Ap pe lle e is the Spe c ia l D e pu ty Re c e ive r f

or the foll owing e nti tie s: A me ri c an B e ne fi t 1 Plans; N a ti o n a l A s s o c iati o no f Wo r k in g A me r ic an s a/k

/a N a ti o n a l A s s o c iati o nf

o r Wo r k ing Americ ans; United Employ ers Voluntar y Employ ees B enef

iciary Association; United Employ ers Vo lun tary

Em plo y e e s B e ne fi c iary As so c ia tio n I ; Ele c tr on ic B e ne fi ts Gr ou p, I nc .; E nh anc e d H e a lth Manag ement, I nc.; Four Corners Com pany , L L C a/k/a Four Corners Co. L L C, a/k/a Four Corners Corp.; America

n Association of Ag riculture, For estry and Fishing Workers; Americ an Association of Tra nsportation, Communi cation, Electric al, Gas a nd Sanitary

Workers; Americ an Association of Wholesale Tra de Workers; Ame rica n Association of Manufa cture r W orker s; America n Association of Service Workers; Americ an Association of Construction W orker s; and Americ an Association of Pr of e ssi on a l Wor

ke rs . 

### TEXA S C OU R T OF A PPEAL S, THIR D DIST R ICT , AT AU STIN

NO. 03-04-00489- CV

M e dCo st , L. L.C ., App e lla nt

v. RobertLoiseau, S pecial Deputy Rec eiver of Ame rican Benefit Plans, et. al., Appellee

F ROM THE DISTRICT CO URT OF TRAVIS COUNTY , 53RD JUDICIAL DISTRI CT NO. GN304388 , HO NORAB LE LORA J. LIVINGSTO N, JUDGE PRESIDI NG

O P I N I O N Appellant MedCost, a pre fer red pr ovider org anization (“PPO”), fil ed a special appea ranc e in this action conc erningthe re ceive rship of ce rtain hea lth insurance companies after the

re c e ive r, a

pp e lle e Rob e rt

L ois e a u, joi ne d M e dCo st a s a

de fe nd ant to co lle c t f

or c la ims ma de a g a ins t 1Robert David Ne al, a Te x as re sident, operated seve ral fr audulent insuranc e compa nies 2 based in Te x as, including Americ an B enef it Pl ans, United Employ ers Voluntar y Employ ee B e ne fi c iary As so c iatio n, and Natio na l As so c ia tio n of Wor kin g Am e ri c ans , a ll of wh ic h a re no w i n re c e ive rs hip in T e xas. 2 the entities in rec eiver ship (“the Ne al entities”). The district court denie d MedCost’s special 2 appea ranc e, and this interloc utory appea l f ollowed. Be cause we hold that the district court ca nnot pr op e rl y e xer c ise pe rs on a l juri sd ic tio n o ve r M e dCo st, we wi ll r e ve rs e the jud g me nt.

BACK GR OUND Me dCo st i s a

De lawa re c or po ra tio n w ithits pr inc ipa l pl a c e of bu sin e ss i n N or

th Carolina. As a

PPO, it org anizes and maintains a ne twork made up of lists of health ca re pr oviders prac ticing only

in North and South Carolina who a g ree to provide ser v i ce s at pre -neg otiated rates to clients of t he P PO. MedCost sells its PPO lists t o larg er PPO org anizations, which provide the lists t o employ ers a

nd health insurer s. MedCost does not handle claims for health ca re r ecipients or providers a

nd does not provide he alth insurance

. Me dCo st c on tr a c te d w ithAm e ri c an H e a lth c are Al lia nc e (“ AH A” ), a

natio na l PPO based in Missouri, g iving AH A ac cess to MedCost’s North a nd South C ar olina networks. AH A ind e pe nd e ntl y

c on tr a c te d w ithPr og ressiv e Ad min ist rator s Re so ur c e s ( “ PAR ” ), a thi rd -p a rt

y administrator in California, g iving PAR a cce ss to the AHA network, which, throug h AHA’ s contrac t with MedCost, included MedCost ’s network. UltraMed, a n Oklahoma e ntity , contra cted with PAR for third-pa

rty administrator service s and claims proce ssing and Amer ican B enef its P lan (AB P), one of the Ne a l e nti tie s b a se d in Te xas, to p ay

the ne tw or

ks and ro ute c la ims

.Th e re c or d r e fl e c ts that Me dCo st te rm inate d n e tw or k a c c e ss a ft e r M e dCo st h a d b e c ome 3 awa re of UltraMed’ s connec t i o n t o the Nea l entities and of Ne al’s havingencounte red le g al problems in Texas conce rning his health insuranc e businesses a nd afte r Ult raMe d had fa iled for the second time to pay

fee s for a period of se vera l months. Me dCo st’ s p oli c y

is t o d isf a vo r c ov e ra g e pr ov ide d b y c oa lit ion s of

e mpl oy e e s b e c a

us e it 4 believes suc h arr ang ements ar e not leg al in some states. 3 AB P pr ov ide d th e Ul tr a Me d Cho ic e He a lthPlan to its ins ur e ds , in c lud ingre sid e nts of the Carolinas. The car d issued by the UltraMed Choice Hea lth Pl an indicate d that the insuranc e was sponsore d by

the National Assoc iation of Working Ame rica ns (“N AWA”) and ref

ere nced the Un it e d E mpl oy e rs Vo lun tary Em plo y e rs B e ne fi c iary

As so c ia tio n ( “ UE VE B A” ) a nd PAR . A B P, NAWA, and UEV EBA are all Texas entities with their principal plac es of business in the Da llas-For t Worth area

. MedCost did no t en t er into contracts with UltraMe d, AB P, NAWA, UEVEB A, or Nea l, but it d id a

p p r o v e th e U lt

r a M e d in s u r an c e id e n ti f

ic a ti o n c ar d f

o r u s e in it s n e tw o r

k in the Carolinas. I t r ece ived $3 monthly from AHA for eac h of the 379 individual insureds in the Carolinas who en j oy ed ac cess to the Me dCost network throug h the NAWA UltraMe d plan. They and the health ca re pr oviders suffere d losses when the N AWA UltraMed c overa g e turne d out to be worthless. The T exas companies were ultimately place d into rece ivership, and Me dCost terminated

acc ess to its network, issuing an internal email repor ting that the c overa g e should have raised a “re d 3 fl a g ” fr om t

he be g inn ingbe c a

us e Ul tr a Me d w a s a

c oa lit ion of e mpl oy e e s. 4 Robert L oiseau is the rec eiver for AB P, NAWA, and UEVEB A, as we ll as other companies. The rec eiver ship court found that these companies e ng ag ed in i m p ro p er insurance p r a c t i c e s b y c r e a t i n g , m ar k e t i n g , an d

s e l l i n g u n a

u t h o r i z e d h e a l t h i n s u r an c e p l an s , c o l l e c t i n g m o n e y,Se c tio n 1 01 .2 01 (a ) r e a ds : 5 “. . . A pe rson who in any m an n er assisted direc tly or indirec tly

in the pr oc ur e me nt o f t

he c on tr a c t is lia

ble to the ins ur e d for

the fu ll amou

nt o f a c la im or loss under the te rms of the c ontrac t if the unauthorized insurer fails to pay

the claim or loss.” Tex. I ns. Code § 101.201(a) (West Supp. 2004-05). 4 and fa iling to pay

claims. When the Texas companie s we nt into rece ivership, the Rec eiver was char g ed with pa

y ing claims of insureds and provide rs, including those within MedCost’s network. No rt h a nd Sou th Caro lin a ins ur e ds wi th c la ims a g a ins t A B P and re la te d c omp anie s in

re c e ive rs hip hav e ass igned th eir

cla im s t o t he R ecei ver. Vari ou s depar tm ent s of ins uran ce in s tat es w here ABP

and re la te d e nti tie s o ff

e re d in sura

nc e de c ide d it

wo uld be e asi e r a

nd c he a pe r t o h and le a ll the se

c la ims in o ne state , T e xas, be c a us e the larg e st n

umb e r o f A B P in sure ds and c la ims c ome fr om t

his state and be c a us e the Ne a l e nti tie s w e re ba se d he re . No ne of the c la ims of Te xan ins ur e ds or c la ims

or ig i n a t i n g i nT e xa s i n v o l v e d M e d C o s t ’ s n e t w o r

k s . T h e R e c e i v e r

h a s f i l e d s u i ta g a i n s tM e dCo st

s eekingdamag es under

section 101.201 of the T exas I nsuranc e Code for assisting in the proc ureme nt of the ill e g a l in sura

nc e c on tr a c ts. 5 M ed C o s t fi l ed a sp ec i al ap p ea ra n ce , wh i ch t h e di s t ri ct co u rt d en i edaf t er a h ea ri n g. MedCost appea ls that denial, claiming that it does not ha ve minimum contac ts with Tex as suffic ient to con fer p ers on al j uri sd ict io n upo n T ex as. Th e R ecei ver c ou nt ers th at, becaus e Me dCo st’ s c on tr a c ts fac ilitated the Texas-bas e d e nti ti e s ’ p r o v idingillega l health insuranc e to users of MedCost’s network in t he Caro lin a s, the tr ia l c ourt pr op e rl y he ld t hat Me dCo st i s su

bje c t to pe rs on a l juri sd ic tio n in Texas, where all the re ceive rship entities are based.Specifica lly , MedCost challeng es F indings of F act 8- 29 and Conclusions of L aw 1- 4. 6 5 DI SCU SSIO N Stand ard of Review Whether a c ourt has personal jurisdiction over a defe ndant i s a question of law, w hich

we r eview de novo

. American TypeCul t u r e C o l l ec t i on, Inc. v . Coleman , 83 S.W .3d 801, 805-06 (T e x. 20 02 ); BMC Software Belg., N.V. v. Marchand , 83 S.W .3d 789, 794 (Tex. 2002)

. Howeve r, wher e the trial court issues finding s of fac t a nd conclusions of law in de ny ing a specia l appea

ranc e, the conc lus i o ns of law a

re r eviewe d de novo and cha lleng ed fa ct finding s are revie wed unde r noe v id e n c e and insuff

icient evidenc e standa

rds for le g al and f

actua l sufficienc y . Marchand , 8 3 S

. W.3d

a t 79 4; Botter v. Ame rican Dental Ass’n , 124 S.W .3d 856, 861 (Tex. App.—Austin 2003, no pet.). I n this case, Me dCost arg ues that the c ourt’s finding s of fa ct and c onclusions of law are f actua lly and leg ally insufficient to conf

er jurisdiction. We assume for purposes of this ana ly sis that the court’s

6 finding s of fa ct ar e supported by sufficient evidence , but beca use we hold that the court’s conclusions of laware err oneous, we must reve rs e and need not decide the suffic iency of the

e vid e nc e su

pp or tin g the fa c t f

ind ing s.
Jurisdi ction T ex as cour

t s m ay ex er ci s e j u ri s d i ct i o no v er n o n re s i d en td ef

en d an t s i f t h e T ex as l o n garm statute a

uthorizes the exercise of j u ri s d iction and that exercise is c onsistent with federa l and

s t ate standards of due proce ss. G u a rdi a n R o y a l E x c h

. A s s u r a n c e, L td

. v . E n g l i s h C h i n a Cla ys, P.L.C. , 8 15 S.W. 2d

22 3, 22 6 ( Te x. 19 91 ); Botter , 1 24 S.W. 3d a t 86 1. Th e Te xas l on g -a rm statut e6

pe rm it s cou rt s to e xer c ise pe rs on a l juri sd ic tio n o ve r a no nr e sid e nt d e fe nd ant w he n s uc h p ow e r i s permitted by the fede ral constitutional re quirements of due proce ss. Tex. Ci v. Prac. & Rem. Code Ann. §§ 17.041-.045 (West 1997); Marchand , 83 S.W. 3d a t 79 5; Pessina v. Rosson , 77 S.W .3d 293, 297 (Tex. App.—Austin 2001, pet. denied) ( broad la ng uag e of s t atut e per

mits ex pansive re ach limit ed only

by fede ral re quirements of due proce ss). Fe dera l standards of due proce ss require that (1 ) t he de fe nd ant ha s pur

po se fu lly e sta

bli sh e d mini mum c on ta c ts with Te xas, and (2 ) t he e xer c ise of jurisdiction comports with traditional notions of fair play and substantial justice. Burger King Corp. v. Rudzewics , 471 U.S. 462, 475-76 (1985) ; Marc hand , 8 3 S

. W

. 3 d at 7 9 5 (c i t i n g International Shoe Co. v. W

ashington , 3 26 U. S. 3 10 , 3 16 (1 94 5) ); CSR, Ltd. v. Li nk , 9 2 5 S. W. 2 d 5 9 1 , 5 9 4 ( T e x. 1996). I f the defenda

nt has not purposef

ully established mi nimum contac ts with the forum state, the exercise of

jurisdiction cannot comport with traditional notions of fa ir play and substantial justice. International Shoe , 326 U.S. at 316.

T h e p l ai n t i ff

b ea rs t h e i n i t i al b u rd en o f p l ea d i n g s u ff i ci en tal l ega t i o n s t o b r i n g a nonresident defenda

nt within the provisi ons of the long -ar m statute. Marchand , 83 S.W .3d at 793. Upon filing a spec ial appea ranc e, a nonr esident c h a ll e n g in g persona l jurisdiction assumes the burden of negat in g al l juri sd ic tio na l ba se s. Te x. R. C iv. P. 1 20 a ; Coleman , 83 S.W .3d at 807 (c iting Kawasaki Steel Corp. v. Middleton , 69 9 S.W. 2d 19 9, 20 3 (T e x. 19 85 )) . I f t he pla int if

f h a s f a ile d to sufficie ntly alleg e persona l jur isdiction, the defe ndant can defe at persona l jurisdiction by prese nting evidenc e that it is a nonreside nt. Siskind v. Villa Found. for Educ., Inc. , 6 4 2 S. W. 2 d 4 3 4 , 4 3 8 ( T e x. 1982).7 Un d er the due pr ocess a naly sis, we must apply

the “ultimate test” of

minimum contac ts: whether the nonr esident def endant ha s purposefully

availe d i t s el f of the privileg e of

c on du c tin g a c tiv iti e s w ith in the fo rum sta te , thus inv ok ing the be ne fi ts an d pro te c tio ns of its laws . Burger King , 4 71 U. S. at 47 5; Botter , 124 S.W .3d at 862. The “ purposef ul availment” r equire ment

e ns ur e s t h a t a d e f

e n d an t w i l l n o t b e c a l l e d i n t o c o u rt i n a j u r i s d i c t i o n b a s e d o n l y up on ra nd om, fortuitous, or attenuated contac ts, or the unilatera l activity of anothe r par

ty or a third pe rson. Burger King , 4 71 U. S. at 47 5; Guardian Royal , 81 5 S.W.2 d at 2 26 . Rathe r, the a c tiv iti e s in the state mus t have be en intentional. Schlobohm v. Sc hapiro, 784 S.W .2d 3 55, 357 (Tex. 1990). The a ctivities

c on du c te d in

the fo rum st a te mus t ju sti fy a c on c lus ion

that the d e fe nd ant s ho uld re a so na bly anticipate be ing ha led into court in that state. W orld-W ide Volkswagen Corp. v. W oodson , 4 44 U. S. 286, 297 (1980). The minimum contac ts analy sis protects a f oreig n corpor ation from suit in a Te x as

c ourt if its re la tio ns hip wi th T e xas i s so re mot e or a tte nu a te d th a t it

c ou ld n ot r e a so na

bly anti c ipate having to de fend itself in a Texas court. Id. For esee ability is an important consideration in deciding whether a nonresident defe ndant has purposef ully established minimum contac ts w ith a forum state. Id. ; Marchand , 8 3 S. W.3 d at 79 5; Guardian Royal , 815 S.W .2d at 227.

Th e jur isd ic tio n o f T e xas c ourt s is a lw ay s d e pe nd e nt o n th e de fe nd ant’ s h a vin g so me minimum contac ts with Tex as, but the re quisite ex tent of those contac ts va ries dependingwhether the ty pe of in personam jurisdiction in question i s specific or g ener al. Guardian Royal , 815 S.W .2d

a t 22 7; Bo tte r, 124 S.W .3d at 862. The e x erc ise of per sonal jurisdiction is proper if the nonre sident defe ndant’s minimum contacts g ive rise to either specific or g ener al juri sdiction. Marchand , 838

S

. W

. 3 d at 7 9 5 (c i t i n g He lic op te ro s Na c ion ale s d e Co lo mbi a, S. A. v . H

all , 466 U.S. 408, 413-14 (1 98 4) ); Guardian Royal , 815 S.W .2d at 226. Specific Jurisdiction

A cour t may exercise spe cifi c jurisdiction over a nonresident de fenda

nt when the defe ndant’s purpose ful contac ts with the forum g ive rise to or a re r elated to the c ause of action. Coleman , 83 S.W. 3d a t 80 6; Guardian Royal , 815 S.W. 2d a t 22 8. I n a

na ly zingmin imum c on ta c ts for pur poses of Te x as cour

ts’ specific jurisdiction, we foc us o n t h e re lationship among the nonresident d ef

en d an t , the forum, a

nd the litigation. Botter , 124 S.W .3d at 862 (c iting Guardian Royal , 815 S.W .2d at 227).

Th e Te xas S up re me Court ha s d e ve lop e d a

fo rm ula to d e te rm ine wh eth er s pe c if ic jurisd ic ti o ne xis ts s u f

f ic ie n t t o s a ti s f

y th e f e d e r a l c o n s ti tuti o n a l s ta

n d ar d : ( 1 ) th e n o n r e s id e nt de fe nd ant o r f

or e ig n c or

po rat io n mu st pur

po se fu lly ta ke so me a c tio n o r c on su mmate so me transac tion in the forum state; (2) the cause of action must arise from or be connected with such act or transa ction; and (3) the assumpt ion of jurisdiction by the forum state must not offend traditional

no tio ns of fa ir pla y and su bs tanti a l jus tic e , c on sid e ri ng the qu a lity , natur e , and e xten t of the a c tiv ity in the forum state, the relative convenie nce of the par ties, the bene fits and protec tion of the laws of the forum state aff

orded the respe ctive parties, a nd the basic e quities of the situation. Botter, 124 S. W. 3 d a t 8 6 2 ( c it ing S

ch lobohm , 7 84 S.W. 2d

a t 35 8) . T hu s, be fo re a

Te xas c ourt

c an a ssume sp e c if ic jur isd ic tio n o ve r M e dCo st, it mus t f ind that Med Cos t pu

rp os e fu lly

pe rf or me d s ome a c t in Texas and that the contr oversy arose out of that ac t. Helicopteros Nacionales , 466 U.S. at 415.Although the parties a g ree that MedCost did not contract dire ctly with any of the Te x as 7 ins ur anc e c a rr ie rs a t th e tim e thi s c a us e of a c tio n a ro se , th e Re c e ive r a

rgue s th a t Me dCo st’ s b us ine ss dealing s with the rec eiver ship entities constitut ed a de fac to contra ctual relationship. We note that sim ply c on tr a c tin g wi th a Te xas re sid e nt a lon e is no t e no ug h to e sta bli shmin imum c on ta c ts w iththi s state. Burger King Corp. v. Rudzewics , 4 71 U. S. 4 62 , 4 78 (1 98 5) ; Blair Communications, Inc. v. SES Survey

Equip. Servs, Inc ., 80 S.W .3d 723, 730 (Tex. App.—Houston [1s t Dist.] 2002, no pet.) (“ We do no t be lie ve that ini tiatin g c on tr a c t dis c us sio ns wi th a Te xas re sid e nt, and su bs equ ent ly enter ing into a c ontrac t, in addition to making pay ment in Texas, are suf

ficient c ontacts with Texas when the e ntire substance of the c ontrac t is performe d outside the state.”) . Thus, contra ry to the dis se nt ’ s su g g e sti on , M e dCo st’ s “ pr of it- ba se d r e la tio ns hip ” thr ou g h a n atte nu a te d c ha in o f c on tr a c ts with others ca

nnot confe r per sonal jurisdiction , nor ca n the fa ct that MedCost ultim ately rec eived money s from Texas entities throug h UltraMed, PAR, and A HA.
9 M e d Co s t a

r g u e s th a t p e r s onal jurisdiction is im proper beca use its contacts with Texas

occur red only throug h the contra ct of a

third party

and are at best remote and attenuated bec ause of the natur e of

the c ha in o f c on tr a c tual rel ati on sh ips —M e dCo st c on tr a c te d w ithAH A f or a c c e ss t o i t s n et wo rk , b u tAH A w as t h e e n t i t y t h at p ro v i d edt h e n et wo rkt o T ex as -b as edi n s u re rs t h ro u gh AHA’ s contra cts with Oklahoma- based UltraMed to which MedCost was not a pa rty
. See B urger King , 4 71 U. S. at 47 5; Hi tac hi S hin Di n Ca ble, L td. v . Ca in , 1 0 6 S. W. 3 d 7 7 6 , 7 8 4 ( T e x. App.—Texarkana

2003, no p et
. ) (Chinese ma nufac turer’ s contrac t to ship goods at F renc h company ’s direc tion did not constitute purposef ul a vailment of privileg es of doingbusiness in Texas when Chinese c ompany

complied with Fr ench c ompany ’s direc tive to s h ip goods to Te x as). The Rec eiver , howeve r, points out contacts other tha n the contra ctual re lationship. 7 He argue s th a t th e re a

re su ff ic ie nt co nta c ts fo r Te xas to as su me sp e c if ic jur isd ic tio n o ve r M e dCo st beca use MedCost’s appr oval of the ide ntification ca rds l isting t he Te x as compa nies constituted an int e nti on a l a c t th a t g a ve ri se to t his c a us e of a c tio n a nd be c a us e the imp a c t of

Me dCo st’ s a c t is fe lt in T exas. MedCost r esponds that beca use it doe s not ha

ve minimum contacts with Texas, the trialMe dCo st argues that it a pp ro ve d th e fo rm

of the c ard , n ot a

pla n o r c ov e ra g e , me re ly 8 en s u r in g th a t in f

o r mati o n r e f

le c te d o n th e c ar d w a s a c c ur a te
. I t c h ar a c te r iz e s th e proc ess as administrative in nature and desig ned to ensure that the nec essar y information was r ecor ded and rela y ed to provider s in the Carolinas. Whether MedCost had a duty to further investigate is releva

nt to the merits of i ts liability , but not to the questi on of whether it took an int entional act in this st ate. 10 court should have g rante d its special appe ara nce. We will examine eac h of MedCost’s alleg ed extracontra ctual conta cts with Texas in turn. Identification C

ards The Rec eiver

argues that MedCost is liable for the losse s re s u l t i ng from NAWA’s

and UE VE B A’ s f

a ilure to p ay

c la ims be c a

us e Me dCo st a llo we d bo th to pr ov ide un a uth or ize d h e a lth

car e cove rag e to insure ds using its ne twork. He a rg ues that MedCost acte d aff irmatively

to allow

acc ess by approvingthe insuranc e identification card that broug ht its network toge ther with the

un a uth or ize d c ov e ra g e , an d be c a us e that cov e ra g e c a me fr om T e xas, the Re c e ive r a rgue s, Me dCo st could expect to be sued he re. The identification card that MedCost approved lists the names or includes the log os of UltraMed, NAWA, AHA, PAR, and MedCost. Upon re ceipt of a sample ca

rd, MedCost evaluate d it accor ding to its “Pay or Repric ing I D Card Che ck L i st” and its “Ne w Client Check L ist,” and appr oved it for use by insureds ac cessingM edCost’s network of health ca

re providers in North and S outh Carolina. The Receiver argues t hat this chec klist and procedur e show that Me dCo st s e rv e d a

g a te ke e pin g fu

nc tio n a nd that Me dCo st i s li a

ble for it s fai lur e to p ro pe rl y
scre en the c ompanies using its network. 8

I n o rd e r t o s ho w that th e a

p p r ov a l of

the c a rd c on sti tut e d s uf

fi c ie nt m ini mum

c on ta c ts for spe cific jurisdiction, the Rec eiver must show that, by

approvingthis card, Me dCost performe dWe n ote that Ultr a Me d wa s bas e d in Okla ho ma , an d tha t, und e r the Re c e ive r’ s argume nt, 9 even thoug h the other N eal e ntities were ba sed i n T ex as an d the injury was to insureds in the Caro lin a s, be c a

us e Me dCo st a ff

ir ma tiv e ly a

pp ro ve d a

n id e nti fi c a tio n c ard

lis tin g an O kla

ho ma company which eve ntually

failed to pa

y claims in the Carolinas, MedCost could re asonably expect to b e ha le d i n t o c o u rt i n O k l ah o m a a s w e l l

. I t m ay b e s u g g e s t e d t h a t M e d C o s t ’ s r e l a t i o n s h i p to Texas was more substantial be cause it approved more Texas companies’ use of its network, but the nature and quality

of the re lationships were t h e s ame. See A merican TypeCulture Col lection v. Coleman , 83 S.W .3d 801, 810 (Tex. 2002) (“Rather than the quantity of conta cts wi th Texas as compar ed to other jurisdictions, we look to the nature a nd quality of those conta cts.”). 11 an ac tion in Tex as an d that the appr oval g ave r ise to this cause of a ction. See Sc hlobohm , 784 S.W .2d at 358. While MedCost m ight be liable for its failure to g ateke ep, the releva nt inquiry here is w he the r i ts a

pp ro va l of

the ide nti fi c a tio n c ard

wa s a n a c t take n in

Te x as, no t w he the r M e dCo st sh ou ld h a ve a llo we d th e Ne a l e nti tie s a c c e ss t o it s n e tw or k. Th e me ri ts o f t

he Re c e ive r’ s c a se ag ainst MedCost are not now be fore us. Mo rri s v . Ko hls -York

, N o . 0 3

- 0 4

- 0 0 3 7 1

- CV , 2 0 0 5 T e x. App. L EXI S 3404, at *13 (Austin May 5, 2005, no pet. h.). The R e c e iv e r

does not argue that MedCost’s appr oval of the c ards took plac e in Texas

rathe r t ha n in No rt h Ca ro lin a , w he re Me dCo st’ s o pe ra tio ns are loc a te d. Ins te a d, he argue s th a t it is sufficie nt that MedCost knew that the entities it was appr oving w ere Texas-based. 9

We are willing to g rant that it may have been forese eable to MedCost that the Nea l entities would misuse its network, but the foresee ability we are c oncer ned with for pur

poses of our du e -p ro c e ss a

na ly sis is wh e the r Me dCo st co uld re a so na bly have e xpe c te d to be ha le d in to c ourt in Texas for the Texas companies’ misuse of that networ k in the Carolinas. W

orld-W ide Volkswagen , 44 4 U .S. a t 29 7; Guardian Royal , 8 15 S.W. 2d a t 22 7. Me dCo st’ s n e tw or k d e a lt o nly

wi th c la ims orig inating in the Ca

rolinas and include d health c ar e p ro v i d er s only in the Carolinas. In fac t, the

c a us e s o f a c tio n th a t the Re c e ive r is no w a sse rt ingbe lon g to r e sid e nts of the Caro lin a s and

aro se in12

the Caro lin a s w he n th e Ne a l e nti tie s f a ile d to pa

y c la ims in t

he Caro lin a s. F or fa ili ng to a de qu a te ly pr ote c t its c us tom e rs in the Caro lin a s fr om inj ur y fr om oth e r e nti tie s, it i s f or e se e a ble that Me dCo st would be ca lled into court in those states. However, it was not foresee able that Me dCost would be called into cour

t in Tex as for failing to do its job in the Carolinas by members or

users of its networ

k in t he Caro lin a s w ho we re inj ur e d by e nti tie s that ha pp e ne d to be ba se d in

Te xas, be c a

us e Me dCo st did not purposefully

avail it self of the privi leg e of doing business in Texas. Purposeful ava ilment may not be based upon such random or fortuitous contac ts with a state. Burger King , 471 U.S. at 47 5; Guardian Royal , 815 S.W .2d at 226.

The Rec eiver

argues t hat, under the insuranc e code , MedCost’s actions constituted procur ement. See Tex. I ns. Code Ann. § 101.201(a ) (holding persons liable wh o i n any manner assisted direc tly

or indirec tly

in the procur ement of fra

udulent insurance contra ct). Thr oug h its own action, the Rec eiver argues, MedCost “allowe d” the unauthorized cover ag e, which c ame f rom Texas entities. We find this arg ument aimed ag ain at the mer its of MedCost’s liabili ty . The que stion befor e us now is not whether this is procurement; the question is whether the alleg ed proc ureme nt happene d in Texas. The Rece iver doe s not adequately plead that Me dCost acted in Texas by

a pp ro vin g the ide nti fi c a tio n c ard fo r u se in t

he Caro lin a s. I t is su g g e ste d that Te xas is the loc us of a natio nw ide fr a

ud ule nt i ns ur anc e sc he me

and that th e re fo re a ll the c la ims tha t r e la te to t

hat sc he me are pr op e rl y

br ou g ht h e re . M e dCo st, howeve r, is not being sued bec ause it conduc ted ce rtain ac tivity that was “ nationwide,” b ut for assisting in the procur ement of insura nce c ontrac ts under which una uthorized insurers fa iled to pay claims. Se e id . T he re fo re , a ny lia bil ity of Me dCo st he re wo uld be fo r f a ilure to p ro te c t th e No rt

h13

and S ou th Caro lin a

ins ur e ds and

pr ov ide rs in i ts n e tw or

k f ro m th e ill e g a l c on tr a c ts i t a lle g e dly assisted in pr ocuring

. The fac t that the same fra udulent insurers may

have a lso injured insureds or providers in other

states, including t h ei r h o m e st ate, ha s no bear ing on Me dCost’s liabili ty on the claims that the R ece iver asserts here

. Nor did the nationwide scope of the N eal e ntities’ scam have any thing to do with the cha

rac ter of the cause s of ac tion. That is, w e cannot examine the behavior of oth e r e nti tie s w hom Me dCo st a llo we d in to t he Caro lin a s, g e og ra

ph ic a lly loc a te the g re a te st

conce ntration of all of those e ntities’ misdeeds , an d t h en bringMedCost into court where ver that may b e ; it is M e d Co s t’ s a c ti o n s th a t matt e r , an d th o s e a c ti o n s b o th o c c u r r e d in th e Ca

r o lina s and jeopar dized only

residents a

nd consumers in the Car olinas. Other unil at er al ac tions by the Nea l entities, such as t h ei r ch o i ce to he adquar ter themselve s in Texas and not, for instance , Neva da, cannot justify

our exercise of per sonal jurisdiction over MedCost. See B urger King , 471 U.S. at 475; Gu a r d ian Royal , 8 1 5 S. W. 2 d a t 2 2 6 ( d e f e n d an ts ma

y n o t b e c a ll e d in to c o u rt b a s e d s o le ly upon unilatera l activity

of anothe r par

ty or third per son). We find a re ce n t case from this Court instructive on the question of whe n a

n o n r e s i d e n te n t i t y ’ s e n d o r s e m e n t o r g a t e k e e p i n g a c t i v i t i e s c an s u b j e c t i t t o j u r i s d i c t i o n i n T e x a s . In Botter , the plaintiffs sued the Americ an De ntal Association (“ ADA” ) for “mar keting ” a da

ng erous amalg am throug h its seal of appr oval in much the same way t h at M ed Cost here is ac cused of

a ssi sti ng in t he pr oc ur e me nt o f a

n in sura nc e pr og ra

m by a pp ro vin g its ide nti fi c a tio n c ard fo r u se in the MedCost network. 124 S.W.3d at 863. The B otters alleg ed that the AD A’s endorsement and pamphlet advertising amalg am, i ts licensing of t housands of Texas dentist members who may not prac tice without such license , and its active g overna n ce o f t h o s e m ember s by an ethica l code thatWe rec og nize that in Botter , the ADA w as basica lly ch ar ged wi t h having allowed 10 dang erous amalg ams into Texas, see generally Bott er v. American D ental Ass’n , 124 S.W .3d 856 (Tex. App.—Austin 2003, no pet.), while her e, MedCost is alleg ed to have allowed dang erous Te x as residents into the C arolinas. We believe that this fact ar g ues eve n more strong ly ag ainst asserting pe rs on a l juri sd ic tio n o ve r M e dCo st i n T e xas m e re ly be c a us e the da

ng e r t o th e Nor th an d So uth Carolina hea lth care rec ipients and provider s orig inated her e. 14 would preve nt the m f

rom war ning about the amalg am constituted “ purposeful actions in Texas that caused this litigati on .” Id. We held that specific jurisdiction did not ex ist because the B otters had

no t “ su ff ic ie ntl y a lle g e d th a t th e AD A’ s e xtra -t e rr ito ri a l c on du c t w a s f oc us e d o n th e pla int if

f i n Texas,” and there wer e no purposef ul contacts in Texas by

the ADA. Id . at 864. Surely here , wher e the orig inal p l ai n tiffs wer e ac tually located in the Ca

rolinas, and whe re the complaint is that Me dCo st a llo we d fr a

ud ule nt ins ur e rs int o the Caro lin a s, Me dCo st’ s ac tio ns are e ve n mo re dif fi c ult to c a st a s h a vin g been focu se d o n a pla int if f i n T e xas o r a s e sta

bli sh ingpurp os e fu l c on ta c ts w ith Texas. The dissent attempts to distinguish Botter , claiming that MedCost ha d a more substantial

10

connec tion to Tex as than did t he ADA . Given that the AD A ac tively g overne d thousands of license d dentists and pamphleted in fa vor of am alg am her e, while Me dCost, without contra cts with Texas entities, allowed them to di stribute identification cards bearing a MedCost logo to their clientele, w e disag ree . We c on c lud e tha t th e Re c e ive r h a s n ot s uf

fi c ie ntl y a lle g e d th a t Me dCo st, thr ou g h it s approva l of the I D car d to be used in the Carolinas, acte d purposef ully in Texas. Even if it is true that, b y a ff ir ma tiv e ly a pp ro vin g the ide nti fi c a tio n c ard fo r u se by the Ne a l e nti tie s in the Caro lin a s, M ed C o s t as s i s t ed i n t h e pr o cu re m en t o f th e co v er age , t h e R ec ei v er h as fa i l edt o s u ff

i ci en t l y al l ege that that procur ement occ urre d in Texas.This is a n odd conce pt of harm; the Rece iver ha s to pay the Carolina c laims beca use he 11 sta nd s in the sh oe s of the re c e ive rs hip e nti tie s and be c a us e he c ho se to liti g a te the c la ims in T e xas. Thus, his arg ument is that, beca use MedCost allowed the N eal e ntiti es i n t o t h e Carolinas a nd the rec eiver of the Ne al entities must now at least par tially make g ood on the insuranc e that they promised, MedCost has ca used dama g e in Texas. Or, more succinc tly : beca use MedCost did not stop the Nea l entities from harmingothers, i t i s M ed C o s t’s fault that the Rec eiver standing in the sh oe s o f t he Ne a l e nti tie s mu st n owpa y fo r t hat ha rm . 15 Inju ry in Texas

Th e Re c e ive r ne xt a

rgue s that, e ve n if Me dCo st ha d n o d ir e c t c on ta c t w ithTe xas, its conduct may

subject it to personal jurisdiction bec ause it c ommitt ed a tort knowing that the re sulting i n j u ry wo u ld be fe lt in Tex as. The only harm that the Rec eiver

claims is felt in Texas from MedCost’s conduc t is that the Texas Receiver must satisfy

the unpaid cla ims from MedCost’s

ne tw or k and that Me dCo st a ff

ir ma tiv e ly c a

us e d tho se c os ts wh e n it a pp ro ve d the Neal e nti tie s’

acc ess to its network. 11

The Re c e iv e r is s u in g o n b e h a lf o f N o rth an d So u th Ca r o li n a in s u r e d s w h o wer e ha rm e d b y the Ne a l e nti tie s’ fa ilure to p ay the ir c la ims in t

he Caro lin a s f

or he a lthc are pr ov ide d in the C ar o l i n a s t h r o u g h M e d C o s t ’ s n e t w o r k

. H e n o w ar g u e s t h a t , i n p u r s u i n g t h e i r c l a i m s , h e is suffe ring harm in Texas bec ause he will have to pay the claims her e. That is, because he choose s to liti g ate in Te x as on b eh al f o f the Car olina individuals, Tex as will make him pay the claims on be ha lf of the Ne a l e nti tie s h e re . H a d he c ho se n to lit ig a te the se c la ims in t he Caro lin a s, he wo uld be oblig ated to pay

the claims there . Thus, despite hi s argument that MedCost took action for whic h it should be held liable, the conne ction to the forum state, i f t hat connection is the harm to the Texas

re c e ive r o f h a vin g to pay the c la ims he re , oc c ur s so le ly a t th e Re c e ive r’ s d isc re tio n a nd is the re su ltSe e als o G ua rd ian Ro y al Exch . A ssu ra nc e . Lt

d. v . E ng lis h Ch ina Cla

y s, P. L.C. , 815 12 S.W. 3d 22 3, 23 3 ( Te x. l99 1) (w he re pa rt ie s ar e “ ne ith e r T e xas c on su me rs no r i ns ur e ds , T e xas’ [s] int e re st i n a dju dic a tin g the dis pu te (i ncl ud ing its sp e c ia l in te re st i n r e g ulatin g ins ur anc e ) i s considera bly diminis hed”)

. 16 of hi s u n i l a t e r a l a c t
. T h e u n i l a t e r a l a c t s o f p l a i n t i f f s o r t h i r d p art i e s w i l l n o t g i v e T e xas c ou rt s jurisdictions over nonre sidents. Burger King , 4 71 U. S. at 47 5; Guardian Royal , 815 S.W .2d at 226.

Fur thermore , the cases t he R ece iver cites do not apply in this context. See Calder v

. Jones , 465 U. S. 783 , 789 (1 98 4) ; Mem orial Hosp. Sys. v. Fisher Ins. Age ncy , 835 S.W .2d 645, 648 (T e x. Ap p. —H ou sto n [14th Di st. ] 199 2, no wr it) ; Ge ne ra l El e c . Co. v . Br own & Ro ss I nt’ l D ist rib s, Inc. , 804 S.W .2d 527, 533 (Tex. App.—Houston [1s t Dist.] 1990, writ. denied)

.

I n Calder , employ ees of the National E n q u i rer libeled a Califor nia re sident by pr int inga sto ry a bo ut he r fr om t

he ir ba se in F lor ida . 4 86 U. S. at 78 9. Th e Un ite d St a te s Su pr e me Court r u le d th a t t h e d e f e n d an ts h a d

s u b s ta n ti a l c o n ta c ts in

Ca li f o r n ia b e c a u s e th e y kn e w th a t the in j u ry wo u ld occur

in California, whe re the ir g reatest mag azine circ ulation was and w here the p la in ti f f li v e d an d w o r

k ed. Id . at 789-90. This ca se is unlike Calder , beca use MedCost did not commit a tort knowing that the resulting injury would be felt in T exas; a nd, in f act , t h e R eceiver bare ly alleg es t hat any injury was felt here . I n Calder , the ac tiviti es we re pur posefully direc ted to the forum state , California; her e the ha rmful ac tiviti es we re dire cted from the fo rum state , T e xas t o the Carolinas. See Calder , 486 U.S. at 790. None of the plaintiffs upon whose be half the Rec eiver i s suing Me dCost are fr om Texas and none of the injuries for whic h he is suing oc curr ed her e. 12 Be cause the fore seea

ble victims in this c ase are the plaintiffs using the Carolina networ ks, none of whom resides in Te x as, under Calder , specific jurisdiction is not proper here

. Se e Nat ion al I nd us .17

S a n d Ass’n v. Hon. J

ay Gibson, Judge , 897 S.W .2d 769, 776 (Tex. 1995) (under Calder , “[j] urisdiction based upon the eff ects of extra-terr itorial conduct within a particular forum is proper only when the e x tra-te rritorial c onduct foc uses upon a plaintiff r esiding in that forum”)

.

I n Mem orial Hospital

System , the plaintiff, a Texas hospital, phone d the nonre sident defe ndant insuranc e compa ny to inquire about insuranc e cove rag e for a patient. 835 S.W.2d at 648. The c ourt held that the de fenda nt’s misrepre sentation of cove rag e to the plaintiff c onstitut ed a tor t committed with a fore seea ble ec onomic injury

in Texas. Id

. at 651. Her e, the c losest analog y the Rece ive r c a n ma

k e is th a t M e d Co s t’ s a

p p r o v a l o f th e id e n ti f

ic a ti o n c ar d mi s le d c o n s u me r s, who

wer e for esee ably

harme d by

relying on he alth insurance for use i n t h e M ed Cost network that ultimately

proved to be worthless. Unli k e t h e i n j u red hospital in Mem orial Hospital , neither the insureds nor the he alth car e provide rs in this case resided in T exas, a nd their ec onomic injury

was

no t f e lt h e re . T he fa c t th a t th e y a ssi g ne d th e ir

c la ims to a Tex as r e sid e nt d oe s n ot t ra ns fo rm the ir inj ur y in t he Caro lin a s to a

ha rm su ff e re d in Te xas. I n Ge ne ra l E le c tri c , the court held t hat although the nonre sident defe ndants involved in a conspira cy

to sell counterf

eit Gene ral Elec tric par

ts ha d littl e phy sical contac t w ith Te x as, they sh ou ld h a ve kn ow n th a t th e ir c on du c t w ou ld h ave an im pa c t up on Te xas a nd the re fo re the e xer c ise of per sonal jurisdiction over t hem was pr oper. 804 S.W.2d at 533. The Rec eiver compar es MedCost’s contac ts to those of the two individual defenda nts in Ge ne ra l E le c tri c , w ho kn e w the ir conduct would have effe cts in Texas beca use t hey intentionally

pursued c onsumers her e. See id. at 532-33 (def

endants made individual visits to Texas, c alled customers a nd employ ees by

telephone here , solicited and cultivated business r elationsh i p s h er e, and sold counter feit par ts to Tex asThe district cour t’s finding s of fa ct do n o t include a f inding that Me dCost contracte d 13 direc tly with any Texas entit y at the time of the e vents g iving r ise to this sui t, nor do they list any Texas r esidents who wer e injured by MedCost. I n char acte rizing MedCost’s inv o l v em en t as pa rt ic ipatio n in

a un ita ry fr a ud ule nt s c he me he a de d b y

the Ne a l e nti ti es, th e dis se nt i mpute s to Me dCo st a ll i nju

ri e s th a t th e Ne a l e nti tie s c a us e d in Te xas o r e ls ewh ere. We do no t be lie ve it i s appropr iate to s ubject thi s Carolina resident to jurisdiction in a locale ot her than wher e it cause d the injuries g iving r ise to the claims at i s s ue. See G uardian Royal , 815 S.W .2d at 227 (for minimum contac ts, we examine relationship between nonre sident defe ndant, forum, a nd this li tigation). 18 co n s u m er s , diverting Gene ral Elec tric customer s to their own company ). These Ge ne ra l E le c tri c defe ndants contra cted with Te x as compa nies and sold counter feit par ts directly

to them. Id

. There fore , it was fore seea ble that Gene ral Electric mi g ht sue i n Texas, wher e the tortious ac ts had taken place and wher e it had been injured. Id . at 53 3. I n c on tr a st, Me dCo st d id n ot c on tr a c t w ith or i njure any Texas residents. Unlike the Ge ne ra l E le c tri c de fe nd ants , M e dCo st d id n ot c ome to 13 Texas at all; rather , it allowed Texans—the Neal entities—to come to the Carolinas. The fore seea bility analy sis is t here fore entirely distinct from that in Ge ne ra l E le c tri c . Whe re th e acts g ivi n g r is e to th e s u it d id n o t ar is e in T e xa s an d th e d e f e n d an t d id n o t in v o k e th e p r o tections and be ne fi ts o f T e xas l aws , “ the fa c t th a t a tor t is a lle g e d to h a ve be e n c omm itt e d b y a pe rs on ou t- of -s ta te and that the tort may

have had an ef

fe ct i n Texas is not sufficient for a court to exercise persona l jurisdiction.” Mo rri

s , 2005 Tex. App. L EXI S 3404, at *14. We hold that the Receive r has not suf ficiently alleg ed that MedCost committ ed a tor t knowing that the har

m would be felt in T exas, or even that any harm related to this cause of action has occ urre d in Texas. Theref ore MedCost defe ated specific jurisdiction by prese nting e vidence that it was a nonre sident in the hear ing be low. See Sisk ind , 642 S.W .2d at 438.19

General Jurisdiction

An a sse rt ion of g e ne ra l juri sd ic tio n c omp e ls a mor e de mand ingmin imum- c on ta c ts analy sis than an asser

tion of specific jurisdiction and require s a showing of subst antial ac tiviti es within the forum state. Botter , 124 S.W .3d at 862. Gene ral jurisdiction exist s when the de fenda nt’s contac ts with T ex as “are c ontinuous and sy stematic so that the for um may exercise pe rsonal jurisdiction over the de fendan t ev en i f the c ause of action did not arise f

rom or re late to ac tiviti es conducte d within the forum state.” Ma r ch and , 8 3 S

. W

. 3 d at 7 9 6 (c i t i n g Guardian Royal , 815 S.W. 2d a t 22 8) ; CSR, Ltd. , 925 S.W .2d at 595. To neg ate the exercise of g ener al j urisdiction, the

no nr e sid e nt d e fe nd ant m us t sh owit d oe s n ot c on du c t su bs tanti a l a c tiv iti e s w ith in t he fo rum. Marchand , 83 S.W .3d at 797.

Th e Re c e ive r argue s that Te xas c ourt s have g e ne ra l jur isd ic tio n o ver Med Cos t beca use MedCo s t has ac tual continuing c ontrac tual relationships wit h various Te x as entities and regularly d o es business with nine named insura nce c ompanies in Texas. I n the trial cour t he prese nted p ri n t o u t s from MedCost’s cur rent we bsite as evidenc e of the se re lationships. The site, howeve r, re flec ts the state of a ffa irs at the time of the he aring , not during the re levant time per iod, when the c laims acc rued. The rele vant contac ts a re t h o s e up to t he time of injury

. Botter , 124 S.W .3d at 865. Although it is true that a defe ndant bea

rs the burde n of neg ating the plaintiff’s alleg ed bases of jurisdiction, the plaintiff must first show that what it alleg es is actua lly a b asi s of jurisdiction. Id

. (c i t i n g Marchand , 83 S.W .3d at 793). A subsequent website does not prese nt the court with suffic ient information to substantiate the alleg ations for proof o f a p at t ern showing20

continuous and sy stematic activity at t he ti me of the alleg ed injury

. See B otter , 124 S.W .3d at 865. I n Botter , “the infor

mation on the [current] A DA website [was] not probative in our jurisdictional analy sis because it is not the same infor mation that was on t he we bsite when the B otters’ a ction

acc rued.” 124 S.W .3d at 865. I nformation fr om the MedCost website exist ing at the time of the trial court he aring , not at the time the ca uses of a ction acc rued, c annot serve as the ba sis of our jurisdiction. W e thus conc lude that the re ceive r has f ailed to dem o n s t ra t e t h at Texas courts may

e xer c ise g e ne ra l juri sd ic tio n o ve r M e dCo st i n th is s uit

. CO NC LU SION B e c a us e Me dCo st i s n ot a

re sid e nt o f T e xas a

nd do e s n ot h a ve min imum c on ta c ts with the state suffic ient to support either spe cific or g ener al jurisdiction in this case , we hold that the district court does not have personal jurisdiction over MedCost. W e ther efor e re verse the judg ment of the dis tr ic t c ourt

and re nd e r j ud g me nt d ism iss ingthe Re c e ive r’ s c la ims

.

__________________________________________ David Pury ear , J ustice Be fore Chief J ustice L aw, Justi ces Patter son and Pury ear : Opinion by J ustice Pury ear ; Dissenting O pinion by J ustice Patterson Reverse d and Rende red Filed: May

26, 2005