrary to the Legislature's explicit
           requirem ents [and] efforts to m odify liability laws relating to health care claim s to address the
           m edical liability insurance “crisis” which has had a “m aterial adverse effect” on the delivery
           of m edical and health care in Texas. (Id. at 32).

And in Horizon v. Auld,35 this Court recognized again:
           The Legislature enacted article 4590i with the express recognition that Texas faced "a
           serious public problem in availability of and affordability of adequate m edical professional
           liability insurance," which in turn had "a m aterial adverse effect on the delivery of m edical and
           health care in Texas" [and that] one of the purposes of article 4590i is to "decrease the cost
           of" health-care-liability claim s” [and] reduce the expenses of trying m edical liability lawsuits".

Focusing on the impact to the insurance industry, this Court concluded that punitive

damages were not included in Art. 4590i’s cap the cap, because “insurers cannot insure

against punitive damages anyway.” (Id. at*19-20). And in Babcock v. Northwest Memorial




33
  See also Metropolitan Life Insurance Co. v. Massachusetts, 471 U.S. 724 (1985) (laws regulating claim s
practice regulate insurance); Stuart Circle Hosp. Corp. v. Aetna Health Mgm t, 995 F.2d 500, 502 (4th Cir.
1993) (regulations which affect the cost of insurance are likewise integral parts of the relationship);
Kentucky Association of Health Plans, Inc., v. George Nichols, 227 F.3d 352 (6 th Cir. 1999); Texas
Pharm acy Association, et al. v. the Prudential Insurance Com pany of Am erica, 1997 U.S. App. Lexis
12986 (5 th Cir. 1997).

34
     Diversicare, et al. v. Rubio, 49 Tex. Sup. J. 19 (Tex. 2005).

35
     Horizon v. Auld, 34 S.W .3d 887, 893 (Tex. 2000).

RESPONSE TO PETITION FOR W RIT OF M ANDAM US                                                         PAGE 10
Hospital36 this Court held that “trial court's refusal to allow questions during voir dire

addressing the alleged "liability insurance crisis," "lawsuit crisis," “higher premiums,” was

such an abuse of discretion [that it] probably did cause the rendition of an improper

judgment. . . . [and denied] the Babcocks' constitutional right to trial by a fair and impartial

jury” (Id. at 709).

           19.     This Court has repeatedly stated in no uncertain terms that “The Legislature

enacted the Medical Liability and Insurance Improvement Act to alleviate a perceived

medical malpractice insurance crisis in the State of Texas.”37 Similar pronouncements from

this Court can been found in many of this Court’s opinions since the passage of the

TMLIIA.38 Recently, in In re Woman’s Hospital,39 Justice Owen, joined by Justice Hecht and

Justice Brister (dissenting), noted that the Legislature’s addition to the TMLIIA in 2003 of

the right to an interlocutory appeal “is another unmistakable statement of public policy

that the Legislature does not want health care liability cases to proceed through the legal

system if the threshold requirement of an expert report has not been met” and “is entirely


36
     Babcock v. Northwest Mem orial Hospital, 767 S.W .2d 705 (Tex. 1989).

37
  Morrison v. Chan, 699 S.W .2d 205, 208 (Tex. 1985); Kim ball v. Brothers, 741 S.W .2d 370, 372 (Tex.
1987). See also W einer v. W asson, 900 S.W .2d 316; (Tex. 1995); In Re W om an’s Hospital of Texas, Inc.,
141 S.W .3d 144 (Tex. 2004); Colum bia Hospital Corporation of Houston v. Moore, et al., 92 S.W .3d 470
(Tex. 2002); Rubio; Auld.

38
  See, e.g., Lucas, et al. v. United States of Am erica, 757 S.W .2d 687; (Tex. 1988), where Justice Phillips
stressed the im portance of the dam ages cap: the Legislature enacted the TMLIIA because "the cost to
physicians” and the “cost im pact on patients” and the lack of “satisfactory insurance coverage” has
“caused a serious public problem ” (Id. at 115-116) of “critical im portance to all people” including both
"significant reductions of availability of m edical and health care services and an increase in "the cost of
m edical care both directly through fees and indirectly through services provided for protection against
future suits or claim s" (dissent). Sim ilarly, in support of a two-year statute of lim itations even for m inors, in
W einer v. W asson, 900 S.W .2d 316; (Tex. 1995), Justice Owen cited the “im portant” state interest directly
related to the m edical m alpractice insurance “crisis” found by the Legislature which has had a “m aterial
adverse effect on the cost and availability of health care.” (Id. at 331 (dissent)).

39
     In Re W om an’s Hospital of Texas, Inc., 141 S.W .3d 144 (Tex. 2004).

RESPONSE TO PETITION FOR W RIT OF M ANDAM US                                                       PAGE 11
consistent with decisions of this Court that hold irreversible harm to the public's interest

makes a remedy by appeal inadequate,” citing the “irreversible waste of judicial and

public resources” incurred when physicians and their carriers ‘expend sizeable sums

defending [potentially frivolous] claims. The “obvious intent” of these statutory provisions

of the TMLIIA, was to “reduce waste of the . . . insurers' time and money, which would

favorably impact the cost of insurance to health care providers and thus the cost and

availability of health care to patients.” (Id.) (emphasis added).

        20.      Finally, to the extent Southfield argues that since it is neither an insurer, nor

is Kepka an insured, the statutory regulation of arbitration agreements in §15.01 which

govern their relationship is not "limited to entities within the insurance industry" and does

not meet the third prong of the Pireno test, this Court’s opinion in Auld resolves this issue:

        To clarify the uniqueness of the liability-lim iting provisions of article 4590i and to ensure their
        distinction from other liability laws, the Legislature added section 1.02(b)(7) to the "Findings
        and Purposes" part of the Act. Section 1.02(b)(7) illustrates that one purpose of article 4590i
        is to m odify "liability laws as they relate to health care liability claim s only." This dem onstrates
        that the Legislature understood that article 4590i is intended to lim it liability in ways that are
        unique to 4590i and to be a self-contained structure for determ ining a health-care provider's
        liability and dam ages. (Auld, at 900.)


Consistent therewith, the Houston Court correctly reasoned that the TMLIIA is not a statute

of general applicability, but, is intended to “make certain modifications in the . . . insurance

. . . system to resolve the so-called “insurance crisis.”40

        21.      If the TMLIIA was not enacted to regulate the business of health care liability

insurance, then this court would have held the entire statute unconstitutional due to lack

of a compelling state interest. Not only has this court not done so, but this court’s


40
  Art. 4590i, §1.02, Southfield’s Appendix 2, Exhibit 3. These Findings are rem arkably sim ilar to those
relied on by the Colorado Suprem e Court in Pacheco. See Colorado HCAA, Sec. 13-64-102, Southfield’s
Appendix 2, Exhibit 4.

RESPONSE TO PETITION FOR W RIT OF M ANDAM US                                                         PAGE 12
consistent language reinforces Kepka’s position that the TMLIIA is an integral part of the

relationship between health care providers and their insurers, and is specifically directed

to the business of health care liability insurance.

       22.     Southfield is correct: upholding the Court of Appeals’ ruling would effectively

nullify its Arbitration Agreement; this is precisely the result which should occur in light of

the Legislature’s clear intent in enacting the TMLIIA, this court’s clear pronouncements

concerning same, and Southfield’s knowing failure to draft an Arbitration Agreement in

compliance with Texas state law. Contrary to Southfield’s assertion that it was merely an

arbitrary decision to have certain requirements in arbitration clauses affecting health care

liability claims, this Court’s clear consistent language shows that Art. 4590i, and specifically

§15.01, reflects a determination by the Texas Legislature to control the risks and harms

caused by the health care liability insurance crisis, which the Houston Court of Appeals

correctly recognized in holding that the TMLIIA is a statute which regulates the “business

of insurance” according to the MFA.

Issue No. 2: The Court of Appeals did not abuse its discretion in ruling granting that
             the Arbitration Agreement does not cover Mrs. Kepka’s wrongful death
             claim because Mrs. Kepka signed the Arbitration Agreement as the
             representative of her husband and not in her individual capacity.

       23.    Southfield’s claim that the Court of Appeals “failed to recognize or consider

all of relator’s defenses” is patently false and must be rejected. To the contrary, the

Houston Court of Appeals correctly acknowledged: “Southfield neither argued any of these

grounds for requiring Mrs. Kepka to arbitrate her claims to the trial court, not asserts them

in this Court” (P23). Southfield did not raise the defenses of “(1) derivative cause of action;

(2) equitable estoppel; (3) incorporation by reference; or (4) third-party beneficiary” at the


RESPONSE TO PETITION FOR W RIT OF M ANDAM US                                     PAGE 13
Trial Court level (Clerk’s record, Exhibit 21), Southfield did not make such arguments

during the oral hearing in the Trial Court (Reporter’s Record), and Southfield did not raise

such issues to the Houston Court of Appeals (Southfield’s Appendix 12). Regardless, the

Houston court of Appeals considered and rejected all six potential theories used by the

courts to bind non-signatories to arbitration agreements.

           24.     The Trial Court41 as well as the Houston Court of Appeals42 properly

recognized the validity and legal significance of the fact that Mrs. Kepka signed the

Agreement in a representative capacity only. Since it is undisputed that Mrs. Kepka

signed the Arbitration Agreement on the signature line designated: “If signing on behalf

of the resident,” and did not sign the Agreement on the signature line designated: “if

signing on his or her own behalf,” (Arbitration Agreement, at page 3, Appendix 2, Exhibit

7), the Houston Court of Appeals correctly ruled that the Arbitration Agreement does not

cover Mrs. Kepka’s wrongful death claims or bind Mrs. Kepka in her individual capacity.

           25.     It is well established that a party who is not a signatory to a contract is not

bound by its terms.43 It is also well established that a party who is a signatory only in a

representative capacity is not bound by its terms in an individual capacity.44 Moreover, “the

Federal policy favoring arbitration does not extend to a determination of who is bound

41
  “W hy would it be enforceable against her if she is sim ply signing on behalf of the resident and not on her
own behalf?” (Transcript, page 17:13-19); “Can I refer then the . . . wrongful death portion of the case, . . .
not the representative – but the individual case to the arbitration panel based on this contract? I m ean, it's
a contractual term . . . . There was a provision for her to sign there [on her own behalf] as well and she
didn't do it.” (Transcript, page 42:16-18).

42
 “It goes without saying that a contract cannot bind a nonparty." Fleetwood v. Gaskam p, 280 F.3d 1069,
1074 (5 th Cir. 2002).

43
     See, e.g., Fleetwood v. Gaskam p, 280 F.3d 1069 (5 th Cir. 2002).

44
     See, e.g., Gracia v. RC Cola-7-up Bottling Co., 667 S.W .2d 517 (Tex. 1984).

RESPONSE TO PETITION FOR W RIT OF M ANDAM US                                                  PAGE 14
because, as stated by the Supreme Court, the purpose of the Federal Arbitration Act is ‘to

make arbitration agreements as enforceable as other contracts, but not more so.’”45

           26.     It is also undisputed that the Arbitration Agreement which Southfield’s

counsel drafted does not make any reference to a death or wrongful death claim in the

section which expressly sets forth a litany of specific claims which are covered.

Conversely, the arbitration agreement at issue in the Pacheco case, relied on by Southfield

in the instant case, specifically and expressly included all claims, including but not limited

to “death.”46 The Pacheco Court therefore reasoned that based on the “broad terms” of

the agreement–which included “death” claims--spouses must be covered, because a

contrary interpretation would yield the absurd result that a resident’s children’s death claim

would be subject to arbitration, whereas the spouse’s would not (Id.). The instant case is

distinguishable in that the Agreement drafted by Southfield does not mention death claims,

and therefore no such absurd result would be reached by following the plain meaning of

the contractual language. Accordingly, Southfield’s reliance on the Pacheco case is

misplaced, as the Houston Court of Appeals properly distinguished.

           27.     The Court of Appeals did not abuse its discretion in ruling that the Arbitration

Agreement does not cover Mrs. Kepka’s wrongful death claim and does not bind Mrs.

Kepka in her individual capacity. Therefore, this Court must deny Southfield’s request for

Mandamus relief.




45
     Fleetwood v. Gaskam p, 280 F.3d 1069, 1074 (5 th Cir. 2002)

46
     Allen v. Pacheco, 71 P.3d at 377.

RESPONSE TO PETITION FOR W RIT OF M ANDAM US                                        PAGE 15
                                         PRAYER

       For these reasons, Kepka requests that this Court find that the Court of Appeals did

not abuse its discretion, and that this Court deny Southfield its mandamus relief. Kepka

also prays for all other relief to which she may be entitled by virtue of the premises either

at law or in equity.

                                   Respectfully submitted,


                                   ___________________________________
                                   William B. Curtis
                                   State Bar No. 00783918
                                   Josh Bernstein
                                   State Bar No. 00793335
                                   LAW OFFICES OF MILLER AND CURTIS, L.L.P.
                                   5489 Blair Road, Suite 500
                                   Dallas, TX 75231
                                   Telephone: (214) 987-0005
                                   Fax: (214) 987-2545

                                   Melvin H. Wolovits
                                   State Bar No. 21872390
                                   THE LAW OFFICES OF MELVIN H. WOLOVITS, P.C.
                                   9400 N. Central Expressway, Ste. 419
                                   Dallas, TX 75231
                                   Telephone: (214) 373-3777
                                   Fax: (214) 373-3388

                                   ATTORNEYS FOR REAL PARTY IN INTEREST,
                                   MARGUERITE KEPKA, INDIVIDUALLY AND AS
                                   REPRESENTATIVE OF THE ESTATE OF WILLIAM G.
                                   KEPKA, DECEASED




RESPONSE TO PETITION FOR W RIT OF M ANDAM US                                  PAGE 16
                                     VERIFICATION
STATE OF TEXAS           )

COUNTY OF DALLAS             )

      BEFORE ME, the undersigned notary public, on this day personally appeared Josh
Bernstein, who being duly sworn by me deposed and said:
      1.     I am counsel of record for MARGUERITE KEPKA, Real Party In Interest in
this case. I am over 21 years of age and am competent to make this affidavit. I have read
the foregoing Response to Petition for Writ of Mandamus to which this verification is
attached, which is filed on behalf of MARGUERITE KEPKA, and every factual statement
contained in this Response is within my personal knowledge and is true and correct.
      2.     This Response is accompanied by an Appendix. I have personal knowledge
that the documents contained in the Appendix are true and correct copies.
      Further, Affiant sayeth not.

                                         Josh Bernstein,
                                         Counsel for Real Party In Interest,
                                         MARGUERITE KEPKA
                                         Affiant


Sworn to and subscribed before me on                , 2006.



                                         Notary Public, State of Texas




RESPONSE TO PETITION FOR W RIT OF M ANDAM US                                PAGE 17
                              CERTIFICATE OF SERVICE

     This certifies that the undersigned served this RESPONSE TO PETITION FOR WRIT OF
MANDAMUS on the following by certified mail or fax on February __, 2006:

Respondent
Court of Appeals for the First District of Texas
Clerk of the 1st Court of Appeals, 10th Floor
1307 San Jacinto
Houston, TX 77002

Trial Court
The Honorable Judge John Wooldridge
269th District Court
Harris County, Texas
301 Fannin, P. O. Box 4651,
Houston, TX 77210-4651

Relator
Living Centers of Texas, Inc.,d/b/a Southfield Healthcare Center
by sending it to lead counsel, Steve Dollinger at
PRESTON & COWAN, L.L.P.
1400 Two Houston Center, 909 Fannin Street
Houston, TX 77010

Other Parties - Co-defendant
Thandavarajan Gopalakrishnan, M.D. d/b/a Southbelt Medical Clinic;
and Virginia D. Chan, A.N.P.
by sending it to lead counsel, John C. Marshall
at MARSHALL & McCRACKEN, P.C.
1990 Post Oak Blvd., Suite 2400
Houston, TX 77056


                                   __________________________
                                   Josh Bernstein
                                   Attorney for Real Party In Interest




RESPONSE TO PETITION FOR W RIT OF M ANDAM US                             PAGE 18
                                        APPENDIX

EXHIBIT 1
Southfield’s Motion for Extension of Time to File a Petition for Review filed in this court on
September 13, 2005, cause number 05-0749, styled Living Centers of Texas, Inc. D/b/a
Southfield Healthcare Center v. Marguerite Kepka, Individually and as Representative of
the Estate of William G. Kepka, Deceased.

EXHIBIT 2
Southfield’s Motion to Dismiss Motion for Extension of Time to File a Petition for Review
filed in this Court on September 21, 2005

EXHIBIT 3
This Court’s Order dated October 13, 2005 granting Southfield’s Motion to Dismiss and
dismissing its Petition.

EXHIBIT 4
Southfield’s Admission and Financial paperwork for Mr. Kepka




RESPONSE TO PETITION FOR W RIT OF M ANDAM US                                   PAGE 19

								
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