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SOUTHEAST TEXAS RECORD

Friday, March 29, 2024

Appellate court rules lower court abused discretion in Associates in Medicine trade secrets case

Lawsuits
General court 05

HOUSTON – The 14th Court of Appeals issued a ruling on June 21 conditionally granting a writ of mandamus that two physician groups do not need to follow an “extreme and highly intrusive” trial court order that a forensic expert will search for information relating to allegations of stolen trade secrets.

The court opinion was written by Judge William J. Boyce, with Judges John Donovan and Kevin Jewell on the panel. 

The discovery fight stems from the lawsuit Associates in Medicine PA filed against Drs. Shari Rubin and Joshua Septimus. Methodist Primary, who has clinics throughout Houston, and Methodist Specialty, who does billing and collection for Methodist, were later added as defendants. 

Associates claims when the doctors quit their practices at Associates and joined Methodist Primary, they “stole trade secrets, tortiously interfered with patient relationships, and committed other actionable conduct,” the opinion states.

Associates seeks damages and disgorgement from any money gained from the alleged theft of trade secrets.

Associates requested discovery of the practice management systems used by Methodist Primary, Methodist Specialist, and other Methodist System entities for documents showing profits from both doctors’ referrals for patients and any other documents showing “ancillary services billed and collected by Methodist Specialty from May 2015 to the present,” the opinion states.

On March 8, the 234th District Court of Harris County granted in part Associate’s motion to order the defendants to produce requested documents, stating a forensic search of Methodist’s “practice management systems, EPIC and ATHENA would likely lead to the recovery of relevant and material documents,” the opinion states.

Methodist filed a writ of mandamus on March 14, claiming the trial court abused its discretion in ordering the search. Among its arguments, Methodist claims Associates did not prove that Methodist defaulted on its discovery obligation, and that the order compels discovery for documents Associates did not request, giving Associates access to more than 200 Methodist System entities that aren’t part of the lawsuit.  

Boyce agreed with the trial court finding that Methodist’s production of the requested electronic data had been inadequate, and that “a further search of their electronic data could recover relevant materials” but stated that Associates have not proved that Methodist has data that show the other 200 Methodist System entities have collected money for patients or ancillary services referred by Rubin and Septimus.

Boyce also noted that the risk of harm in this case is not outweighed because Associates will pay for the forensic expert to conduct the search and emphasized the Supreme Court rulings, cautioning that courts choose “the least intrusive means of retrieval.” 

The court order stated that ordering a search that is much broader than Associates requested is an “extreme and highly intrusive measure.”  

Boyce conditionally granted the writ of mandamus, stating in closing, “We are confident the trial court will act in accordance with this opinion. The writ of mandamus will issue only if the trial court fails to do so.”

14th Court of Appeals case number 14-18-00191-CV

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