Legislative Protections for Texas Optometrists - PowerPoint Presentation

Slide1

Legislative Protections for Texas Optometrists

EyeCon

2014

Drew York

Gray Reed & McGraw, P.C.

dyork@grayreed.comSlide2

Three Principal Statutes Protecting Optometrists

Optometry Act (Texas Occupations Code Chapter 351)

Texas Insurance Code Chapter 1451

Medical Liability Act (Texas Civil Practice and Remedies Code Chapter 74) Slide3

Texas Optometry Act

(Occupations Code Chapter 351)

Section 408

“prevent[s]

manufacturers, wholesalers, and retailers of ophthalmic goods from controlling or attempting to control the professional judgment, manner of practice, or practice of an optometrist or therapeutic

optometrist.”Slide4

Texas Optometry Act

(Occupations Code Chapter 351)

Section 408

“prevent[s]

manufacturers, wholesalers, and retailers of ophthalmic goods from controlling or attempting to control the professional judgment, manner of practice, or practice of an optometrist or therapeutic

optometrist.”

The defendant

must

be a manufacturer, wholesaler, or retailer of ophthalmic goods.Slide5

Texas Optometry Act

(Occupations Code Chapter 351)

Section 408

“prevent[s]

manufacturers, wholesalers, and retailers of ophthalmic goods from controlling or attempting to control the professional judgment, manner of practice, or practice of an optometrist or therapeutic

optometrist.”

The defendant

must

be a manufacturer, wholesaler, or retailer of ophthalmic goods.

Section 408

does not apply

to other optometrists or any legal entities owned and controlled by an optometrist unless the optometrist or legal entity has more than three locations.Slide6

Texas Optometry Act

(Occupations Code Chapter 351)

Section 408

“control

or attempt to control the professional judgment, manner of practice, or practice of an optometrist or therapeutic optometrist" includes

:

This means the following list is not exhaustive, which is important because the statute is liberally construed.

Slide7

Express Examples of Violations of Section 408

setting

or attempting to influence the professional fees or office hours of an optometrist or therapeutic

optometrist

Example: You lease space from

Supermart

for your optometry practice.

Supermart

retails glasses and contacts to customers. Your lease with

Supermart

states you must be open Monday-Saturday 9 a.m.-7 p.m.

Supermart

is violating Section 408 by setting your office hours.Slide8

Express Examples of Violations of Section 408

setting

or attempting to influence the professional fees or office hours of an optometrist or therapeutic

optometrist

Example: You lease space in a strip mall shopping center from GRM LLC, a real estate development company. Your lease states you must be open 24 hours a day, 7 days a week. Because GRM LLC does not manufacture or sell (either wholesale or retail) ophthalmic goods, the lease provision does not violate Section 408. Slide9

Express Examples of Violations of Section 408

(2) restricting or attempting to restrict an optometrist's or therapeutic optometrist's freedom to see a patient by

appointment

Example: Your lease with

Bullseye

, a big box “all in one” store, is up. In the new lease agreement,

Bullseye

requires that you see patients on a walk-in basis only. Your practice suffers a 20% drop in patients seen.

The new lease violates your freedom to see a patient by appointment, and therefore violates Section 408. Slide10

Express Examples of Violations of Section 408

(3) terminating or threatening to terminate an agreement, including a lease, or other relationship in an attempt to control the professional judgment, manner of practice, or practice of an optometrist or therapeutic

optometrist

Example: manufacturer threatens to stop giving you a 20% discount if you don’t begin selling their newest contact lens product.

NOTE: the phrases “professional judgment” and “manner of practice” are not defined. In a lawsuit, the plaintiff-optometrist likely proves this through their own testimony about how the threat attempted to control their professional judgment or manner of practice. Slide11

Express Examples of Violations of Section 408

(4) providing, hiring, or sharing employees, business services, or similar items to or with an optometrist or therapeutic

optometrist

Example:

Supermart

hires your employees Slide12

Express Examples of Violations of Section 408

(5) making or guaranteeing a loan to an optometrist or therapeutic optometrist in excess of the value of the collateral securing the loan

Example: An optometry practice is looking to open a fifth location. The location is in Midland, but you live in Dallas. The practice offers you a $300,000 advance to move to West Texas. The advance is to be paid back over three years based on your revenue produced, but in the event you do not produce enough revenue to pay off the entire advance, the practice will forgive the outstanding balance. Slide13

What are an Optometrist’s Remedies for a Violation of Section 408?

There are multiple remedies available to optometrists:

Damages;

Reasonable attorney’s fees;

Court costs;

Injunction against the violator; and

A civil penalty not to exceed $1,000 for each day a violation occurs

But maybe not after the

Forte v. Wal-Mart Stores, Inc.

case

A violation of Section 408 may also be brought under the Texas Deceptive Trade Practices Act. Slide14

When Must You Bring a Lawsuit for a Violation of Section 408?

The statute does not have an express limitations period.

Generally under Texas law, if a claim does not have an express limitations period, a party must bring the claim within four (4) years after it accrues.

There are two cases holding claims for violations of Section 408 must be brought within 4 years. BUT, there is one case holding the claim must be brought within two (2) years. Slide15

Forte v. Wal-Mart Stores, Inc.

Facts

:

Wal-Mart leased space to optometrists and required the optometrists to make representations about the number of hours their offices would remain open in the lease agreements. The optometrists sued, claiming Wal-Mart’s lease agreements violated Section 408.

At trial the court instructed the jury that the plaintiffs did not claim to have suffered any economic damages, and only sought to recover civil penalties.Slide16

Forte v. Wal-Mart Stores, Inc.

Facts (Cont’d.)

:

The jury awarded the plaintiffs $3,953,000 in civil penalties, which was the maximum amount allowed under the Optometry Act. The jury also awarded the plaintiffs approximately $764,000 in attorney’s fees.

The court subsequently reduced the jury’s civil penalty to $1,396,400. Slide17

Forte v. Wal-Mart Stores, Inc.

Issues on Appeal

:

Wal-Mart raised two arguments on appeal:

The Optometry Act’s prohibition against controlling or attempting to control the professional judgment or practice of an optometrist should be limited to controlling or attempting to control the optometrist’s medical judgment.

The jury’s award of civil penalties cannot be allowed under Texas law because the optometrists did not seek or recover any actual damages. Slide18

Forte v. Wal-Mart Stores, Inc.

Court of Appeals Decision

:

The Optometry Act’s prohibition is not limited to situations where a manufacturer, wholesaler or retailer controls or attempts to control an optometrist’s medical judgment.

The plain language of the statute is not limited to situations involving an optometrist’s medical judgment; AND

The statute expressly prohibits Wal-Mart from taking any action “setting or attempting to influence the . . . office hours of an optometrist.”

Slide19

Forte v. Wal-Mart Stores, Inc.

Court of Appeals Decision

:

Could a court find that the Optometry Act should be limited to situations involving control over an optometrist’s medical judgment? Potentially.

Slide20

Forte v. Wal-Mart Stores, Inc.

Court of Appeals Decision

:

The optometrists are not entitled to the civil penalty award because they did not seek or recover actual damages. But how if the Optometry Act allows for a civil penalty of up to $1,000 per day?

Texas law defines “civil penalties” as a form of punitive damage. In order to be able to recover punitive damages under Texas law, a plaintiff must recover some amount of actual damages.

Slide21

Forte v. Wal-Mart Stores, Inc.

Takeaway

:

The court’s ruling on civil penalties is disappointing, but it is a learning experience. If the Legislature will follow-through, there are ways to modify the statute to allow optometrists to recover damages even if the optometrist does not have any actual damages.

Slide22

Forte v. Wal-Mart Stores, Inc.

Takeaway

:

Even if you didn’t suffer any damages, you still have a claim for a violation of Section 408. In this situation, you may be able to obtain an injunction and recover your attorney’s fees.

Slide23

Texas Insurance CodeSlide24

Insurance Contract Prohibitions

Chapter 1451’s prohibitions apply only if a “managed care plan” provides vision or medical eye care services.

A managed care plan is not required to provide vision or medical eye care services. Slide25

Insurance Contract Prohibitions

Texas Insurance Code § 1451.155

Prohibits a “managed care plan” from limiting the fee an optometrist can charge for a product or service that is not covered by the insurance policy.

Example: Vision plan provides insured a $130 allowance for frames with a 20% discount on the balance. This is okay so long as the managed care plan is not placing a cap on how much the optometrist charges for the frames.Slide26

Insurance Contract Prohibitions

Texas Insurance Code § 1451.155

Also prohibits managed care plan from requiring the optometrist to discount products or services not covered by the insurance policy.

Example: Vision plan allows covers one eye exam every 12 months, but requires the optometrist to discount any additional eye exams during the 12-month period by 50%. This violates the statute.Slide27

Insurance Contract Prohibitions

Texas Insurance Code § 1451.153

If a “managed care plan” provides vision or medical eye care services, the HMO/PPO is prohibited from excluding an optometrist as a participating plan practitioner because the optometrist does not have medical staff privileges at a hospital.

Also prohibits the HMO/PPO from excluding an optometrist because the optometrist’s services could be provided by an ophthalmologist or other health care practitioner.Slide28

Insurance Contract Prohibitions

These prohibitions only apply to insurance contracts entered into after January 1, 2014. Slide29

What is a “Managed Care Plan”

“

a plan under which a

health maintenance organization

,

preferred provider benefit plan issuer

, or

other organization

provides or arranges for health care benefits to plan participants and requires or encourages plan participants to use health care practitioners the plan designates

.Slide30

Do Sections 1451.153 and 1451.155 Apply to Medicaid Managed Care Organizations?

Possibly

Definition of “managed care plan” is not limited to HMOs and PPOs.

An MMCO arranges for health care benefits for its

insureds

and requires or encourages

insureds

to use certain health care practitioners