In an opinion by Chief Justice Hecht, the Texas Supreme Court has overturned a multi-million dollar judgment against Memorial Hermann Health System in a defamation action brought by a prominent cardiovascular surgeon.
Memorial Hermann Health System v. Miguel A. Gomez, III, M.D. and Miguel A. Gomez, M.D., P.A. (No. 19-0872) turned on two issues: the interpretation of the jury charge and whether proof of actual injury justified the jury’s award of general damages to the physician. The facts can be briefly stated as follows. Gomez, a leading cardiovascular surgeon at Memorial, was recruited by a competitor hospital, Methodist West. In the meantime, Memorial had begun using non-risk-adjusted data to assess patient outcomes. The use of the data generated controversy among cardiovascular surgeons at Memorial because it showed an “unfavorable mortality rate” associated with individual surgeons. The data was shared at meetings, but the individual surgeon’s results were shown only to the surgeon. When Gomez objected to the data, he complained to the administrator, who told him that the hospital would continue to use the data for purposes of transparency and to allow physicians to make informed decisions about patient referrals. Subsequently, Gomez experienced a decline in the number of surgeries he performed at Memorial. Gomez also discovered that in a phone conversation between a physician recruiter at Methodist West and a Memorial employee, the employee reported that she had “heard bad quality, high mortality rates, unnecessary surgeries” about Gomez from several sources. This did not prevent Methodist West from hiring Gomez to head up its Cardiovascular Robotics Institute.
Gomez sued Memorial for illegal restraint of trade, tortious interference with prospective business relations, defamation, and business disparagement. The case went up to SCOTX in 2015 for resolution of a discovery dispute and was subsequently tried to a jury. The negotiated jury charge asked about two specific statements, one by the administrators regarding use of the data, and the other by the Memorial employee about what she had heard about Gomez’s outcomes. During deliberations, the jury asked the judge to clarify the charge with respect to the administrator’s statement: did the charge refer just to publication of the administrator’s statement regarding the data, or did it refer to publication of the data itself? The trial court declined to comment. The jury found no illegal antitrust conspiracy or tortious interference, but returned a verdict of $6.3 million on the defamation and business disparagement claims for loss of reputation, mental anguish, lost profits, and exemplary damages. Memorial appealed, and the Houston Court of Appeals [1st] affirmed. SCOTX accepted review.
Memorial argued to the Court that no evidence supported the jury’s findings that Memorial published the administrator’s statement or that the employee’s statement caused Gomez or his business any damages. The question, according to Chief Justice Hecht, came down to the interpretation of the jury charge and whether Gomez’s interpretation of the charge to inquire about publication of the data was reasonable. Courts will review a jury charge based on “their commonsense interpretation, gleaned from both the text of the charge and the context of the case.” The court must interpret an ambiguous charge to uphold the judgment, but it “cannot ignore the plain, commonsense meaning merely because an unreasonable interpretation would better align with the judgment.” Here the charge asked the jury to evaluate the administrator’s specific statement to Gomez regarding the data. The statement was quoted in the charge. Memorial’s interpretation of the charge as referring just to the statement was “certainly reasonable. From the text itself, it is inescapable.” In the words of Chief Justice Hecht, “a reasonable juror should have read the instruction and questions regarding [the administrator’s] statement according to their plain, simple words.” The court of appeals’ finding that the charge asked about the data because that was the “crux” of the case is beside the point because a “court is not free to rewrite an unobjected and unambiguous jury charge in order to better capture what it perceives to be the ‘crux’ of the case.” Neither may the jury answer a different question than the charge poses, for to do so “would be to allow the jury to not just make the findings, but determine which findings are to be made. That is the province of the court.” In entering judgment based on the verdict, the trial judge erred in awarding Gomez damages for his defamation and business disparagement claims.
The employee’s statement to Methodist West was likewise directly quoted in the charge. The jury found that the publication of that statement proximately caused damages of more than $1 million to Gomez and the same amount for lost profits. Memorial argued that there was no evidence of causation. SCOTX agreed, pointing out that although juries have “a degree of latitude” in determining noneconomic damages, such damages “must flow from actual injuries. Thus, in most cases, there must be proof of actual injury before a jury can award general damages.” In a defamation case, this means that the impact of a published statement must be actual, not theoretical. In other words, the “evidence must show ‘that people believed the statements and the plaintiff’s reputation was actually affected.” This showing can be made by direct evidence of people changing their minds about the plaintiff as a result of the statement, or that the plaintiff lost a job or business opportunity because of the defamation. In this case, however, no such evidence existed. According to the testimony of Methodist West’s recruiter, she had already heard about Gomez before talking to Memorial’s employee. Even with that information, Methodist West hired Gomez anyway. The “whisper campaign” alleged by Gomez may or may not have occurred, but the jury charge didn’t refer to that, only to the statement itself. The record also contains no evidence that the decrease in Gomez’s referrals had anything to do the employee’s statement. The same goes for Gomez’s claim regarding disparagement of his practice.
We view this decision as important for two reasons. First, it provides helpful guidance about appropriate jury charges in actions alleging reputational torts. It appears that the problem for the trial court in this case was how to avoid a vague, nonspecific charge that could really not be answered based on the evidence. The charge ultimately submitted, which was agreed to by the parties, solved this problem by quoting specific statements. When the jury asked for clarification, the trial court declined to hold the jury to the charge because it knew there was no evidence that the administrator’s statement had ever been published. The court thus allowed the jury to run off on its own to the tune of $4 million. SCOTX reminded us that the charge matters, and both courts and jurors have a responsibility to interpret it properly.
Second, although the decision doesn’t break any new ground with regard to noneconomic or general damages, it does show a sensitivity to the need to closely scrutinize huge verdicts based on uncertain or little evidence of actual damages. This is the whole problem with noneconomic damages in a nutshell. It may be time to consider higher evidentiary standards for noneconomic damages, perhaps a clear and convincing evidence standard. We have to give trial and appellate courts better tools to assure that general damages cannot be easily detached from the actual damages that give rise to them in the first place.
