Consultants in Pain Medicine, PLLC and David Blanton v. Ellen Boyle Duncan, PLLC and Ellen Boyle Duncan, M.D.(No. 04-22-00479-CV; March 13, 2024) arose from a dispute between a pain-management medical practice (CIPM), its CEO (Blanton), and one its six physician members (Dr. Duncan) over repayment of certain Medicare reimbursements for a pain treatment called “Fluid Flow.” When Blanton got wind that Medicare would exclude that treatment from reimbursement, he got five of the six CIPM members to agree to voluntarily repay Fluid Flow claims. Dr. Duncan demurred and sought an independent audit prior to committing to a course of action. In late 2021, CIPM received notice and a request for information regarding the claims from an contract auditor with the Centers for Medicare & Medicaid Services (CMS). Blanton responded with the information, but in his letter he singled out Dr. Duncan as unwilling to cooperate and shoulder “her responsibilities to the payors, including Medicare, and to CIPM along with her refusal to return overpayments, if any are identified.” Dr. Duncan sued Blanton and CIPM for defamation, as well as contract claims. Defendants moved to dismiss under the Texas Citizens Participation Act (Ch. 27, CPRC). The trial court denied the motion and awarded Dr. Duncan attorney’s fees. Defendants appealed.
The court of appeals affirmed in part and reversed in part. Defendants argued that the allegedly defamatory statement in their response to the CMS auditor was “a communication ‘in or pertaining to’ an ‘official proceeding’ or ‘other proceeding’ of the federal government” covered by § 27.001(4)(A). Dr. Duncan countered that the audit letter only requested information and did not trigger a right to petition and, in any event, the allegedly defamatory statements had nothing to do with CMS and everything to do with a private business dispute. The court of appeals agreed with Defendants that the TCPA applied because the statute “does not require a pending government investigation for its applicability, as [Plaintiffs] imply, nor does it require any proceeding concerning ‘Medicare fraud,’ which [Defendants] assert the evidence shows.” Rather, Dr. Duncan’s defamation claim “[w]as based on or in response to” Defendants’ response to the auditor. Here the court went into a detailed explanation of the Medicare audit process, concluding that “[the auditor’s] decision was the initial part of an ‘official proceeding . . . to administer the law’ or another ‘proceeding before a department of the . . . federal government’” within thge meaning of § 27.001(4).
The burden then shifted to Dr. Duncan to “establish[] by clear and specific evidence a prima facie case for each essential element’ of their defamation claim.” As to whether Blanton’s published statement was false and capable of defamatory meaning toward Dr. Duncan, the court concluded that the “gist” of the statement “[was] that [Dr. Duncan] refused to return money wrongfully or unlawfully obtained.” The statement further alleged that Dr. Duncan was personally profiting from refusing to repay the claims at the expense of the five other CIPM members. In other words, the court stated, “[i]t assert[ed] active avoidance of legal responsibilities to Medicare payors for a personal profit motive.” Consequently, Dr. Duncan established by clear and specific evidence that “the gist of the letter is verifiable and false.” In support of her position, Dr. Duncan submitted a copy of the “Physician Services Agreement” between her and CIPM, which assigned CIPM exclusive authority to bill Medicare and handle accounts receivable, belying Defendants’ claim that the individual physician members were legally responsible. She further testified that Blanton had told her that she owed $1.4 million before CMS had requested any information and later raised that number to $2.6 million, and that rather than refusing to participate in repayment, she merely requested an independent audit to determine the appropriate amounts. Finally, the court held that “[Defendants’] statements, if false, were defamatory per se,” thus dispensing with the necessity of proof of damages to overcome a TCPA motion.
The burden shifted back to Defendants to establish an affirmative defense. Having failed in the “truth” department, Defendants argued that the statement was privileged. The question was whether Defendants made the statements in a “quasi-judicial” proceeding. The court rejected Defendants’ privilege argument because “there is no indication from the record or any authority cited by [Defendants] that [the contract auditor] has the power to make binding orders and judgment; the power to affect the personal or property rights of private persons; or the power to enforce decisions or impose penalties” (citations omitted). At most, the auditor “[held] a limited investigatory and advisory role,” for short of being, as Defendants asserted, “a final arbiter.” Thus, quasi-judicial immunity did not apply, and Defendants failed to establish an affirmative defense as a matter of law.
Defendants did get something out of the appeal when the court reversed Dr. Duncan’s attorney’s fee award, holding that Defendants demonstrated that the TCPA applied and that they asserted “an arguably meritable affirmative defense.” Because the court “[could] not say that [Defendants’] TCPA motion had no basis in law or face, and the trial court could not have reasonably concluded otherwise,” it found that the trial court abused its discretion in awarding Dr. Duncan her attorney’s fees.
This is an interesting case for many reasons. The court of appeals’ painstaking analysis of the TCPA’s application and Defendants’ assertion of quasi-judicial privilege are instructive and significant from the standpoint of TCPA jurisprudence generally. From a practical perspective, it might have been better for everyone concerned if Defendants had run their statements concerning Dr. Duncan by a defamation lawyer with TCPA expertise before they hit the send button on the letter to the auditor. While perhaps not as simple as a case of “if you don’t have anything nice to say about someone . . . ,” there had to be other ways to make their point without calling out by name a licensed physician as a scofflaw.
