TEXAS MEDICAL LIABILITY ACT REPORT REQUIREMENTS DO NOT APPLY TO INSURER’S FRAUD CLAIMS AGAINST MEDICAL PROVIDERS

Last Wednesday, the Houston Court of Appeals affirmed a trial court’s order denying a group of medical providers’ motion to dismiss a lawsuit against them filed by Allstate entities alleging fraud and other causes of action.  In Shanti v. Allstate Insurance Company, 2011 WL 5244360 (Tex.App. – Houston [14th Dist.] November 3, 2011), Allstate filed suit against Ishan Shanti, M.D., Larry Likover, M.D. and other entities providing medical services, alleging causes of action for fraud, conspiracy, unjust enrichment, and claiming damages resulting from settlements paid in reliance on false billing and other records prepared by the medical providers and relied upon by the insurers.  The medical providers sought dismissal of the lawsuit under the Texas Medical Liability Act (TLMA) because the insurers did not timely file an expert report under the TMLA in support of their claims.  The trial court denied the motion and this appeal followed.

On appeal, the court observed that the TMLA only requires an expert report from plaintiffs seeking recovery against a medical provider in a “health care liability claim.”  The court examined Texas case law rejecting application of the TMLA report requirements in similar circumstances, and closely examined the underlying facts and allegations asserted by Allstate against the providers including false billing, kickback schemes, and personal injury attorneys directing treatment.   The court rejected the medical providers’ arguments that these are health care liability claims recast as fraud, conspiracy and unjust enrichment and held that Allstate was not a claimant under the TMLA subject to its report requirements. The trial court’s ruling denying the motion to dismiss the insurers’ claims was affirmed.