Court Opinion

ID: 4691388
Source: CourtListenerOpinion
Date Created: 2021-05-31 07:16:27.670189+00
Date Added: 2024-06-11T08:05:08.158145
License: Public Domain

IN THE SUPREME COURT OF TEXAS
                                        ══════════
                                          No. 19-1022
                                        ══════════

     IN RE K & L AUTO CRUSHERS, LLC AND THOMAS GOTHARD, JR., RELATORS

            ══════════════════════════════════════════
                      ON PETITION FOR WRIT OF MANDAMUS
            ══════════════════════════════════════════

                                    Argued January 5, 2021

     JUSTICE BOYD delivered the opinion of the Court, in which CHIEF JUSTICE HECHT, JUSTICE
GUZMAN, JUSTICE LEHRMANN, JUSTICE DEVINE, JUSTICE BLACKLOCK, and JUSTICE BUSBY joined.

       JUSTICE HUDDLE filed a concurring opinion, in which JUSTICE BLAND joined, and in which
JUSTICE GUZMAN joined as to Parts II(A) and III.

       We held three terms ago that the negotiated rates a medical provider charged to patients’

private insurers and public-entity payors were relevant and discoverable on the issue of the

reasonableness of the “full” rates the provider charged to an uninsured patient for the same

services. In re N. Cypress Med. Ctr. Operating Co., 559 S.W.3d 128, 129 (Tex. 2018) (orig.

proceeding). Based on that holding, we concluded that the trial court did not abuse its discretion

by allowing discovery of the provider’s negotiated rates in the uninsured patient’s suit challenging

the reasonableness of the full rates the provider charged and secured with a medical lien. Id.

       This case presents the same issue, but in a different context. Here, the defendants in a

personal-injury suit argue that the trial court abused its discretion by quashing their discovery

requests, including those for information regarding the plaintiff’s medical providers’ negotiated

rates and costs. We hold that the information we found relevant to the reasonableness of the

provider’s rates in North Cypress is equally relevant here. For the reasons explained below, we
conclude that the trial court abused its discretion by denying outright the defendants’ narrowed

requests—which they expressly limited to the discovery we approved in North Cypress—because

at least some of the discovery requested is relevant, the narrowed requests were sufficiently

tailored, the providers and the plaintiff failed to submit evidence establishing that the narrowed

requests were unduly burdensome, and the trial court failed to consider whether a protective order

would reasonably protect against the disclosure of any confidential information or trade secrets.

Because we also conclude that the defendant has no adequate appellate remedy, we conditionally

grant mandamus relief, without prejudice to the providers’ and plaintiff’s right to adequately

support their objections on rehearing in the trial court.

                                                I.
                                            Background

       Kevin Walker alleges he was injured in a motor-vehicle collision with a tractor-trailer rig

driven by Thomas Gothard, Jr. According to Walker, the accident occurred at an intersection where

both vehicles had stopped side-by-side in adjacent lanes that both permitted right turns. As Gothard

made the turn from the left lane, his trailer’s passenger-side wheels caught the rear driver-side door

of Walker’s car, which was still stopped in the right lane. The trailer dragged the car a short

distance before Gothard stopped, scraping and tearing the sheet metal along the driver’s side of

Walker’s car. After the accident, the parties took photos, exchanged information, and drove away

without reporting any injuries.

       Walker first sought medical treatment four days after the collision. Five months later,

Walker underwent surgeries on his cervical spine and shoulder to repair injuries he claims he

sustained in the accident. Walker’s medical providers charged him a total of about $1.2 million for

the surgeries and related treatment. Walker did not pay for the medical care or provide information
                                                  2
on private insurance or public benefits. Instead, his attorneys sent the medical providers “letters of

protection,” 1 promising they would “attempt to protect [the providers’] interest in [Walker’s]

account” when they settled Walker’s claims, but “only for any reasonable and necessary medical

charges.”

         Walker sued Gothard and his employer, K & L Auto Crushers (collectively, K & L Auto). 2

After Walker served medical-expense affidavits under section 18.001 of the Civil Practice and

Remedies Code, K & L Auto served counter-affidavits challenging the amounts billed as

unreasonable. See TEX. CIV. PRAC. & REM. CODE § 18.001. K & L Auto then served subpoenas on

Walker’s healthcare providers, requesting production of information related to their billing

practices and rates over a period of several years. The subpoenas included multiple requests, some

with multiple sub-requests, and sought a wide array of information. Three of the providers—Saint

Camillus Medical Center, Pine Creek Medical Center, and Dr. Andrew Indresano—filed motions

to quash the subpoenas, asserting they were overbroad, unduly burdensome and harassing, and not

reasonably calculated to lead to the discovery of admissible evidence, and that they sought

information that was irrelevant, inadmissible, confidential, proprietary, and protected as trade

secrets. Walker also moved for a protective order and to quash the subpoenas, essentially on the

same grounds. 3 K & L Auto then moved to compel the discovery. After a hearing, the trial court

         1
           Plaintiffs’ personal-injury attorneys sometimes provide “letters of protection” to their clients’ healthcare
providers, in lieu of any immediate payment, to assure future payment from the proceeds of any recovery from the
third party who allegedly caused the injuries. See, e.g., Advantage Physical Therapy, Inc. v. Cruse, 165 S.W.3d 21,
24–25 (Tex. App.—Houston [14th Dist.] 2005, no pet.).
         2
              Walker’s passenger is also a plaintiff in the suit, but discovery regarding her medical expenses is not at
issue here.
         3
           Walker’s motion also sought to quash a subpoena served on another provider, NPPS Services. NPPS
Services did not file its own motion or objections to the subpoena. The trial court’s order granting the motions did not
mention NPPS Services, and NPPS Services has not filed any briefing in this Court.
                                                            3
sustained the providers’ objections and quashed the subpoenas without explaining the basis for its

ruling.

          A few weeks later, Walker moved to strike some of K & L Auto’s experts’ counter-

affidavits, arguing that the experts’ assertions that Walker’s medical expenses were unreasonably

high were conclusory, unreliable, and unsupported by facts and data. K & L Auto then moved for

partial reconsideration of the order quashing the subpoenas, arguing its experts needed information

about the medical providers’ negotiated rates and costs to adequately contest the reasonableness

of the full rates the providers charged to Walker. K & L Auto’s motion abandoned many of the

requests and sub-requests the initial subpoenas contained and narrowed its requests to seek

production only of documents related to (1) the amounts the providers charged insurance

companies, federal insurance programs, and in-network healthcare providers for the services,

materials, devices, and equipment billed to Walker as of the date of Walker’s treatment, (2) the

amounts the providers paid for the devices and equipment billed to Walker, and (3) the providers’

chargemaster (full) rates for the devices and equipment billed to Walker and how the providers

determined those rates. 4 But K & L Auto still broadly sought, among other things, all

          4
              Specifically, K & L Auto requested the following information:

                     Documents reflecting agreements between [the providers] and insurance companies
                     governing the amounts charged as of [the date of Walker’s treatment] for the medical
                     [services, materials, devices, and equipment] listed on the billing detail [for Walker’s
                     treatment];
                     Documents reflecting amounts charged federal insurance programs and in network
                     healthcare providers as of [the date of Walker’s treatment] for the medical [services,
                     materials, devices, and equipment] listed on the billing detail [for Walker’s treatment];
                     Documents reflecting agreements, communications, billings, and payments between [the
                     provider] and the manufacturer, seller, or distributor of the various devices/equipment
                     listed on the billing detail for the charges for Plaintiff Walker; and
                     Documents reflecting the Charge Description Master and how the Charge Description
                     Master was determined as of [the date of Walker’s treatment] for the medical
                     devices/equipment listed on the billing detail [for Walker’s treatment].
                                                            4
communications between the providers and any manufacturer, seller, and distributor of any device

used by the providers to treat Walker, and in many cases, all documents related to the services and

devices provided.

       K & L Auto reiterated in its motion for reconsideration that it was “willing to enter into

any reasonable and necessary protective orders with the medical providers to address concerns

about confidentiality of their contractual agreements with third-party payers and insurers.” Based

on its willingness to enter into a protective order and the narrowing of its requests, K & L Auto

asserted that its requests were now “targeted to the specific medical devices/services at issue, d[id]

not implicate any concerns about confidentiality of other patient records, and f[ell] squarely within

the discovery authorized by” our decision in North Cypress.

       The providers responded by arguing the narrowed requests suffered the same problems as

the original requests contained in the subpoenas. Relying on the affidavits they had submitted in

support of their objections to the initial requests, they continued to complain of the general volume,

breadth, and burden of the narrowed requests. They did not provide any additional evidence,

however, to support their objections that the narrowed requests imposed an undue burden or

implicated confidential information.

       At a hearing on the reconsideration motion, K & L Auto explained, “What we are trying to

do is come in with a targeted motion for partial reconsideration” and “focus the Court on the

specific discovery requests [it] made that [it thought were] expressly authorized” by North

Cypress. It then noted that North Cypress permitted discovery of medical providers’

reimbursement rates with private insurers, Medicare, and Medicaid, and discovery of the costs to

medical providers for the equipment and devices reflected in the patient’s bills. K & L Auto

                                                  5
specifically pointed the trial court to the fact that it had made requests “in [its] subpoena that are

along those lines and are targeted to the specific medical services and devices at issue in the time

frame at issue,” and requests “seeking discovery about the cost to the medical providers of the

equipment and devices that were included in their bills in the time frame at issue.”

       The trial court denied the motion for reconsideration without explanation. The court of

appeals denied K & L Auto’s petition for writ of mandamus, stating only that K & L Auto failed

to show it was entitled to relief. No. 05-19-01061-CV, 2019 WL 5558597 (Tex. App.—Dallas Oct.

29, 2019, orig. proceeding). K & L Auto now seeks mandamus relief in this Court.

                                              II.
                                         Mandamus Relief

       Mandamus is an extraordinary, discretionary remedy available only when a trial court

clearly abuses its discretion and a relator has no adequate remedy by appeal. In re Prudential Ins.

Co. of Am., 148 S.W.3d 124, 135–36, 138 (Tex. 2004) (orig. proceeding). We conclude that K & L

Auto has demonstrated that mandamus relief is appropriate here.

A.     Abuse of Discretion

       Trial courts have broad discretion to decide whether to permit or deny discovery. In re

Nat’l Lloyds Ins. Co., 532 S.W.3d 794, 802 (Tex. 2017) (orig. proceeding). Generally, they abuse

that discretion only if their decision is “so arbitrary and unreasonable as to amount to a clear and

prejudicial error of law.” In re State Farm Lloyds, 520 S.W.3d 595, 604 (Tex. 2017) (orig.

proceeding) (quoting Walker v. Packer, 827 S.W.2d 833, 839 (Tex. 1992) (orig. proceeding)). To

demonstrate an abuse of discretion, a party seeking mandamus relief must show that the trial court

“could have reached only one conclusion and that a contrary finding is thus arbitrary and

unreasonable.” Id. Alternatively, the party may demonstrate that the court erred in “‘determining
                                                  6
what the law is or applying the law to the facts,’ even when the law is unsettled.” Id. (quoting

Prudential, 148 S.W.3d at 135).

       Our procedural rules govern the scope of permissible discovery. Generally, the rules

broadly permit discovery of “any matter that is not privileged and is relevant to the subject matter

of the pending action.” TEX. R. CIV. P. 192.3(a). This includes information that “will be

inadmissible at trial if the information sought appears reasonably calculated to lead to the

discovery of admissible evidence.” Id. Because the purpose of discovery is to enable courts to

decide disputes based on “what the facts reveal, not by what facts are concealed,” Crosstex Energy

Servs., L.P. v. Pro Plus, Inc., 430 S.W.3d 384, 394 (Tex. 2014), the rules must be “liberally

construed to allow the litigants to obtain the fullest knowledge of the facts and issues prior to

trial,” Axelson, Inc. v. McIlhany, 798 S.W.2d 550, 553 (Tex. 1990) (orig. proceeding).

       But discovery is also subject to a “proportionality overlay.” State Farm Lloyds, 520 S.W.3d

at 599. Even when a party seeks information that is relevant and not privileged, courts should

“make an effort to impose reasonable discovery limits,” id. at 604 (quoting In re CSX Corp., 124

S.W.3d 149, 152 (Tex. 2003) (orig. proceeding) (per curiam)), particularly when “the burden or

expense of the proposed discovery outweighs its likely benefit,” TEX. R. CIV. P. 192.4(b).

       K & L Auto contends that the trial court abused its discretion by completely denying

discovery of any information regarding the medical providers’ negotiated rates and costs because

that information is not privileged and is relevant and necessary to determine whether the rates the

providers charged to Walker were reasonable. Walker and the providers argue that the trial court

did not abuse its discretion because the information is not relevant and, even if it were, the requests

are overbroad, unduly burdensome and harassing, and seek information that is confidential and

                                                  7
protected as trade secrets. We address each objection in turn, focusing on the discovery requested

in K & L Auto’s motion for partial reconsideration and as narrowed by its requests at the hearing

before the trial court. We conclude that the information sought through K & L Auto’s narrowed

requests is relevant and the trial court abused its discretion by completely denying discovery of

that information.

        1. Relevance

        Evidence is relevant if it has “any tendency” to make “more or less probable” a fact that is

“of consequence in determining the action.” TEX. R. EVID. 401. Relevant evidence is generally

admissible at trial, while irrelevant evidence is not. TEX. R. EVID. 402. But for purposes of pre-

trial discovery, evidence is relevant even if it’s not admissible at trial, so long as it’s “reasonably

calculated to lead to the discovery of admissible evidence.” TEX. R. CIV. P. 192.3(a).

        We held in North Cypress that information regarding the negotiated rates a hospital charged

to private insurers and public payors, “[w]hile not dispositive,” was “at least relevant” to whether

the higher chargemaster rates the hospital charged to a self-paying patient for the same services

were reasonable. 559 S.W.3d at 129. We also held that the costs the hospital incurred to provide

the services had “some bearing on the reasonableness of its patient charges.” Id. at 136. We

explained the healthcare industry’s modern “two-tiered” billing structure—consisting of higher

“chargemaster” (or “full” or “list”) rates for uninsured patients and lower rates charged to private

and public insurers—particularly noting that chargemaster rates are both “increasingly arbitrary”

and “frequently uncollected.” Id. at 132. 5 We held that chargemaster rates “are not dispositive of

        5
            See also Gunn v. McCoy, 554 S.W.3d 645, 673 (Tex. 2018) (discussing modern two-tiered healthcare-
billing structure); Haygood v. De Escabedo, 356 S.W.3d 390, 393 (Tex. 2011) (same).
                                                     8
what is reasonable.” Id. at 133. And we also acknowledged that providers set their negotiated rates

based on numerous considerations and confirmed that negotiated rates are similarly not dispositive

of reasonableness. Id. at 135. But it “defies logic,” we explained, “to conclude that those

[negotiated rates] have nothing to do with the reasonableness of charges to the small number of

patients who pay directly.” Id.

        Walker and the providers (and several supporting amici 6) argue that our holding in North

Cypress should not apply here because that case involved a patient’s challenge to a hospital’s

ability to enforce a lien securing medical charges, while this case involves an injured party’s ability

to recover such charges from a tortfeasor. Because a medical lien is invalid to the extent it seeks

to secure charges that exceed a “reasonable and regular rate,” see TEX. PROP. CODE § 55.004(d)(1),

the reasonableness of the hospital’s chargemaster rates was “the central issue” in North Cypress,

559 S.W.3d at 133. Here, the providers argue, Walker’s ability to recover his medical expenses

from K & L Auto does not depend on whether those expenses were reasonable. Instead, they

contend, Walker can recover whatever amount was “actually paid or incurred” by him or on his

behalf. TEX. CIV. PRAC. & REM. CODE § 41.0105.

        We disagree. Section 41.0105 limits a claimant’s recovery from a tortfeasor to the amount

of medical expenses the claimant “actually paid or incurred,” meaning the amount the claimant’s

provider “has a legal right to be paid.” Haygood, 356 S.W.3d at 391. So if a provider bills an

        6
           We received amicus briefs generally supporting Walker and the providers from Tri-City Pain Associates,
P.A., the Texas Orthopaedic Association, the Texas Medical Association and the Texas Hospital Association,
Advanced Diagnostics Health System, LLC, and the Texas Trial Lawyers Association. We received amicus briefs
generally supporting K & L Auto from the Texas Association of Defense Counsel, the Texas Civil Justice League, the
American Property Casualty Insurance Association and State Farm Mutual Automobile Insurance Company, and
Research and Planning Consultants, L.P., Texans for Lawsuit Reform, the American Tort Reform Association, and
the Chamber of Commerce of the United States of America.
                                                        9
insured patient at chargemaster rates but, pursuant to its contract with the patient’s insurer, is only

entitled to receive payment at a reduced, negotiated rate, then the insured can only recover the

reduced amount from the tortfeasor because that’s the amount “actually paid or incurred.” Id. at

396–97. But section 41.0105 is not the only limit on a claimant’s recovery of medical expenses.

In fact, it expressly imposes the “paid or incurred” limitation “[i]n addition to any other limitation

under law.” TEX. CIV. PRAC. & REM. CODE § 41.0105.

        One such “other limitation” is the common-law requirement that the amount of recoverable

expenses be reasonable. It has long been well-settled that “recovery of [medical] expenses will be

denied in the absence of evidence showing that the charges are reasonable,” and proof of the

amount charged does not itself constitute evidence of reasonableness. Dall. Ry. & Terminal Co. v.

Gossett, 294 S.W.2d 377, 380, 383 (Tex. 1956). 7 The enactment of section 41.0105 did not

eliminate this common-law limitation; instead, it expressly imposed the “paid or incurred”

limitation “[i]n addition to” the reasonableness limitation. TEX. CIV. PRAC. & REM. CODE

§ 41.0105. In fact, section 18.001, which provides a “purely procedural” process for using

affidavits to establish and challenge the reasonableness and necessity of medical expenses,

Haygood, 356 S.W.3d at 397, recognizes and confirms that claimants can recover medical

expenses from a tortfeasor only if the amount charged “was reasonable at the time and place that

the service was provided,” TEX. CIV. PRAC. & REM. CODE § 18.001.

        7
          See also Haygood, 356 S.W.3d at 391 (“Damages for wrongful personal injury include the reasonable
expenses for necessary medical care.” (emphasis added)); McGinty v. Hennen, 372 S.W.3d 625, 627 (Tex. 2012) (per
curiam) (“A party seeking to recover remedial damages must prove that the damages sought are reasonable and
necessary.” (emphasis added)); Mo., K. & T. Ry. Co. of Tex. v. Warren, 40 S.W. 6, 7 (Tex. 1897) (holding proof of
amount of medical expenses charged would not support recovery; instead, “the reasonable value of such services
should have been proved” (emphasis added)); Gulf, Colo. & Santa Fe Ry. Co. v. Campbell, 13 S.W. 19, 20 (Tex. 1890)
(holding claimant may only “recover the reasonable value of medical services rendered him in effecting a cure”
(emphasis added)).
                                                       10
         Walker and the providers (and their supporting amici) urge us to abolish the common-law

reasonableness limitation because it can leave claimants undercompensated and give tortfeasors a

windfall when claimants are obligated to pay the amount a medical provider charges regardless of

whether that amount is reasonable. But that reasoning fails here because Walker’s providers treated

him pursuant to letters of protection in which Walker’s attorney promised to “attempt” to pay the

providers “only for any reasonable and necessary medical charges.” We find nothing in the record

that legally obligates Walker to pay the full amount the providers charged if the amount is

unreasonable.

         And even if Walker were legally bound to pay the providers an unreasonable amount for

their services, K & L Auto’s liability to Walker would still be limited to a reasonable amount. To

be sure, the purpose of requiring tortfeasors to compensate claimants for their damages is to make

the claimant whole by placing the claimant “in the position in which he would have been absent

the defendant’s tortious act.” J & D Towing, LLC v. Am. Alt. Ins. Corp., 478 S.W.3d 649, 655

(Tex. 2016). But inherent in this purpose is the recognition that tortfeasors are responsible only for

losses caused by their tortious conduct—that is, losses that are “the necessary and usual result of

the tortious act.” Id. 8 Although the reasonableness limitation may in some cases leave a claimant

         8
             See also Horizon Health Corp. v. Acadia Healthcare Co., 520 S.W.3d 848, 873 (Tex. 2017)
(“[C]ompensatory damages redress concrete losses caused by the defendant’s wrongful conduct.”); Texarkana Mem’l
Hosp., Inc. v. Murdock, 946 S.W.2d 836, 839–40 (Tex. 1997) (“[A] plaintiff may recover only for those injuries caused
by the event made the basis of suit.”); Transp. Ins. Co. v. Moriel, 879 S.W.2d 10, 16 (Tex. 1994) (“Compensatory
damages are intended to make the plaintiff ‘whole’ for any losses resulting from the defendant’s interference with the
plaintiff’s rights.”); Pasadena State Bank v. Isaac, 228 S.W.2d 127, 128 (Tex. 1950) (“The basic reason underlying
rules for the ascertainment of damages for any tortious act is a fair, reasonable, and proper compensation for the injury
inflicted as a proximate result of the wrongful act complained of.”); Massachusetts v. Davis, 168 S.W.2d 216, 222
(Tex. 1942) (“[O]ne who is complaining of a wrongful injury can recover only for such damages as are proximately
caused by the injury complained of.”); Seale v. Gulf, Colo. & Santa Fe Ry. Co., 65 Tex. 274, 278 (1886) (explaining
that defendant’s liability extends only to “such injuries as might reasonably have been anticipated, under ordinary
circumstances, as the natural and probable result of the wrongful act”).
                                                          11
“undercompensated,” it ensures that the tortfeasor is held responsible only for losses naturally

resulting from its wrongful act. See id. If a claimant agrees or is required to pay a medical provider

more than a reasonable amount, the difference between the amount paid and a reasonable amount

is not a “necessary and usual result of the tortious act,” but of the claimant’s or provider’s conduct.

See id.

          The reasonableness of the claimant’s medical expenses is as germane in a personal-injury

case as it is in a suit to challenge the validity of a medical lien. Our relevance holdings in North

Cypress thus apply equally here: while certainly “not dispositive,” the negotiated rates the

providers charged to private insurers and public payors for the medical services and devices

provided to Walker, and the costs the providers incurred to provide those services and devices, are

“at least relevant” to whether the chargemaster rates the providers billed to Walker for the same

services and devices are reasonable. 559 S.W.3d at 129.

          Although we conclude these types of information are relevant under North Cypress, we did

not hold then, and we do not hold now, that all communications or all documents regarding those

topics are automatically discoverable. Nor does our holding entitle a party to discover all evidence

tangentially related to these types of information. Proportionality must control the extent to which

a trial court orders such relevant information discoverable. 9 But in light of K & L Auto’s motion

for reconsideration and its concessions at the hearing on that motion, we conclude the requests

were sufficiently narrowed and targeted to what we permitted in North Cypress so as to make a

         9
           See In re Mem’l Hermann Health Sys., 607 S.W.3d 913, 920–21 (Tex. App.—Houston [14th Dist.] 2020,
orig. proceeding) (concluding order granting discovery requests was an abuse of discretion because it compelled
production of documents evidencing reimbursement rates for services different than those received by plaintiff and it
sought discovery of reimbursement rates for all insurers rather than limiting the requests to insurers who had
negotiated rates for the relevant services and time period).
                                                        12
complete denial of the requested discovery arbitrary. 10 See State Farm Lloyds, 520 S.W.3d at 604.

Even if the law was unsettled, see id., to the extent the trial court denied K & L Auto’s narrowed

discovery requests based on a lack of relevance, the court abused its discretion.

         2. Overbreadth

         In addition to their relevance objection, Walker and the providers argued that the original

and narrowed requests were overbroad. Although our rules must be “liberally construed to allow

the litigants to obtain the fullest knowledge of the facts and issues prior to trial,” Axelson, 798

S.W.2d at 553, “even these liberal bounds have limits, and discovery requests must not be

overbroad.” In re Nat’l Lloyds Ins. Co., 449 S.W.3d 486, 488 (Tex. 2014) (orig. proceeding) (per

curiam). In essence, an overbroad discovery request is one that seeks irrelevant information. In re

Allstate Cnty. Mut. Ins. Co., 227 S.W.3d 667, 670 (Tex. 2007) (orig. proceeding) (per curiam). But

a request is not overbroad simply because it “may call for some information of doubtful relevance,”

Texaco, Inc. v. Sanderson, 898 S.W.2d 813, 815 (Tex. 1995) (orig. proceeding) (per curiam), and

“the sheer volume of a discovery request does not in itself render the request irrelevant or

overbroad as a matter of law,” In re Alford Chevrolet-Geo, 997 S.W.2d 173, 180 n.1 (Tex. 1999)

(orig. proceeding). Instead, discovery requests and orders are overbroad if they are not properly

“tailored with regard to time, place, or subject matter,” In re Nat’l Lloyds Ins. Co., 507 S.W.3d

         10
           Through its rehearing motion, K & L Auto expressly narrowed and limited its requests and argued that it
was only seeking information regarding the providers’ negotiated rates and costs, which we addressed in North
Cypress. The record does not reflect that the trial court acknowledged or considered these limitations when it denied
the rehearing motion. The trial court retains discretion to determine the relevance of the specific information K & L
Auto seeks through its narrowed requests, but to the extent its denial of K & L Auto’s narrowed requests was based
on a lack of relevance, its outright denial of those requests constitutes an abuse of discretion.

                                                        13
219, 226 (Tex. 2016) (per curiam), 11 or otherwise require production of information that is not

reasonably calculated to lead to the discovery of admissible evidence, Nat’l Lloyds, 449 S.W.3d at

490. 12

          Here, K & L Auto’s subpoenas initially required the providers to produce a wide array of

information regarding their billing practices and rates, covering procedures the providers

performed from 2009 to 2018. After the trial court quashed the subpoenas, however, K & L Auto

moved for reconsideration and expressly focused its requests on information regarding the

negotiated rates and costs for the “same or similar services” and devices Walker was billed for, as

of the dates Walker was billed for them.

          Although sheer volume does not make discovery overbroad as a matter of law, Alford, 997

S.W.2d at 180 n.1, proportionality requires a fact-intensive, complex balancing of many relevant

factors, particularly where discovery is sought from non-parties whom trial courts “must” protect

from undue burden or expense in answering subpoenas, TEX. R. CIV. P. 176.7. While the original

requests implicated all communications and all documents related to certain topics and the motion

          11
            See also Allstate, 227 S.W.3d at 669 (concluding requests were “overbroad as to time, location, and scope,
and could easily have been more narrowly tailored to the dispute at hand”); Texaco, 898 S.W.2d at 815 (holding “a
request for all documents authored by Sexton on the subject of safety, without limitation as to time, place or subject
matter, is overbroad”); CSX, 124 S.W.3d at 152 (“Discovery orders requiring document production from an
unreasonably long time period or from distant and unrelated locales are impermissibly overbroad.”); Alford, 997
S.W.2d at 180 n.1 (“[O]verbroad requests [are those that] encompass[] time periods, products, or activities beyond
those at issue in the case.”).
          12
            See, e.g., In re Shipman, 540 S.W.3d 562, 569–70 (Tex. 2018) (orig. proceeding) (per curiam) (holding
discovery of “not just the computer at issue, but also all electronic ‘media,’ whether business or personal, and
regardless of whether they are related to the issues in the lawsuit, for the past seventeen years,” was overbroad); In re
Ford Motor Co., 427 S.W.3d 396, 397 (Tex. 2014) (orig. proceeding) (per curiam) (holding request for “detailed
financial and business information for all cases the companies have handled for Ford or any other automobile
manufacturer from 2000 to 2011” was overbroad); In re Dana Corp., 138 S.W.3d 298, 302 (Tex. 2004) (orig.
proceeding) (per curiam) (holding request for inapplicable insurance policies covering fifteen years of exposure was
overbroad); Dillard Dep’t Stores, Inc. v. Hall, 909 S.W.2d 491, 492 (Tex. 1995) (orig. proceeding) (per curiam)
(holding request requiring “a twenty-state search for documents over a five-year period is overly broad as a matter of
law”).
                                                          14
for partial consideration involved those same requests, K & L Auto made clear at the hearing

before the trial court that it sought only the same discovery permitted in North Cypress. Thus,

despite the broadly written subpoenas originally sent to the providers, K & L Auto’s motion and

the hearing transcript reflect that K & L Auto agreed to narrow its requests to the information

North Cypress permitted. 13

         We conclude K & L Auto’s narrowed requests are nearly identical to those we approved

of in North Cypress. Because we held the requests in North Cypress were sufficiently tailored and

K & L Auto expressly sought to narrow the requested discovery to the time period, devices, and

services at issue in this case and approved by North Cypress, we conclude its requests here are not

overbroad as a matter of law. To the extent the trial court denied K & L Auto’s motion for

reconsideration on that ground, the court abused its discretion.

         3. Undue Burden & Harassment

         Walker and the providers also argue that the requests were unduly burdensome and

harassing. The question of “whether a request for discovery is overbroad is distinct from whether

it is burdensome or harassing.” Nat’l Lloyds, 449 S.W.3d at 488. Under rule 192.4, courts should

limit discovery that is “unreasonably cumulative or duplicative” or “obtainable from some other

source that is more convenient, less burdensome, or less expensive,” or when “the burden or

expense of the proposed discovery outweighs its likely benefit, taking into account the needs of

         13
            As noted, K & L Auto explained at the hearing that it was seeking reconsideration of its requests that were
permitted by North Cypress, and it pointed the court to its requests that were “along those lines and [were] targeted to
the specific medical services and devices at issue in the time frame at issue,” and those that were “about the cost to
the medical providers of the equipment and devices that were included in their bills in the time frame at issue.” See N.
Cypress, 559 S.W.3d at 129–30 (approving discovery of (1) all contracts regarding the rates private insurers pay for
the hospital services provided to the plaintiff, (2) the Medicare and Medicaid reimbursement rates for the services
provided to plaintiff, and (3) North Cypress’s annual cost report it provided to Medicare for 2011–2015).
                                                          15
the case, the amount in controversy, the parties’ resources, the importance of the issues at stake in

the litigation, and the importance of the proposed discovery in resolving the issues.” TEX. R. CIV.

P. 192.4. This rule imposes a proportionality standard that requires “a case-by-case balancing of

jurisprudential considerations.” State Farm Lloyds, 520 S.W.3d at 599–600.

       But a party resisting discovery must do more than “make conclusory allegations that the

requested discovery is unduly burdensome.” Alford, 997 S.W.2d at 181. Instead, the party must

“support proportionality complaints with evidence.” State Farm Lloyds, 520 S.W.3d at 614. And

where a responding party’s own conscious, discretionary decision, such as how it chooses to store

and organize its materials, causes discovery to be burdensome, the burden is not considered

“undue.” See In re State Farm Lloyds, 519 S.W.3d 647, 657 (Tex. App.—Corpus Christi–Edinburg

2015, orig. proceeding) (mem. op.) (citing ISK Biotech Corp. v. Lindsay, 933 S.W.2d 565, 569

(Tex. App.—Houston [1st Dist.] 1996, orig. proceeding)). Here, as mentioned, the subpoenas K &

L Auto served on the providers contained dozens of requests with multiple subparts seeking a wide

array of information regarding the providers’ billing rates and practices covering several years. In

response, the providers submitted affidavits asserting that “[r]esponding to [the requests] would

be unduly burdensome and expensive,” in part because the providers’ software is not configured

to allow searching by “particular health insurance plans, policies, or procedures.”

       As discussed, K & L Auto substantially narrowed its requests, in a motion and then orally,

and the trial court should have focused its analysis on those narrowed requests. The providers made

no effort to establish the burdens they would bear to respond to the substantially narrowed requests

K & L Auto made at the hearing on its motion for reconsideration. And although a responding

party is not required to affirmatively address each modification a requesting party makes to its

                                                 16
discovery requests, the providers’ original objections and affidavits failed to provide more than

conclusory estimates of the time, effort, and expenses they would incur in responding specifically

to the original requests; they simply noted that responding would be burdensome and expensive,

particularly because their electronic records software was not configured for searching. Cf. id. at

657 (citing Alford, 997 S.W.2d at 181) (noting that a claim of undue burden cannot be

conclusory—it must be supported by some demonstration or evidence of the burden, and

concluding that failure to provide some evidence prevents a trial court from weighing the burden).

Thus, those objections were likewise too conclusory to establish that the narrowed requests were

unduly burdensome.

       We are sensitive to the fact that the providers are not parties to this suit, and we agree that

their status as non-parties is relevant to whether the requests are unduly burdensome. But to

promote the resolution of disputes based on “what the facts reveal” rather than “what facts are

concealed,” Crosstex, 430 S.W.3d at 394, our rules specifically permit parties to compel non-

parties to produce relevant information, see TEX. R. CIV. P. 205. Rule 205 addresses this burden

by requiring the party requesting the information to fully “reimburse the nonparty’s reasonable

costs of production,” TEX. R. CIV. P. 205.3(f), but it imposes no other special limits on non-party

discovery. However, this type of discovery will not be proportional for all non-parties or providers.

       Here, any weight the providers’ non-party status may have on the burden issue is

substantially offset by the fact that the “letters of protection” give the providers a direct financial

stake in the resolution of Walker’s claims. Unlike most non-parties, the providers who treated

Walker pursuant to letters of protection invested themselves in the outcome of this case and the

amount of damages recovered, and because of that, they forfeit a degree of the protection our rules

                                                  17
afford disinterested third parties who are subjected to third-party discovery. In fact, the providers

acknowledge in their briefs that their choice to provide treatment based on letters of protection

makes them subject to an “intrusion on their time by repeated depositions on written questions and

subpoenas.”

       We also acknowledge that K & L Auto may be able to obtain some of the requested

information—such as federal Medicare and Medicaid reimbursement rates—from other sources.

But we do not agree with the providers’ argument that all of the requested discovery is unnecessary

because some of it is available from other sources and K & L Auto can and did hire experts to

opine that the providers’ chargemaster rates are unreasonable. Any such opinion must be based on

relevant facts and data. As we held in North Cypress and reaffirm today, the rates healthcare

providers charge to private insurers and public payors and their costs for providing services to a

patient constitute relevant facts and data. The trial court could certainly limit discovery by

excluding information K & L Auto could obtain elsewhere, but it could not simply deny all access

to the relevant facts and information because some of it might be available elsewhere or because

K & L Auto hired experts to argue the reasonableness of the rates.

       The same is true for proportionality. The damages at issue in North Cypress totaled only

$8,278.31, yet we upheld the proportionality of those requests to the needs of the case by approving

the discovery. Where, as here, the damages are alleged to be $1.2 million, similar requests are even

more proportional. Trial courts can, and should, curtail disproportionate requests on a case-by-case

basis, but an outright denial of all the narrowed requests here goes beyond a court’s discretion.

Proportionality limits must be reasonable. State Farm Lloyds, 520 S.W.3d at 604. Accordingly,

the trial court should reevaluate the proportionality of the narrowed discovery requests in light of

                                                 18
our confirmation that the relevance we recognized in North Cypress applies to the personal-injury

context.

        Trial courts must balance evidence of burdensomeness against the likely benefit of the

discovery, considering “the needs of the case, the amount in controversy, the parties’ resources,

the importance of the issues at stake in the litigation, and the importance of the proposed discovery

in resolving the issues.” TEX. R. CIV. P. 192.4. We agree with K & L Auto that, here, the trial court

must consider that the requested information, though not dispositive, is relevant and important to

a fair, just, and fact-based resolution of this case.

        Although K & L Auto does not concede liability for negligently causing the accident or

that the accident caused Walker’s spine and shoulder injuries, the reasonableness of the $1.2

million in claimed medical expenses is central to K & L Auto’s defense. Depriving K & L Auto

of key information relevant to that issue will place K & L Auto at a significant disadvantage. Given

our conviction that disputes should be resolved on “what the facts reveal,” discovery would benefit

K & L Auto by allowing it to litigate the issue of reasonableness on level ground. With the

requested discovery, K & L Auto can rebut the alleged damages at trial by offering concrete

evidence—rather than speculative evidence in the form of affidavits and cross-examination based

on generalized data—of the amounts the providers usually charge and accept as payment and the

cost to providers for the services and devices provided to Walker. And meanwhile, Walker and the

providers may offer evidence at trial explaining why such evidence does not establish what is

reasonable under these circumstances and why the rates and costs actually billed are reasonable.

        Considering that K & L Auto’s requests were narrowed to the type and amount of discovery

we approved of in North Cypress, that the providers have a financial stake in the outcome of this

                                                   19
case, and that the providers failed to provide evidence quantifying the burden of responding to the

narrowed requests, we conclude that Walker and the providers failed to establish that the narrowed

requests were unduly burdensome. Although the providers failed to meet their burden, the trial

court denied the narrowed requests outright. To the extent the trial court denied the narrowed

requests based on undue burden, the court abused its discretion.

       4. Confidentiality, Trade Secret, and Protective Order

       Finally, the providers and Walker also objected that the requested information is privileged,

confidential, proprietary, and constitutes trade secrets. In North Cypress, the hospital made an

identical “confidential and proprietary” argument. 559 S.W.3d at 130, 136–37. After granting the

requested discovery, the trial court denied the hospital’s motion for rehearing, which argued that

the “confidential nature of its insurance contracts warrants mandamus relief.” Id. at 136–37. The

trial court responded that “if the parties were unable to agree on [protective] measures,” the

hospital could request a protective order and the court would consider it. Id. at 137. Because

nothing in the record suggested that the trial court was unwilling to issue a protective order and

the hospital failed to show that such an order would not address its concerns, we declined to quash

the discovery on that ground. Id.

       In light of the relevance of the information sought through K & L Auto’s narrowed

requests, the trial court should have taken that same approach here. In response to the subpoenas,

the providers asserted that the “[i]nformation contained in [their] health insurance agreements . . .

constitutes privileged trade secrets” and compliance with the subpoena “would potentially

jeopardize [their] ability to conduct business with every health insurer whose confidential trade

secrets are exposed.” The trial court was then obligated to “preserve the secrecy of [the] alleged

                                                 20
trade secret[s] by reasonable means,” and a presumption arose in favor of granting a protective

order to do so. See TEX. CIV. PRAC. & REM. CODE § 134A.006(a). Subsequently, K & L Auto

agreed that the court should enter a protective order and assured the court that it was not seeking

any “private” or legally protected patient information. Yet the trial court denied the requested

discovery without acknowledging that alternative or determining whether it would provide the

reasonable protection required.

       As we have noted, a protective order can help reduce the potential harm of disclosure. In

re Union Pac. R.R. Co., 294 S.W.3d 589, 593 (Tex. 2009) (orig. proceeding) (per curiam). Even

if the requested documents contain confidential information or trade secrets, the providers have

not shown that an appropriate protective order will not address their concerns. If the trial court

denied the motion for reconsideration on the ground that the requested documents contain

confidential information or trade secrets, the court should have considered whether it could permit

this discovery while protecting the information, yet the record contains no suggestion that the court

ever did so. To the extent the court denied the discovery on this ground, we conclude the court

abused its discretion.

B.     No adequate remedy

       In addition to showing that the trial court abused its discretion, K & L Auto may obtain

mandamus relief only if it also shows it has “no adequate remedy by appeal.” Prudential, 148

S.W.3d at 135–36. We have acknowledged that when the denial of discovery prohibits a party

from effectively preparing for trial, “his remedy by appeal is of doubtful value.” Garcia v. Peeples,

734 S.W.2d 343, 345 (Tex. 1987) (orig. proceeding). But not every denial of discovery is sufficient

for mandamus review. An appellate remedy may not be adequate where (1) an appellate court

                                                 21
cannot cure the discovery error, such as when confidential information is erroneously made public,

(2) the party’s ability to present a viable claim or defense—or reasonable opportunity to develop

the merits of the case—is “severely compromised” so that the trial would be a waste of resources,

or (3) discovery is disallowed and cannot be made part of the appellate record such that a reviewing

court is unable to evaluate the effect of the trial court’s error based on the record. Walker, 827

S.W.2d at 843–44. A party’s ability to present and develop its case may be severely compromised

when the denied discovery goes “to the very heart” of a party’s case and prevents it from

“developing essential elements” of its claim or defense. Able Supply Co. v. Moye, 898 S.W.2d 766,

772 (Tex. 1995) (orig. proceeding).

       We conclude that K & L Auto has no adequate remedy by appeal both because it has

effectively been denied a reasonable opportunity to develop a defense that goes to the heart of its

case, and because a reviewing court will be unable to evaluate the effect of the trial court’s denial

of discovery from the third-party providers.

       The reasonableness of the providers’ charges goes to the heart of K & L Auto’s defense: if

the charges are unreasonable, they are not recoverable. K & L Auto argues the denial of its

narrowed requests severely compromised its ability to challenge the reasonableness of the

providers’ charges. We agree. Walker claims medical expenses in an amount exceeding $1.2

million. K & L Auto seeks discovery it believes will contradict Walker’s evidence of

reasonableness, and without it, can only present counter-affidavits generally arguing the

unreasonableness of the expenses.

       As discussed above, denial of discovery here limits K & L Auto to offering speculative

evidence rather than the providers’ actual agreed rates with insurers and other payors, which we

                                                 22
have determined are relevant in this context. Despite the unavailability of the information, Walker

challenged K & L Auto’s counter-affidavits on the ground that they were not adequately supported

by information. While federal Medicare and Medicaid reimbursement rates may be available from

another source, much of the requested information is not. To deny this relevant information

significantly impairs K & L Auto’s ability to argue reasonableness in general, but it also undercuts

K & L Auto’s ability to convince a jury that any of its speculative information is credible when

the providers are arguing that the charges were reasonable without having to reveal relevant

underlying data. Thus, the denial prevents K & L Auto from both adequately presenting and

defending the heart of its argument against the claimed damages.

       In addition, an appeal here would be inadequate because the missing discovery is from a

third party and cannot be made part of the appellate record or challenged on appeal, and the

providers will not be parties to any appeal. See In re Colonial Pipeline Co., 968 S.W.2d 938, 941

(Tex. 1998) (orig. proceeding) (per curiam) (“Mandamus relief may be justified when . . . the trial

court’s discovery order disallows discovery which cannot be made a part of the appellate record,

thereby denying the reviewing court the ability to evaluate the effect of the trial court’s error.”).

Although Walker and the providers suggest that K & L Auto waived any complaint about the

discovery becoming part of the record by failing to request that it be included in the record or

subjected to an in camera review, our precedent has never required such a request. See Walker,

827 S.W.2d at 843. The question is whether the discovery can be made part of the appellate record,

or whether a trial court refused a proper request to do so, and whether an appellate court can review

the effect of the error. Id. Here, the discovery is not and cannot be part of the record although much

of it is likely relevant and critical to the reasonableness of the medical charges, and it would be

                                                 23
difficult, at best, to determine on appeal whether the lack of discovery erroneously affected the

outcome of the trial. Taking into account the relevant circumstances, the claims and defenses

asserted, the type of discovery sought, what it is intended to prove, and the presence or lack of

other discovery, we conclude that K & L Auto has no adequate remedy here. See id. at 844.

                                              III.
                                           Conclusion

       We hold that the trial court abused its discretion by denying the requested discovery, as

narrowed in K & L Auto’s motion for reconsideration and explained at the hearing, considering

the circumstances and the applicability of our reasoning in North Cypress to this case. We further

hold that K & L Auto has no adequate remedy by appeal. Accordingly, we conditionally grant the

writ of mandamus and order the trial court to vacate its order denying K & L Auto’s motion for

reconsideration.

       Under North Cypress, at least some of the information K & L Auto requested from the

providers in its narrowed requests is relevant to the issue of the reasonableness of the providers’

charges, and the providers failed to establish that the narrowed requests were overbroad or unduly

burdensome and harassing, or that they sought confidential information that could not reasonably

be protected. The trial court retains discretion to issue a protective order as necessary to protect

any information the providers may establish to be confidential or trade secrets, and to impose any

other necessary and appropriate limitations. See In re Hous. Pipe Line Co., 311 S.W.3d 449, 452

(Tex. 2009) (orig. proceeding) (per curiam) (giving trial court permission to rule on issue after

vacating prior order). It may also impose reasonable limits on requests it finds disproportionate to

the circumstances. But it may not simply deprive K & L Auto from obtaining the narrow categories

of information that we have previously held are relevant and discoverable on the reasonableness
                                                24
of medical expenses. We are confident the trial court will comply, and our writ will issue only if

it does not.

                                                    _____________________
                                                    Jeffrey S. Boyd
                                                    Justice

        Opinion delivered: May 28, 2021

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