Appellant’s Brief

Nataliya Shahin v. Memorial Hermann Health System

Summary: This case involves a Houston, Texas patient (“plaintiff”) who was treated at Hermann Memorial City Hospital (“hospital”) in September 2015. The plaintiff did not have health insurance at the time she presented to the hospital. Before she received emergency care, the plaintiff was required to agree to the hospital’s standard admissions agreement, which agreement said nothing about the charges for the care to be provided. After she was treated and released from the hospital, the plaintiff received a bill based on the hospital’s “Chargemaster” rates, which the plaintiff alleges was several times what the hospital charges if you have insurance. The hospital bill demanded payment in full from the plaintiff and stated that the hospital would initiate collection proceedings against her if no response was received. The plaintiff filed a lawsuit against the hospital seeking a declaratory judgment that the hospital’s form agreement for emergency room care permits only billing for, and collection of, amounts constituting the reasonable value of the treatment the hospital provides, not the “Chargemaster” rates that were listed on the bill she received from the hospital.

IN THE COURT OF APPEALS
FOR THE FIRST DISTRICT OF TEXAS
HOUSTON, TEXAS
 

NATALIYA SHAHIN,

Appellant,

v.

MEMORIAL HERMANN HEALTH SYSTEM,

Appellee.

 

 

Appeal from the 333rd Judicial District Court,
Harris County, Texas
Trial Court Cause No. 2015-61950

STATEMENT OF THE CASE

1.      Nature of the Proceeding. After plaintiff was charged for emergency medical care (CR 57 (the bill)), she filed this action for a declaratory judgment to resolve a dispute regarding the amount of charges under the defendant hospital’s form admissions agreement. CR 3 (petition).

2.      The Course of Proceedings. With its initial pleading, the defendant hospital filed a Plea to the Jurisdiction and Motion to Dismiss. CR 45 (the plea). Plaintiff responded. CR 70 (response).

3.      Disposition Below. The trial court granted the Plea to the Jurisdiction and Motion to Dismiss and dismissed the case. CR 96 (the order).

STATEMENT REGARDING ORAL ARGUMENT

Appellant requests oral argument. The merits are not at issue and have thus not been explored at length in the brief; however, Appellant believes that the ability of counsel to address at oral argument (and answer any questions from the court regarding) how the underlying facts and legal theories alleged may relate to the jurisdictional issues raised by this appeal would aid the court’s decisional process.

ISSUES PRESENTED

Whether the trial court erred by granting the defendant/hospital’s plea to the jurisdiction and dismissing the plaintiff/patient’s petition that seeks only declaratory relief where: (1) a justiciable controversy exists as to whether the hospital has overcharged plaintiff under the terms of the parties’ contract; and (2) a declaration as to whether the hospital is limited by the contract to charging only a reasonable value of the services provided would serve a useful purpose in resolving the dispute even if other, related issues remain unresolved.

STATEMENT OF FACTS

A.      Plaintiff received emergency care at the hospital.

Nataliya Shahin (“plaintiff”) sought emergency care and treatment at Memorial Hermann Memorial City Hospital (“the hospital”) on or about September 9, 2015. CR 11 (Petition at ¶ 5.20); see also CR 57 (the bill). While at the hospital, plaintiff received emergency care, i.e., not scheduled or elective services. CR 11. She was uninsured for her visit. Id.; see also, e.g., CR 57 (“Our records indicate the balance on this statement is your responsibility.”). Plaintiff has paid $300 toward the charges for her treatment. See CR 57.

B.      The hospital’s form agreement with plaintiff does not describe or define the hospital’s rates.

Plaintiff was required to agree to the hospital’s standard admissions agreement (“the form agreement”). CR 11 (Petition at ¶ 5.20). The form agreement includes a Financial Agreement provision requiring the payment of the hospital’s “current standard rates.”  CR 7-8 (Petition ¶¶ 5.8-5.8). The form agreement calls for the payment of the hospital’s “current standard rates” regardless of whether the patient is a Medicare, Medicaid, Worker’s Compensation, privately insured, HMO, or, like plaintiff, a self-pay patient. Id.

The form agreement does not define or describe in any manner what is meant by its “current standard rates.” CR 8 (Petition ¶ 5.10).  Plaintiff alleges there are no “standard rates” as such; instead, the actual prices used by the hospital vary by category of patient. Id. For example, rates for commercially insured patients are found in privately negotiated contracts, and rates for Medicare, Medicaid, and Workers’ Compensation patients are contained in various governmental regulations. Id. In other words, even though “all patients, regardless of category, are subject to the exact same pricing agreement to pay the hospital’s ‘standard rates’”, in practice, “each category of patients is charged based on separate rate schedules not contained within the Contract[.]” Id.

C.      The hospital’s form agreement does not mention the hospital’s Chargemaster rates.

For record-keeping and other purposes, the hospital maintains an itemized lists of drugs, tests, services, treatments and procedures with corresponding, so-called “gross charges” for each. CR 9 (Petition ¶ 5.13). Such lists are called “Chargemasters” in the hospital industry. Id. The hospital’s Chargemaster list is not a pricing schedule which patients are expected to pay. Id. The hospital’s form agreement and Financial Agreement provision contain no reference whatsoever to the hospital’s Chargemaster rates. CR 9-10 (Petition ¶¶ 5.18-5.19).

D.     Under the same form agreement, the hospital bills other types of patients (such as those with private insurance, Workers’ Compensation, Medicaid or Medicare) amounts constituting the reasonable value of the treatment provided rather than Chargemaster rates.

All of the hospital’s emergency care patients are subject to the same form agreement regarding the payment of the hospital’s “standard rates.” CR 10 (Petition ¶ 5.17). The vast majority of the hospital’s emergency care patients are covered by governmental healthcare plans or private commercial insurance plans. CR 10 (Petition ¶ 5.15).

This vast majority of the hospital’s emergency care patients (i.e. those covered by private insurance, Medicaid, Medicare) are not required to pay based on the Chargemaster rates. CR 10 (Petition ¶ 5.15).  Indeed, the hospital’s “Chargemaster rates are unrelated to its actual reimbursement rates, which are set forth in separate governmental regulations, contracts with commercial insurers, agreements with HMOs, etc.” CR 9 (Petition ¶ 5.14).

E.      The Chargemaster rates are vastly higher than the reasonable value of such services and far in excess of what all other categories of patients pay for the same treatment and services.

Plaintiff alleges that the hospital’s Chargemaster sets forth “artificial, grossly inflated rates.” CR 6 (Petition ¶ 5.3). The hospital’s “Chargemaster rates are several times its actual costs in providing services, as well as vastly higher than the reasonable value of such services.” CR 11 (Petition ¶ 5.19). These “unreasonable and grossly excessive charges” are “far in excess” of what other categories of patients pay “for the same treatment and services.” CR 10 (Petition ¶ 5.17). Indeed, the “astronomical rates” set forth in the Chargemaster list “average several times what [the hospital] collects from all other categories of emergency care patients,” i.e. the vast majority of patients (who are covered by governmental healthcare plans or private commercial insurance plans). CR 6 and 10 (Petition ¶¶ 5.3 and 5.15).

F. The hospital billed plaintiff at Chargemaster rates, demanded payment of Chargemaster rates, and threatened “collection efforts” if Chargemaster rates were not paid.

On or about September 24, 2015, the hospital sent plaintiff its billing “Statement” for the care plaintiff received at the hospital:

CR 57. In the hospital’s plea to the jurisdiction that forms the basis of this appeal, the hospital acknowledged that the billing statement sent to the plaintiff herein “reflects Chargemaster rates.” CR 48 (Plea to the Jurisdiction p. 4).

As reflected in the hospital’s billing statement, the total charges billed to Plaintiff by the hospital were “$5,551.75.” CR 57. The “balance due” is “$5,251.75.”[1] The hospital stated “[o]ur records indicate the balance on this statement is your responsibility and we are asking for payment in full.” CR 57 (emphasis added).

On the top half, the hospital directed plaintiff to “PAY THIS AMOUNT: $5.251.75” with a “DUE DATE: 10.9.15” Id.  In the bottom half, the hospital reiterated that the “BALANCE DUE” is $5,251.75 and that the “DUE DATE” is October 9, 2015. Id. (emphasis added). Beyond giving a due date to pay the balance due in full by October 9, 2015, the bill also specifically threatens: “If no response is received, your account will continue through collection efforts.” Id. (emphasis added). The bill adds: “If you have recently mailed your payment in full, thank you for taking care of your obligation.” CR 57.

G.     Plaintiff files this declaratory judgment action.

On October 16, 2015, plaintiff filed this lawsuit.  CR 3 (Petition). Plaintiff alleges only a claim for declaratory relief. CR 16. Plaintiff seeks to have the Court interpret a few sentences from the hospital’s form agreement. CR 16-17.

Plaintiff seeks a declaration that the hospital’s form agreement for emergency room care permits only billing for, and collection of, amounts constituting the reasonable value of the treatment the hospital provides. CR 16-18 (Petition ¶¶ 7.1-7.8). Plaintiff alleges the form agreement contains no pricing term (i.e. an “open” pricing term), and thus, pursuant to Texas law, Defendant has the right to charge a self-pay emergency care patient such as plaintiff only the “reasonable value” for the services rendered, and she seeks a declaration to that effect.  CR 6 (Petition at ¶ 5.4); see also CR 11 and 16-18 (Petition ¶¶ 5.20-5.22 and 7.1-7.8).

In stark contrast, the hospital has claimed that its form agreement gives it the right to charge its self-pay patients using its own artificial, grossly inflated Chargemaster rates. CR 6-11 (Petition ¶ 5.3 and ¶¶ 5.8-5.19).  In this case, the hospital acknowledges that is has already billed and demanded payment from the plaintiff at the hospital’s Chargemaster rates. See CR 48 (Motion to Dismiss at p. 4) (acknowledging invoice to plaintiff “reflects Chargemaster rates”).

Jurisdiction for this declaratory judgment action is authorized by the Texas Uniform Declaratory Judgment Act, which provides that a person interested under a written contract may bring an original action for a declaration of his or her rights, status, or other legal relations under the contract, including a determination of any question of construction or validity arising under the contract. Tex. Civ. Prac. & Rem. Code § 37.004(a). The Act is equally clear that “[a] contract may be construed either before or after there has been a breach” and that such a declaration is proper “whether or not further relief is or could be claimed.” Id., at § 37.004(b) and § 37.003(a).

Plaintiff’s suit also seeks to represent a class of similarly-situated Texas citizens who were also self-pay emergency care patients at a hospital run by the defendant/appellee. CR 5-11 and 12-16 (Petition at ¶¶ 5.1-5.4, 5.8-5.19 and 6.1-6.14. Plaintiff seeks the very same declaratory relief on behalf of the proposed class. CR 16-18 (Petition at ¶¶ 7.1-7.8).

H.     The hospital’s Plea to the Jurisdiction.   

The hospital filed a Plea to the Jurisdiction and Motion to Dismiss. CR 45-66 (the hospital’s motion and exhibits). The hospital argued this case is not “ripe” and claimed that whether plaintiff is “being required to pay [the hospital’s] ‘Chargemaster’ rates for medical services rendered … is contingent upon [the hospital] determining that [plaintiff] is not eligible for a charitable discount or full write-off of her bill under [the hospital’s] Financial Assistance Policy.” Id. The hospital’s Plea also argued that “the Court should not exercise jurisdiction over her claim because her requested relief will not terminate the controversy between the parties” because questions will remain as to the “‘reasonable’ rate for the services that [plaintiff] and each class member received.” CR 45. Plaintiff filed a response in opposition to the hospital’s motion. CR 70-90 (plaintiff’s response and exhibits).

I.       The hospital’s “Financial Assistance Program.”

The billing statement sent to the plaintiff noted the hospital “offer[s] a variety of payment options, as well as Financial Assistance. If you are unable to pay the balance in full at this time, please contact our office to discuss which options you may qualify for.” CR 57. On the reverse side of the billing statement, a section discussed the hospital’s “Financial Assistance Program.” CR 58. This section explained that “[t]o be considered for this program, patients are required to provide financial information for the household by completing a Financial Information Form along with supporting documentation.” Id. Patients must “verify income” by providing tax returns and any other documentation that “may be requested” by the hospital “including; Last two Employer paycheck stubs, written documentation from income sources, and a copy of all bank statements for the last three months.” Id. The hospital “reserves the right to review an applicant’s credit report, property tax records, and/or other public or personal documents prior to a determination regarding program eligibility.” Id. Further, “[p]ayment from all other possible payment sources must be exhausted before a patient can be considered for the Financial Assistance Program.” Id. (emphasis added). The section regarding the Financial Assistance Program concludes, “To request a Financial Information Form, please contact our Customer Service Department[.]” Id.

J.      Plaintiff has not applied for financial assistance.

It is undisputed that plaintiff did not and has not requested or applied for financial assistance from the hospital. Similarly, it is undisputed that plaintiff has not performed any of the acts necessary “to be considered for this program.” See CR 58. For example, plaintiff has not completed or submitted to the hospital a “Financial Information Form along with supporting documentation” as “required” by the hospital. Id.

K.     Plaintiff is not “contractually obligated” to apply for financial assistance.

In the trial court, the hospital claimed that its standard form agreements required the plaintiff to apply for financial assistance. See, e.g, CR 46.  In reality, and not surprisingly, nothing in any hospital agreement requires that a patient must apply for any such financial assistance. In full, the language cited by the hospital provides as follows:

If the patient may be eligible for free or discounted hospital services, patient agrees to comply with the eligibility requirements of the hospital’s financial assistance policy which requires submission of an application and determination that the patient qualifies for financial assistance.

See CR 46 (Plea to the Jurisdiction p. 2) citing CR 65 (Ex. 3 to the Motion; the hospital’s form “Authorization for Use/Disclosures and Waivers/Insurance Assignments,” at the section entitled “Financial Responsibilities”) (emphasis added). Thus, according to the hospital’s own “Authorization for Use/Disclosures and Waivers/Insurance Assignments” form, plaintiff agreed “to comply with the eligibility requirements” for financial assistance only “If the patient may be eligible for free or discounted hospital services” and thus seek such assistance. CR 65. Again, plaintiff did not apply and is not applying.

L.      There is nothing in the record to suggest plaintiff would be eligible for financial assistance; the only evidence is to the contrary.

As noted, a patient agrees “to comply with the eligibility requirements” only “[i]f the patient may be eligible for free or discounted hospital services” and seeks such assistance. CR 65.  In this case, there is nothing in the record to suggest the plaintiff “may be eligible for free or discounted hospital services.” CR 65.  Rather, the only evidence is to the contrary.

Specifically, the hospital attached selected “account notes” regarding the plaintiff’s account to its Plea to the Jurisdiction. See CR 60-63. According to the hospital’s account notes of October 1, 2015, the plaintiff’s husband complained to the hospital that he “was upset that he had such a large bill for only a few hours in the ER.” CR 61. When the hospital offered to send a financial assistance application, plaintiff’s husband “denied” the offer because he “would not qualify.”  CR 61-62.  The call was transferred to a supervisor for the hospital, and plaintiff’s husband repeated that he “would not qualify for financial assistance.” CR 62 (emphasis added).

M.     The trial court granted the plea and dismissed the case.

A non-evidentiary hearing was held for arguments on the motions and exhibits. See RR 1-19. On January 15, 2016, the trial court granted the hospital’s motion and dismissed the case.  CR 96.[2]  On February 12, 2016, Plaintiff filed a timely notice of appeal.  CR 103.

SUMMARY OF ARGUMENT

This case begins with a common enough scenario: an uninsured person went to a hospital emergency room and received care. Then, the hospital sent the patient a bill for that care. Not surprisingly, the hospital’s bill made it clear that it expected to be paid. Indeed, the bill at issue is unequivocal: “we are asking for payment in full”; “PAY THIS AMOUNT: $5.251.75”; “BALANCE DUE: $5.251.75”; “DUE DATE: 10.9.15”; “If no response is received, your account will continue through collection efforts.” CR 57.

The patient’s husband notified the hospital that the bill was too high. CR 61-62. The hospital offered to send an application for financial assistance, but the husband rejected the offer and informed the hospital that they would not qualify for financial assistance. Id.

Because the hospital has charged her at grossly-inflated, so-called “Chargemaster” rates even though all other categories of patients (such as patients covered by private insurance, Medicare, Medicaid or Workers’ Compensation) are charged far lower rates (that have been determined to be “reasonable”) despite those other patients also agreeing to the exact same form agreement as to rates, this proposed class action suit was filed seeking a declaratory judgment to construe the hospital’s form pricing agreement. CR 3-19.

Plaintiff seeks a declaration that the hospital’s form agreement contains no pricing term (i.e. contains an “open” pricing term), and thus, pursuant to Texas law, the hospital has the right to charge self-pay emergency care patient such as plaintiff only the “reasonable value” for the services rendered. CR 6-11 & 16-18. In  contrast, the hospital claims that its form agreement gives it the right to charge self-pay patients like plaintiff using artificial, grossly-inflated “Chargemaster” rates that average several times more than the rates the hospital charges all other categories of patients (even though all patients agree to same form pricing agreement). CR 6-11, The hospital acknowledges that is has already billed and demanded payment from the plaintiff at the hospital’s Chargemaster rates. CR 48 (acknowledging bill “reflects Chargemaster rates”); CR 57 (the bill).

Facing a proposed class action challenge to its billing practices with regard to all similarly-situated Texans, the hospital responded with a Plea to the Jurisdiction, hoping to avoid the named plaintiff’s claim. However, the hospital’s jurisdiction argument is wrongly directed at whether the plaintiff has suffered damages and the argument should have been rejected below. The hospital argued that “[w]hether Shahin will be injured by being required to pay Chargemaster rates is […] contingent upon a future determination by Memorial Hermann that Shahin is not eligible for a discount or write-off of her bill.” CR 57 (emphasis added). But declaratory relief is proper “before substantial damages [are] incurred,”[3], “even before the wrong has actually been committed.”[4] “A contract may be construed …. before …  there has been a breach” and “whether or not further relief is or could be claimed.”[5] “A justiciable controversy […] does not necessarily equate to a fully ripened cause of action,”[6] and “[a] person seeking a declaratory judgment need not have incurred actual injury.”[7]

Furthermore, the hospital can point to nothing to support its argument that plaintiff is required to apply for financial assistance (much less that such an application opportunity is somehow available indefinitely). There is no evidence the plaintiff has or will apply for such financial assistance. The only evidence is that plaintiff rejected the offer to apply and would not qualify anyway. CR 61-62. More importantly, nothing about the hospital’s financial assistance argument suggests that the “balance” billed to plaintiff is not “due” (as clearly stated in the hospital’s invoice). CR 57 (invoice). Here, plaintiff has already paid $300 toward the hospital’s bill. CR 57.

Even pretending an obligation exists to apply for assistance, the hospital’s Plea should have been rejected. The possibility of “financial assistance” does not authorize the hospital to overcharge in the first place. Significantly, the hospital does not dispute the plaintiff’s core allegations herein that (a) the hospital interprets the form agreement as authorizing it to collect from plaintiff at Chargemaster rates and (b) the hospital has already billed plaintiff at Chargemaster rates. In short, regardless of, or despite, the hospital’s argument about financial assistance applications, the hospital has retained an “unfettered ability” to insist plaintiff make payments for the very Chargemaster rates that the plaintiff denies are allowed under the contract.[8] The hospital’s argument that plaintiff is compelled to apply for financial assistance for help with paying the grossly-inflated amount that has been charged by the hospital misses the point. The question for now is whether she owes that amount in the first place. The question is ripe and the decision below should be reversed.

“Texas courts uniformly hold that a declaratory judgment need only serve a ‘useful purpose’ in resolving the dispute” and “[t]he fact that other issues in the general controversy between the parties remain unresolved by a declaratory judgment does not deprive the court of the power and discretion to render such a judgment.”[9]  Here, a declaration of the form agreements pricing terms would serve a useful purpose in resolving the dispute “even if other, related issues remain unresolved.” The trial court’s order granting the Plea to the Jurisdiction and Motion to Dismiss and dismissing the case should be reversed.

ARGUMENT

A.  The trial court’s ruling on the plea to the jurisdiction is reviewed de novo.

“The usual procedural vehicle used to challenge the sufficiency of the pleader’s jurisdictional allegations or the existence of jurisdictional facts is a plea to the jurisdiction.” Drexel Corp. v. Edgewood Dev., Ltd., 417 S.W.3d 672, 674 (Tex. App–Houston [14th Dist.] 2013, no pet.), citing Tex. Dep’t of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 226–27 (Tex. 2004). “In substance, then, [the hospital’s] motion to dismiss was [also] a plea to the jurisdiction.” See, Drexel, 417 S.W.3d at 674, citing Speer v. Stover, 685 S.W.2d 22, 23 (Tex.1985) (per curiam); accord Brown v. Todd, 53 S.W.3d 297, 305 n. 3 (Tex. 2001) (treating motion to dismiss for lack of standing the same as plea to the jurisdiction).

A plea to the jurisdiction can be utilized to challenge whether the plaintiff has met his burden of alleging jurisdictional facts but it can also raise a challenge to the existence of jurisdictional facts. Miranda, 133 S.W.3d at 227. If a plea to the jurisdiction challenges jurisdictional facts, the court considers relevant evidence submitted by the parties when necessary to resolve the jurisdictional issues raised. Miranda, 133 S.W.3d at 227. In deciding a plea to the jurisdiction, the court does not consider the merits of the case, but only the plaintiff’s pleadings and the evidence pertinent to the jurisdictional inquiry. County of Cameron v. Brown, 80 S.W.3d 549, 555 (Tex. 2002).

“The standard of review for a plea to the jurisdiction based on evidence ‘generally mirrors that of a summary judgment under Texas Rule of Civil Procedure 166a(c).’” Shelton v. Kalbow, No. 14-14-00710-CV, 2016 WL 1128479, at *3 (Tex. App.–Houston [14th Dist.] Mar. 22, 2016 n.p.h.), citing Miranda, 133 S.W.3d at 227; accord Lenoir v. U.T. Physicians, No. 01-14-00767-CV, ___ S.W.3d ____, 2016 WL 1237771, at *4 (Tex. App.—Houston [1st Dist.] Mar. 29, 2016, no pet. h.).  The court is to “construe the pleadings liberally in favor of” jurisdiction. Thornton v. Ne. Harris Cty. MUD 1, 447 S.W.3d 23, 32 (Tex. App.–Houston [14th Dist.] 2014, pet. denied). The court is to “take as true all evidence favorable to the nonmovant” and “indulge every reasonable inference and resolve any doubts in the nonmovant’s favor.” Miranda, 133 S.W.3d at 228. If the movant first meets its burden to present conclusive proof that the trial court lacks subject matter jurisdiction, then the nonmovant must present evidence sufficient to raise a material issue of fact regarding jurisdiction or the plea will be sustained. See, e,g, Shelton, 2016 WL 1128479, at *3, citing Miranda, 133 S.W.3d at 227; see also, Fort Bend Indep. Sch. Dist. v. Gayle, 371 S.W.3d 391, 394 (Tex. App.–Houston [1st Dist.] 2012, pet. denied).

The trial court’s ruling on the hospital’s plea to the jurisdiction is—like a summary judgment motion would be— reviewed de novo. Shelton, 2016 WL 1128479, at *2; see also, City of Pearland v. Contreras, No. 01-15-00345-CV, 2016 WL 358612, at *2 (Tex. App.–Houston [1st Dist.] Jan. 28, 2016, no pet. h.), citing State v. Holland, 221 S.W.3d 639, 642 (Tex.2007) (citing Miranda, 133 S.W.3d at 225-226); HDW2000 256 East 49th Street, LLC v. City of Houston, 2012 WL 2928496, *1 (Tex. App.-Houston [1st Dist.], July 19, 2012, no pet). Whether a justiciable controversy exists under the Declaratory Judgments Act is a question of law that is reviewed de novo. Stern v. Marshall, 471 S.W.3d 498, 516 (Tex. App.–Houston [1st Dist.] 2015, no pet.), citing  Tex. Dep’t of Pub. Safety v. Moore, 985 S.W.2d 149, 153–54 (Tex. App.–Austin 1998, no pet.). Similarly, “[r]ipeness is a component of subject matter jurisdiction” and “[t]herefore, ripeness is a question of law.” In re Reynolds, 369 S.W.3d 638, 648 (Tex. App.–Tyler 2012, orig. proceeding), citing Mayhew v. Town of Sunnyvale, 964 S.W.2d 922, 928 (Tex. 1998) (“ripeness is a legal question subject to de novo review.”).  As explained by the Austin court of appeals:

We may also consider evidence that the parties have submitted and must do so when necessary to resolve the jurisdictional issues. Our ultimate inquiry is whether the particular facts presented, as determined by the foregoing review of the pleadings and any evidence, affirmatively demonstrate a claim within the trial court’s subject-matter jurisdiction. That is a question of law that we review de novo.

Texas Dep’t of State Health Servs. v. Balquinta, 429 S.W.3d 726, 738 (Tex. App.–Austin 2014, pet. dism’d); see also Univ. of Tex. Health Sci. Ctr. v. DeSoto, 401 S.W.3d 319, 323 at n. 5 (Tex. App.–Houston [14th Dist.] March 21, 2013, pet. denied) (“The DeSotos incorrectly assert that the de novo standard of review does not apply when a plea to the jurisdiction involves an evidentiary challenge to jurisdictional facts.”), citing Miranda, 133 S.W.3d at 228; see gen., Shaw v. Lynch, No. 01-15-00040-CV, 2016 WL 1388986, at *2 (Tex. App.–Houston [1st Dist.] Apr. 7, 2016, no pet. h.) (noting summary judgment ruling is review de novo).

B.      Ripeness under the Declaratory Judgments Act.       

The stated purpose of the Texas Declaratory Judgments Act is “to settle and afford relief from uncertainty and insecurity with respect to rights, status, and other legal relations.” Bonham State Bank v. Beadle, 907 S.W.2d 465, 467 (Tex. 1995), quoting Tex. Civ. Prac. & Rem.Code § 37.002(b). The Act expressly provides that it is “remedial” and “is to be liberally construed.” Id. A declaratory judgment is appropriate where: (1) a justiciable controversy exists as to the rights and status of the parties; and (2) the controversy will be resolved by the declaration sought. Moore, 985 S.W.2d at 153, citing Bonham State Bank, 907 S.W.2d at 467.

The Act is “‘intended as a speedy and effective remedy’ for settling disputes before substantial damages [are] incurred.” MBM Fin. Corp. v. Woodlands Operating Co., L.P., 292 S.W.3d 660, 670 (Tex. 2009) (emphasis added), quoting Cobb v. Harrington, 190 S.W.2d 709, 713 (1945); see also, Cobb, at 714 (“even before the wrong has actually been committed”) (emphasis added). Accordingly, “[a] justiciable controversy […] does not necessarily equate to a fully ripened cause of action.” Moore, 985 S.W.2d at 153; see gen., Patel v. Texas Dep’t of Licensing & Regulation, 469 S.W.3d 69, 78 (Tex. 2015) (holding that challenge to state-licensing law was ripe and rejecting argument that claims were “not ripe because [the plaintiffs] have not faced administrative enforcement”). Indeed, “[a] suit under the UDJA is not confined to cases in which the parties have a cause of action apart from the Act itself.” City of Waco v. Tex. Nat. Res. Conservation Comm’n, 83 S.W.3d 169, 175 (Tex. App.–Austin 2002, pet. denied), citing Moore, 985 S.W.2d at 153. Furthermore, “[a] person seeking a declaratory judgment need not have incurred actual injury.” Bexar Metro. Water Dist. v. City of Bulverde, 156 S.W.3d 79, 88 (Tex. App.–Austin 2004, pet. denied); accord Tex. & N.O.R. Co. v. Houston Belt & Terminal Ry. Co., 308 S.W.2d 912, 919 (Tex. Civ. App.–Houston 1957, no writ) (railroad seeking declaratory judgment to determine its rights under track agreement with another railroad was “legally entitled to an answer without showing of damages”).[10] The Act expressly provides that a court “has power to declare rights, status, and other legal relations whether or not further relief is or could be claimed.” Tex. Civ. Prac. & Rem. Code § 37.003 (emphasis added).

With regard to contracts in particular, the Act provides that “[a] person interested under a […] written contract, or other writings constituting a contract or whose rights, status, or other legal relations are affected by a […] contract […] may have determined any question of construction or validity arising under the […] contract […] and obtain a declaration of rights, status, or other legal relations thereunder.” Tex. Civ. Prac. & Rem. Code § 37.004(a). The Act specifies that “[a] contract may be construed either before or after there has been a breach.” Id., at § 37.004(b) (emphasis added). Thus, for example, the Supreme Court has permitted a declaratory judgment counterclaim to proceed for purpose of declaring future rights under a contract. BHP Petroleum Co. Inc. v. Millard, 800 S.W.2d 838, 842 (Tex.1990) (“the counterclaim would have the effect of settling all future disputes as to the granting of royalties under the deed”); see also, e.g., Indian Beach Prop. Owners’ Ass’n v. Linden, 222 S.W.3d 682, 702 (Tex.App.-Houston [1st Dist.] 2007, no pet.).

“Applying these general principles, a declaratory judgment action may encompass the future rights of parties pursuant to a contract when the ‘ripening seeds’ of a controversy are present.” Bencor, Inc. v. Variable Annuity Life Ins. Co., No. 01–09–00094–CV, 2011 WL 1330818, at *5 (Tex. App.–Houston [1st Dist.] Apr. 7, 2011, pet. denied) (mem. op.); see also American National Ins. Co. v. Cannon, 86 S.W.3d 801, 806 (Tex. App.–Beaumont 2002, no pet.) (“a party to a contract may file suit to declare rights under a contract if the circumstances show the presence of ‘ripening seeds of controversy.’”), citing City of Waco v. Texas Natural Resource Conservation Comm’n, 83 S.W.3d 169, 175 (Tex. App.–Austin 2002, no pet. h.) (quoting Texas Dep’t of Banking v. Mount Olivet Cemetery Ass’n, 27 S.W.3d 276, 282 (Tex. App.–Austin 2000, pet. denied)). “Perhaps the principal contribution that the Declaratory Judgment Act has made in the philosophy of procedure is to make it clear that a controversy as to legal rights is as fully determinable before as it is after one or the other parties have acted on his own view of his rights and perhaps irretrievably shattered the status quo.” Ainsworth v. Oil City Brass Works, 271 S.W.2d 754, 761 (Tex. Civ. App.–Beaumont 1954, no writ) (emphasis added). “The settlement of such controversies ‘before they ripen into violations of law or some breach of contractual duty is a fundamental purpose of the Declaratory Judgment Act.’” Myer v. Americo Life, Inc., No. A-06-CA-599 LY, 2007 WL 320960, at *5-7 (W.D. Tex. Jan. 30, 2007) (emphasis added), quoting U.S. Coffee & Tea Co. v. Texas & Pacific RY., Co., 280 S.W.2d 290, 293 (Tex.Civ.App.—Dallas 1955, writ ref’d n.r.e.).

C.      Plaintiff’s claim for declaratory relief is ripe.

As the Texas Supreme Court has recognized, a “two-tiered structure has evolved” for health care charges: “‘list’ or ‘full’ rates sometimes charged to uninsured patients” (as happened to plaintiff herein) and “reimbursement rates for patients covered by government and private insurance.” Haygood v. De Escabedo, 356 S.W.3d 390, 393 (Tex. 2011). In contrast to the “ ‘list’ or ‘full’ rates” that are set “as high as possible,” the much lower “reimbursement rates have been determined to be reasonable under Medicare or other programs, or have been reached by agreements between willing providers and willing insurers[.]” Id. at 393-394. Here, plaintiff, an uninsured patient, has been subjected to such a “two-tiered structure”; however, plaintiff alleges, the parties’ contract does not authorize the hospital to charge more than a reasonable rate.

A justiciable controversy exists as to the rights and status of the parties with respect to plaintiff’s hospital visit and the parties’ contract. Specifically, plaintiff contends the contract itself contains no pricing terms for self-pay patients which are certain or readily identifiable, and fails to identify any means by which such pricing terms for self-pay patients can be made certain (i.e., the contract contains an “open” pricing term), and that under such circumstances applicable law implies a contractual obligation to pay the reasonable value of the services and treatment rendered. See, e.g, CR 6 (Petition ¶ 5.4); see also CR 7-11 and 16-18 (Petition ¶¶ 5.20-5.22 and 7.1-7.8). In stark contrast, the hospital claims it is entitled to charge and receive its full Chargemaster rates from self-pay patients, including plaintiff. See CR 57 (hospital’s invoice to plaintiff); CR 48 (acknowledging the invoice to plaintiff “reflects Chargemaster rates.”); see also, CR 7-11 and 16-18 (Petition ¶¶ 5.1-5.22 and ¶¶ 7.1-7.8).

The hospital’s jurisdictional argument is wrongly directed at whether plaintiff has suffered a compensable injury. In its Plea to the Jurisdiction, the hospital argued that “[w]hether Shahin will be injured by being required to pay Chargemaster rates is […] contingent upon a future determination by Memorial Hermann that Shahin is not eligible for a discount or write-off of her bill.” CR 48 (emphasis added). Here, Plaintiff seeks declaratory relief only and not damages. As this Court has recognized, “a declaratory judgment action may encompass the future rights of parties pursuant to a contract when the ‘ripening seeds’ of a controversy are present.” Bencor, 2011 WL 1330818, at *5. The Act specifically provides that “[a] contract may be construed … before … there has been a breach” and “whether or not further relief is or could be claimed.” ” Tex. Civ. Prac. & Rem. Code §§ 37.003 and 37.004(b) (emphasis added). The very purpose of the Act is to determine the rights of parties “before substantial damages [are] incurred” (MBM Fin. Corp., 292 S.W.3d at 670), “even before the wrong has actually been committed.” Cobb, 190 S.W.2d at 713.  Accordingly, “[a] person seeking a declaratory judgment need not have incurred actual injury.” Bexar Metro. Water Dist., 156 S.W.3d at 88. The plea to the jurisdiction should not have been granted.[11]

In the present case, the hospital has already determined how much it is charging plaintiff, has already billed the plaintiff, has already demanded payment, and has already declared the balance to be due under threat of “collection efforts.” CR 57. By the time this lawsuit was filed, the hospital’s position was unequivocal and clearly designed to impose a legal obligation to pay: “PAY THIS AMOUNT: $5.251.75”; “DUE DATE: 10-9-15.”; AMOUNT DUE: $5,251.75”; “Our records indicate the balance on this statement is your responsibility and we are asking for payment in full.”; “If no response is received, your account will continue through collection efforts.”; “TOTAL CHARGES: $5,551.75”; and “BALANCE DUE: $5,251.75.”  CR 57 (emphasis added). “The common meaning of the word ‘due’ with regard to a debt is one that is ‘immediately enforceable’ or is ‘owing or payable; constituting a debt.’” In re R.C.T., 294 S.W.3d 238, 241–43 (Tex. App.–Houston [14th Dist.] 2009, pet. denied), quoting Black’s Law Dictionary 538 (8th ed. 2004). The hospital’s bill even adds: “If you have recently recently mailed your payment in full, thank you for taking care of your obligation.” (CR 57) (emphasis added). Plaintiff has already paid $300 toward these charges. See CR 57.

Now, after this lawsuit was filed—a lawsuit that proposes a broad class action challenge to the hospital’s billing practices on behalf of a great many Texans—the hospital states that whether the plaintiff will ultimately pay the full $5,251.75 (an amount the hospital continues to assert to be the proper amount owed under the contract) could depend on whether she qualifies for financial assistance and, according to the hospital’s post-lawsuit position, she is somehow “obligated” to apply for such assistance.

In reality, although the bill and other documents mention the option of applying for financial assistance, the hospital points to nothing that provides that such an application for assistance is somehow mandatory (much less is somehow available indefinitely!). There is no evidence that the plaintiff has or will apply for such financial assistance. There is no suggestion in the record that the hospital will or could consider the plaintiff’s eligibility for such assistance in the absence of her applying for it. There is no evidence the plaintiff would qualify for such assistance[12], and the only evidence in the record is to the contrary.[13]

More importantly, there is nothing to suggest the hospital’s invoice (and its clear language, i.e. “balance due,” “your obligation,” “payment in full”) sent to the plaintiff was inaccurate or a mistake. On the contrary, the hospital continues to assert the charges set forth in the invoice are the proper charges under the contract. For example, in its Plea to the Jurisdiction, the hospital maintains “[t]he cost for these services was $5,551.75.” CR 46.[14]  The hospital also acknowledges that the charges imposed on plaintiff “reflect Chargemaster rates,” i.e. the very rates that plaintiff alleges are inflated and in violation of the contract. CR 48.

Tellingly absent from the hospital’s jurisdiction argument is any suggestion that plaintiff has not (as plaintiff alleges) already been charged per the hospital’s interpretation of the parties’ contract. Instead, it is undisputed that plaintiff has already been charged per the hospital’s interpretation of the contract.  At the very least, the “ripening seeds” of a controversy exist regarding how to interpret the hospital’s Financial Agreement provision, and the trial court should be reversed.

A decision from California, Sarun v. Dignity Health, 232 Cal. App. 4th 1159 (2014), involves very similar facts. Tony Sarun was uninsured when he received emergency health care services at a Dignity Health hospital. Id., at 1162. Upon admission Sarun signed an agreement to pay the hospital’s “full charges, unless other discounts apply.” Id. “The agreement explained uninsured patients might qualify for government aid programs or financial assistance from Dignity.”  Id.  After receiving an invoice for $23,487.90, which reflected a $7,871 “uninsured discount,” and without applying for any other discount or financial assistance, Sarun filed a putative class action complaint asserting claims including unfair and/or deceptive business practices under consumer protection statutes.  Id. Sarun’s complaint alleged Dignity had failed to disclose uninsured patients would be required to pay several times more than other patients receiving the same services, the charges set forth on the invoice were not readily available or discernable from the agreement, and the invoiced charges exceeded the reasonable value of the services. Id.

Dignity moved to dismiss the complaint due to lack of standing.  Id., at 1164-65 Dignity argued that “Sarun had conceded he would be willing to pay approximately $3,000 and, until he applied for financial assistance, it was speculative whether he would be required to pay more than that amount.” Id. at 1164. “Dignity further argued Sarun’s refusal to seek financial assistance made it impossible to determine whether he was in fact injured and rendered injury, if any, self-inflicted, not traceable to unfair business practices or conduct proscribed by the CLRA.” Id. at 1164-1165.

The question in Sarun was whether the patient had suffered an “injury in fact.” Under the law at issue, an “injury in fact” is: an invasion of a legally protected interest which is (a) concrete and particularized and (b) actual or imminent, not conjectural or hypothetical. Id. at 1166.  This standard is somewhat similar to the standard for ripeness under the Texas Declaratory Judgment Act. See Drexel Corp., 417 S.W.3d at 675-676.  Of course, under the Texas Act, there is no requirement to show an actual injury and a declaration of contractual rights can be proper “before” a breach.

In Sarun, the trial court sustained Dignity’s demurrer to the complaint and dismissed the action on the ground Sarun had not adequately alleged “actual injury,” and, therefore, lacked standing. Id. at 1162.  The trial court found standing was lacking because Sarun did not allege his “medical bill has been referred to a collection agency or that [Dignity] has taken other informal steps to coerce payment” and did not allege “that [Sarun] sought and was denied a discounted rate.” Id. at 1165.

The court of appeals reversed. The court of appeals began by looking to the billing invoice sent to Sarun:

… the invoice even included instructions as to the proper payee of a check, provided space for payment by credit card and supplied information for payment online. Although Dignity had not begun any collection activity, the existence of an enforceable obligation, without more, ordinarily constitutes actual injury or injury in fact.

Id., at 1167.

The court of appeals then addressed the hospital’s argument based on Sarun failing to apply for assistance:

[T]hough a further discount from Dignity’s “full charges”–even a complete elimination of the charges in excess of what Sarun already had paid–may have been available, the invoice as presented to Sarun (which was before the trial court after it granted Dignity’s unopposed motion for judicial notice) stated a $23,487.90 balance was due. Sarun was not merely “exposed” to the allegedly unlawful pricing system–that is, a list price expressly subject to negotiation like the sticker price on an automobile on a dealer’s lot or a shouted offer at the souk–Dignity’s invoice told him to pay the full remaining sum unless he sought relief. Indeed, the form admissions agreement Sarun had signed after arriving by ambulance at the hospital obligated him to pay Dignity’s full charges unless other discounts applied, but did not obligate him to apply for such discounts, and further provided he would be liable for attorney fees and collection expenses if the matter was referred for collection. As in Hale, upon receipt of this bill Sarun faced at least an imminent invasion of a legally protected interest.

Id., at 1168-69.

Despite differences, the present case involves almost the same substantive situation as Sarun.  Even “though a further discount” or possibly “a complete elimination of the charges” invoiced by the hospital “may have been available,” the hospital’s statement “as presented to” the plaintiff herein “stated a [$5.251.75] balance was due.”  See id., at 1168. Like Mr. Sarun, plaintiff “was not merely ‘exposed’ to the allegedly unlawful pricing system,” the hospital’s “invoice told [her] to pay the full remaining sum unless he sought relief.” Id. The hospital “form admissions agreement [plaintiff] had signed […] obligated [her] to pay [the hospital’s] full charges unless other discounts applied, but did not obligate [her] to apply for such discounts[.]” Id.  “[U]pon receipt of this bill [plaintiff] faced at least an imminent invasion of a legally protected interest.” Id.

The Sarun court also noted that “incurring transaction costs to avoid the consequences of a deceptive practice” constituted an injury that would confer standing:

Sarun was faced with just such transaction costs: To avoid the consequences of its allegedly unlawful “full charges” pricing structure for uninsured emergency care patients, Dignity required Sarun to apply for financial assistance, including providing tax return information and other personal financial data. The tangible burden of such an application process is far more than the “identifiable trifle” required to confer injury in fact standing.

Id. at 1169.  Similar reasoning applies here.[15]  Plaintiff should not be compelled to comply with the burdens of the hospital’s assistance eligibility process to avoid charges that plaintiff alleges are illegal under the contract in the first instance.  Indeed, it may be that—if the hospital only charges the amount actually allowed under the contract—there would be no need to go through the “financial assistance” process.

Applying our Declaratory Judgements Act, Texas courts have rejected ripeness arguments similar to that made by the hospital herein. For example, the Fourteenth Court considered such an argument in Drexel Corp., 417 S.W.3d 672. In that case, Drexel had brokered Edgewood’s purchase of an office building. Id., at 673. When the companies disagreed about the commission payment due to Drexel, they resolved the dispute through a written contract in which Edgewood gave Drexel the rights to certain profits from the property and promised to pay Drexel a portion of the proceeds when the property is sold.  Id. at 673-674.

“Approximately seventeen years later, Drexel sent Edgewood a demand letter in which it stated that the parties omitted to include in the contract a date by which the property would be sold and final payment made to Drexel.” Id. at 674. “Drexel asserted that a reasonable time for the property’s sale had passed, and that a reasonable estimation of Drexel’s share of the proceeds from a hypothetical sale was $1.2 million.” Id.  Drexel stated that if Edgewood did not pay $1.2 million within thirty days, Drexel would sue for “a declaratory judgment with respect to the missing term (i.e., the outside date for a sale of the Property), and a monetary judgment” for Drexel’s share of the sales proceeds, plus attorneys’ fees, costs, and interest.” Id.

Edgewood did not wait for the thirty-day period mentioned in the demand letter to expire. Id.  Instead, Edgewood filed its own suit for declaratory judgment. Drexel moved to dismiss the suit for lack of subject-matter jurisdiction and argued that the controversy was not ripe. Id. The trial court denied the motion to dismiss and Drexel was granted permission to appeal. Id.

Finding there was a justiciable controversy, the court of appeals affirmed:

Drexel has asserted that under the express and implied terms of the contract, Edgewood is obligated to pay it $1.2 million. Drexel has demanded that Edgewood pay this amount, which it says is “now due and owing.” Edgewood, on the other hand, contends that Drexel’s interpretation contradicts the agreement’s unambiguous terms, and denies that it owes Drexel the payment demanded. This is a live controversy that can be resolved by a judicial declaration of the parties’ rights and duties under the contract.

Id., at 675.

Drexel argued that “harm is not imminent because it never filed a counterclaim and has indicated that it is not interested in pursuing the dispute at this time.”  Id., at 676.  “In effect, Drexel argues that because it has not followed through on its demand, the issue is now moot.” Id. v.

The court of appeals disagreed:

As Edgewood’s pleadings demonstrate, the harm at issue is the wrongful retention or wrongful payment of $1.2 million. Edgewood filed this suit in response to Drexel’s letter insisting that Edgewood owed it this amount and demanding payment within thirty days. At the time the lawsuit was filed, just eleven days remained before the expiration of that deadline, but the parties had conflicting understandings of their rights and duties under the contract. If Edgewood truly owed Drexel this amount but did not pay it, then Drexel would be harmed; if Edgewood paid the money as Drexel demanded but did not owe it, then Edgewood would be harmed. Declaratory judgment accordingly was the appropriate vehicle to resolve the controversy. See Aetna Life Ins. Co. of Hartford, Conn. v. Haworth, 300 U.S. 227, 242, 57 S.Ct. 461, 465, 81 L.Ed. 617 (1937) (holding that where one party asserts a present right to payment under a contract and the other party denies it, the “dispute is manifestly susceptible of judicial determination. It calls, not for an advisory opinion upon a hypothetical basis, but for an adjudication of present right upon established facts.”).

Id., at 676.

In response to Drexel’s argument that it “has not followed through on its demand,” the court of appeals noted that “Drexel has retained an ‘unfettered ability’ to insist that Edgewood make payments that Edgewood denies it owes.” Id. Accordingly, the court found there was “a live controversy and the trial court’s judgment on the merits can still affect the parties’ rights or interests.” Id.

This court reached a similar result in Beard v. Endeavor Natural Gas, L.P., No. 01–08–00180–CV, 2008 WL 5392026, at *5 (Tex. App.–Houston [1st Dist.] Dec. 19, 2008, pet. denied) (mem. op.).

In this case, a real and justiciable controversy existed as to the parties’ rights and liabilities under the division order.  […] Beard’s numerous threats of suit in his “demand letters” indicated that there was ample reason for Endeavor and Tepee to believe that a real controversy existed over the proper amount of the royalty checks (though Beard never pursued those demands once Endeavor filed suit).

Beard, 2008 WL 5392026 at *5 (emphasis added).

The reasoning of cases like Drexel Corp. applies equally here. As in Drexel Corp., the parties here dispute the meaning of a contract.  Much like the demand letter sent by Drexel, the hospital has here written plaintiff to state that his “BALANCE DUE” was $5.251.75”; “PAY THIS AMOUNT: $5.251.75” with a “DUE DATE: 10.9.15” and “the balance on this statement is your responsibility and we are asking for payment in full.” CR 57 (emphasis added). Beyond giving a specific due date to pay the stated amount “in full,” the statement also specifically threatened: “If no response is received, your account will continue through collection efforts.” Id.

Just as Englewood disagreed with Drexel’s interpretation of the contract, plaintiff disagrees with the hospital’s interpretation of the parties’ contract. In Drexel Corp., the parties disputed whether “the outside date for a sale of the Property” was a “missing term” and here, the parties dispute whether the hospital’s pricing or rates are a “missing term.”  Rather than wait for the hospital’s collection efforts, plaintiff, much like Englewood, has instead filed suit seeking a declaration of the parties’ rights, status, or other legal relations under the contract.

Here, “the harm at issue is the wrongful retention or wrongful payment of” $5.251.75”. See Drexel Corp., 417 S.W.3d at 676. Plaintiff “filed this suit in response to [the hospital’s] letter insisting that [Plaintiff] owed it this amount and demanding payment.” Id.  “At the time the lawsuit was filed”, plaintiff and the hospital “had conflicting understandings of their rights and duties under the contract.” Id. “If [plaintiff] truly owed [the hospital] this amount but did not pay it, then [the hospital] would be harmed; if [plaintiff] paid the money as [the hospital] demanded but did not owe it, then [the plaintiff] would be harmed.” Id.

Jurisdiction to resolve the parties’ dispute is not defeated merely because the hospital, like Drexel, has “never filed a counterclaim [to recover the disputed amount from plaintiff] and has indicated that it is not interested in pursuing the dispute at this time.” See id. Here, the hospital “has retained an ‘unfettered ability’ to insist that [plaintiff] make payments” of the full $5.251.75 “that [plaintiff] denies it owes.” See id.  There is “a live controversy and the trial court’s judgment on the merits can still affect the parties’ rights or interests.” Id., see also, e.g., Mackie v. Guthrie, 78 S.W.3d 462, 467 (Tex. App.–Tyler 2001, pet. denied) (holding that plaintiff had standing to maintain a declaratory-judgment action where plaintiff had received a demand letter from defendant and the declarations plaintiff sought would prevent defendant from recovering under the contract). Declaratory judgment accordingly was the appropriate vehicle to resolve the controversy,” and the trial court should be reversed.  See id.

It bears repeating that the hospital has not done anything to establish that it does not feel entitled to collect $5,251.75 from plaintiff for the emergency care at issue under the contract. The hospital’s position is that it has subjectively decided, for now, to hold off on efforts to collect the “balance due.”  In Transp. Ins. Co. v. WH Cleaners, Inc., 372 S.W.3d 223 (Tex. App.–Dallas 2012, no pet.) (“WH Cleaners”) the court of appeals considered the effect of such an argument as to ripeness.  The case concerned whether an insurance coverage dispute was ripe for adjudication.  The insured was sued and requested a defense from its carriers. See WH Cleaners, 372 S.W.3d at 227.  The carriers denied coverage and filed a declaratory judgment action. Id. The insured responded by filing a plea to the jurisdiction.  The insured argued “there is no imminent disagreement among the parties because” the insured claimed it “was not going to contest the carriers’ denial of coverage.’” Id, at 231.  The trial court agreed there was no controversy and dismissed. However, the court of appeals reversed:

The record contains no formal withdrawal of [the insured’s]  request for a defense and indemnity, no agreement that it was not entitled to coverage under any of the policies, no waiver, concession, or settlement of the claims, or anything else to indicate [the insured] had changed or relinquished its position of entitlement and demand for coverage as stated in its August 2008 letter. And in oral argument, [the insured] admitted it had not done anything to establish it was not contesting coverage. We decline to make the existence of a justiciable controversy dependent on the subjective state of mind and intention of one party. It is enough that [the insured] took the position it is entitled to defense costs and indemnity and the carriers disputed that position for a justiciable controversy to exist.

Id., at 231 (emphasis added).

The hospital’s argument in the present case is analogous to the insured’s position in WH Cleaners. The hospital continues to urge that plaintiff has been properly charged under the contract. “The record contains no formal withdrawal of [the hospital’s] request for” payment based on the inflated Chargemaster rates, “no agreement that it was not entitled to” charge plaintiff based on the Chargemaster rates, “no waiver, concession, or settlement of the claims, or anything else to indicate” the hospital has “changed or relinquished its position of entitlement and demand for” the $5,251.75 that was based on its Chargemaster rates. See WH Cleaners, 372 S.W.3d at 231.

To use a phrase that the Drexel Corp. court pulled from a Supreme Court case, the hospital has retained an “unfettered ability” to insist that plaintiff pay the $5,251.75 based on inflated Chargemaster rates that plaintiff denies she owes under the contract. See, Drexel Corp., 417 S.W.3d at 676, quoting Already, LLC v. Nike, Inc., 133 S. Ct. 721, 727, 184 L. Ed. 2d 553 (2013). This Court should also “decline to make the existence of a justiciable controversy dependent on the subjective state of mind and intention of one party.” See WH Cleaners, 372 S.W.3d at 231. Rather, “[i]t is enough that [the hospital] took the position it is entitled to” $5,251.75 based on its Chargemaster rates and the plaintiff “disputed that position for a justiciable controversy to exist.” Id.

“For ripeness to bar [the plaintiff’s] claim, we would have to assume that [the hospital’s] construction of the contract is correct.” Carter v. Dripping Springs Water Supply Corp., No. 03–03–00753–CV, 2005 WL 121867, at *6 (Tex .App.–Austin Jan.21, 2005, no pet.) (mem. op.) (holding contract dispute was ripe for declaratory judgment). The hospital is asserting that plaintiff is “contractually obligated” to apply for financial assistance with regard to its charges of $5,251.75 whereas plaintiff disputes that the charges for $5,251.75 are lawful under the parties’ contract.  For ripeness to bar plaintiff’s claim, the court would have to assume the plaintiff was obligated to apply for a financial assistance eligibility determination based on whether she can pay the charges for $5.251.75 that hospital has claimed it is owed under the contract.  Of course, the question for now is whether she owes that amount in the first place—with or without assistance. The question is ripe and the decision below should be reversed.

The Court is to “construe the pleadings liberally in favor of” jurisdiction (Thornton, 447 S.W.3d at 32), “take as true all evidence favorable to the nonmovant” and “indulge every reasonable inference and resolve any doubts in the nonmovant’s favor.” Miranda, 133 S.W.3d at 228.  Plaintiff’s request for declaratory relief is ripe, the trial court  has jurisdiction, and the decision below should be reversed.

D.     Plaintiff seeks a declaration that will “terminate” a critical “uncertainty” with regard to the contract at issue, and/or such a judgment would serve a “useful, beneficial purpose.” 

The record in this case is clear that the trial court’s decision was based on the question of ripeness: “I find this matter is not ripe. I am dismissing this case.”  RR 19. As an alternative ground for dismissal, the hospital relied on a provision of the Uniform Declaratory Judgments Act which states that “[t]he court may refuse to render or enter a declaratory judgment or decree if the judgment or decree would not terminate the uncertainty or controversy giving rise to the proceeding” Tex. Civ. Prac. & Rem. Code § 37.008 (emphasis added). This alternative ground presents a question of discretion and the record here is clear that the trial court only reached ripeness and has yet to rule on this issue. See RR 1-19. Thus, this Court should reverse as to ripeness and remand to the trial court.

If this Court instead reaches this issue, the hospital’s argument should be rejected. The hospital’s position is that, after the court determines whether the hospital’s charges under the contract at issue must reflect a reasonable value of the services provided, a need will remain to determine the exact amount plaintiff owes the hospital. However, plaintiff does not seek any damages in this case, and “[t]he fact that other issues in the general controversy between the parties remain unresolved by a declaratory judgment does not deprive the court of the power and discretion to render such a judgment.Hunter v. NCNB Tex. Nat’l Bank, 857 S.W.2d 722, 725 (Tex. App.–Houston [14th Dist.] 1993, writ denied) (emphasis added), citing Southern National Bank of Houston v. City of Austin, 582 S.W.2d 229, 237 (Tex. Civ. App.–Austin 1979, writ ref’d n.r.e.). Instead, “[a] trial court has discretion to render a judgment declaring the rights of the parties as to only some of the issues raised in the general controversy.” In re Alsbrooks, No. 09-14-00091-CV, 2014 WL 1285395, at *1 (Tex. App.–Beaumont Mar. 27, 2014), citing Hunter, 857 S.W.2d at 725.  Furthermore, and in any event, the declaratory relief requested herein by plaintiff will terminate “the uncertainty” giving rise to this proceeding.”  In this regard, plaintiff’s Petition expressly defines the “uncertainty” giving rise to this proceeding:

Plaintiff brings this Class Action Petition against Defendant Memorial Hermann Health System seeking a declaration that Defendant’s standard contracts for emergency room care only permit billing for, and collection of, amounts constituting the reasonable value of the treatment Defendant provides. Such a declaration is needed because there is uncertainty and disagreement as to whether Defendant may lawfully bill and attempt to collect from Plaintiff (and similarly situated self-pay emergency care patients who are Texas citizens) by using Defendant’s master lists of itemized charge rates, which Plaintiff alleges to be artificially inflated and excessive.

CR 3 (Petition at ¶ 1; emphasis added). The requested declaration will “terminate the uncertainty” concerning whether the hospital may lawfully bill and attempt to collect from plaintiff by using the hospital’s inflated Chargemaster rates.

As discussed above, plaintiff alleges that, under the contract, the hospital may only charge plaintiff the reasonable value of the services received. The hospital, on the hand, believes it may charge plaintiff (and other self-pay emergency patients) at its Chargemaster rates (as the hospital has already done to plaintiff in this case). The hospital’s Chargemaster rates average several times what the hospital collects for the very same services from all other categories of emergency care patients (consisting primarily of privately insured patients covered by commercial insurers such as Blue Cross and Blue Shield, and patients covered by governmental healthcare programs such as Medicare, Medicaid and Worker’s Compensation). See CR 7-11 (Petition, at ¶ 5.3 and ¶¶ 5.8-5.19).

At this stage, the merits of the dispute are not before the Court. County of Cameron v. Brown, 80 S.W.3d 549, 555 (Tex. 2002). Further, whether a class should be certified at all herein is not yet before the Court. The hospital’s motion to dismiss on this basis is premature.

The provision of the Uniform Declaratory Judgments Act relied on by the hospital states only that “[t]he court may refuse to render or enter a declaratory judgment or decree if the judgment or decree would not terminate the uncertainty or controversy.” Tex. Civ. Prac. & Rem. Code § 37.008 (emphasis added). The Court should reject the invitation to summarily reject plaintiff’s claims at this initial stage. How the trial court will ultimately choose to exercise its discretion under the Uniform Declaratory Judgments Act should turn on a more fully developed record, not on initial pleadings and the hospital’s conclusory arguments.  The “motion to dismiss” should be rejected as premature.

Even if it is not considered premature, the hospital’s argument should still be rejected. “The Texas cases dealing with the propriety of the trial court granting a declaratory judgment are well settled that the court may do so where the judgment would serve a useful, beneficial purpose.” Southern National Bank of Houston v. City of Austin, 582 S.W.2d 229, 237 (Tex.Civ.App.–Austin 1979, writ ref’d n.r.e.), quoting Standard Fire Insurance Co. v. Fraiman, 514 S.W.2d 343, 346 (Tex. Civ. App.–Houston (14th Dist.) 1974, no writ).

As to the effect of any potential disputes between the parties in this case, a “declaratory judgment may be entered if it serves a useful purpose in resolving a controversy between the parties, even if actual or potential disputes remain.” Town of Griffing Park v. City of Port Arthur, 628 S.W.2d 101, 102 (Tex. App.–Beaumont 1981, writ ref’d n.r.e.) (emphasis added). Indeed, “[t]he fact that other issues in the general controversy remain unresolved by a declaratory judgment does not deprive the court of the power and discretion to render such a judgment.” Id . (citation omitted); see also Hawkins v. Texas Oil & Gas Corp., 724 S.W.2d 878, 891 (Tex. App.–Waco 1987, writ ref’d n.r.e.).

Lee v. Kline, No. 14-98-00268-CV, 2000 WL 19227, at *11 (Tex. App.–Houston [14th Dist.] Jan. 13, 2000, pet. denied).

In this case, the parties are disputing the terms of their agreements. Thus, the present suit required the court to construe the parties’ agreements. The Act on its face provides that a party may seek declaratory relief involving “any question of construction … arising under [a written contract]” “either before or after there has been a breach.” Tex. Civ. Prac. & Rem.Code Ann. § 37.004 (Vernon 1997). A court can declare the rights and status of the parties to a contract “whether or not further relief is or could be claimed.” Id. § 37.003(a). “The fact that other issues in the general controversy between the parties remain unresolved by the … declaratory judgment does not deprive the trial court of the power and discretion to render such a judgment.” Standard Fire Ins. Co. v. Fraiman, 514 S.W.2d 343, 346 (Tex. Civ. App.–Houston [14th Dist.] 1974, no writ). We must liberally construe the Act. Tex. Civ. Prac. & Rem.Code Ann. § 37.002(b) (Vernon 1997).

Brush v. Reata Oil & Gas. Corp., 984 S.W.2d 720, 724 (Tex. App.–Waco 1998, pet. denied) (emphasis added).

In support of its position that a declaratory judgment must “settle all the potential issues,” Zinpro cites Southern Methodist University v. Times Herald Printing Co., 729 S.W.2d 129, 131 (Tex. App.–Dallas 1987, no writ). However, careful examination of that opinion reveals that it does not support Zinpro’s proposition. Texas courts uniformly hold that a declaratory judgment need only serve a “useful purpose” in resolving the dispute. Bonham State Bank, 907 S.W.2d at 468; Harkins v. Crews, 907 S.W.2d 51, 56 (Tex. App.–San Antonio 1995, writ denied); Hunter v. NCNB Texas Nat’l Bank, 857 S.W.2d 722, 725 (Tex. App.–Houston [14th Dist.] 1993, writ denied); Barnett v. City of Colleyville, 737 S.W.2d 603, 606 (Tex. App.–Fort Worth 1987, writ denied); Town of Griffing Park v. City of Port Arthur, 628 S.W.2d 101, 102 (Tex. App.–Beaumont 1981, writ ref’d n.r.e.) (“A declaratory judgment may be entered if it serves a useful purpose in resolving a controversy between the parties, even if actual or potential disputes remain”); Standard Fire Insurance Co. v. Fraiman, 514 S.W.2d 343, 346 (Tex.Civ.App.–Houston [14th Dist.] 1974, no writ); Kimble v. Baker, 285 S.W.2d 425, 429-30 (Tex.Civ.App.–Eastland 1955, no writ); Town of Santa Rosa v. Johnson, 184 S.W.2d 340 (Tex.Civ.App.–San Antonio 1944, no writ). Indeed, a court may render a declaratory judgment on one issue while refusing a declaration on a related issue. Firemen’s Ins. Co. of Newark v. Burch, 442 S.W.2d 331, 332-33 (Tex.1968). Here, a declaration of the contracts’ validity would serve a useful purpose in resolving the dispute even if other, related issues remain unresolved.

Zinpro Corp. v. Ridenour, No. 07–96–0008–CV, 1996 WL 438850, at *9 (Tex. App.–Amarillo Aug.1, 1996, no writ) (emphasis added).

The hospital is here arguing that a declaratory judgment must “settle all potential issues.”  As the Zipro Corp. court pointed out, that is not the law.  Although a court does have limited discretion to “refuse to render or enter a declaratory judgment” under § 37.008, “Texas courts uniformly hold that a declaratory judgment need only serve a ‘useful purpose’ in resolving the dispute” and “[t]he fact that other issues in the general controversy between the parties remain unresolved by a declaratory judgment does not deprive the court of the power and discretion to render such a judgment.” See, e.g., Hunter, 857 S.W.2d at 725.  “The Act on its face provides that a party may seek declaratory relief involving ‘any question of construction … arising under [a written contract]’ ‘either before or after there has been a breach.’” Brush, 984 S.W.2d at 724, quoting § 37.003(a).  “A court can declare the rights and status of the parties to a contract ‘whether or not further relief is or could be claimed.’” Id. quoting § 37.003(b); see also § 37.002(b).

It is the allegations of the petition, of course, which define the “uncertainty or controversy” which has been brought before the Court to resolve. The challenged behavior here is the hospital’s practice of billing self-pay patients based on inflated and unreasonable rates set forth in its Chargemaster.  The hospital does not dispute that it charges such patients at Chargemaster rates, rather, it asserts that the contract provides for and authorizes the practice.  The declaratory judgment requested is “final”; it is the only relief sought or necessary in this action, and will be extremely useful to plaintiff and class members to defend against the hospital’s excessive billed charges at Chargemaster rates.

“Here, a declaration of the contracts’ [price terms] would serve a useful purpose in resolving the dispute even if other, related issues remain unresolved.” See Zinpro Corp., supra (collecting cases).  The trial court’s order dismissing the case should be reversed.

PRAYER

          The trial court erred by granting the Plea to the Jurisdiction and Motion to Dismiss. The judgment below should be reversed and this case remanded to the trial court for further proceedings.

Respectfully submitted,

/s/ James Craig Orr, Jr.

JAMES CRAIG ORR, JR.
Texas Bar No. 15313550
jim@hop-law.com

ERIC D. PEARSON
Texas Bar No. 15690472
eric@hop-law.com

Heygood, Orr & Pearson
6363 North State Highway 161, Suite 450
Irving, Texas 75038
(214) 237-9001 Telephone
(214) 237-9002 Facsimile
ATTORNEYS
FOR PLAINTIFFS


Notes:

[1] Plaintiff has paid $300. Id.

[2] The trial court’s order granting the plea to the jurisdiction and dismissing the case resolved all claims against all parties and is final and appealable. See Speer v. Stover, 685 S.W.2d 22 (Tex.1985) (“Since the trial court concluded that it lacked subject matter jurisdiction, we hold that the order sustaining the plea was final and appealable.”).

[3] MBM Fin. Corp. v. Woodlands Operating Co., L.P., 292 S.W.3d 660, 670 (Tex. 2009).

[4] Cobb v. Harrington, 190 S.W.2d 709, 713 (1945).

[5] Tex. Civ. Prac. & Rem. Code §§ 37.004(b) and § 37.003(a).

[6] Tex. Dep’t of Pub. Safety v. Moore, 985 S.W.2d 149, 153–54 (Tex. App.–Austin 1998, no pet.).

[7] Bexar Metro. Water Dist. v. City of Bulverde, 156 S.W.3d 79, 88 (Tex. App.–Austin 2004, pet. denied).

[8] See, Drexel Corp. v. Edgewood Dev., Ltd., 417 S.W.3d 672, 675 (Tex. App–Houston [14th Dist.] 2013, no pet.) (rejecting argument that dispute over amount due was not a justiciable controversy where party retained “unfettered ability” to collect full amount that had been claimed).

[9] See Zinpro Corp. v. Ridenour, No. 07–96–0008–CV, 1996 WL 438850, at *9 (Tex. App.–Amarillo Aug.1, 1996, no writ) (collecting cases); accord  Lee v. Kline, No. 14-98-00268-CV, 2000 WL 19227, at *11 (Tex. App.–Houston [14th Dist.] Jan. 13, 2000, pet. denied); Brush v. Reata Oil & Gas. Corp., 984 S.W.2d 720, 724 (Tex. App.–Waco 1998, pet. denied).

[10] See also, e.g., In re City of Dallas, 977 S.W.2d 798, 804 (Tex.App.—Fort Worth 1998, no pet.) (“Actual injury or harm is not a prerequisite to a declaratory judgment lawsuit; a trial court may construe a contract in a declaratory judgment action before a breach occurs.”), citing Hasty, Inc. v. Inwood Buckhorn Joint Venture, 908 S.W.2d 494, 499 (Tex. App.–Dallas 1995, writ denied).

[11] Claims like the plaintiff’s claim herein are a relatively common use of the Declaratory Judgments Act. See, e.g., BHP Petroleum, 800 S.W.2d at 842 (allowing declaratory action to resolve “future disputes as to the granting of royalties under the deed”); Michelin North America, Inc. v. First Indus. NLF 12 JV, LLC, 2014 WL 586228, Tex.App.-Hous. (1 Dist.), Feb. 13, 2014 no pet. (mem. op.) (“First National demanded payment for $1,327,642, corresponding to expenses incurred to satisfy the deductible on the warehouse policy” and “Michelin filed suit seeking a declaratory judgment that, since First Industrial had failed to give advance notice of the amount of the policy’s deductible, Michelin did not owe the $1.3 million sought.”); N. Cent. Distribs., Inc. v. Minyard Food Stores, Inc., No. 05–12–00418–CV, 2014 WL 223060, at *5 (Tex. App.–Dallas Jan. 21, 2014, no pet.) (mem. op.) (“Minyard seeks a declaration that it is entitled to a setoff of amounts it owes North Central for goods received.”); BP Am. Prod. Co. v. Zaffirini, 419 S.W.3d 485, 515 (Tex. App.–San Antonio 2013, pet. denied) (“[W]e declare that […] BP does not owe Lessors any additional bonus payment[.]”).

[12] Regardless of income and wealth, a person is of course free to choose to not buy health insurance. See, e.g., Nat’l Fed’n of Indep. Bus. v. Sebelius, 132 S. Ct. 2566, 2600, 183 L. Ed. 2d 450 (2012) (noting the decision is a citizen’s “lawful choice”); see also id., at 2600 (“it is estimated that four million people each year will choose to pay the IRS rather than buy insurance”).

[13] CR 62 (“would not qualify for financial assistance.”).

[14] Plaintiff has paid $300. Id.

[15] In the instant case, the burdens are certainly “tanglibe.” To be considered for financial assistance from the hospital, one must provide “financial information for the household by completing a Financial Information Form along with supporting documentation.” CR 58. One must “verify income” by providing tax returns and any other documentation that “may be requested” by the hospital “including; Last two Employer paycheck stubs, written documentation from income sources, and a copy of all bank statements for the last three months.” Id.  The hospital “reserves the right to review an applicant’s credit report, property tax records, and/or other public or personal documents prior to a determination regarding program eligibility.” Id. Further, “[p]ayment from all other possible payment sources must be exhausted before a patient can be considered for the Financial Assistance Program.” Id.