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Is it Too Late to Probate the Will?

June 9, 2020/in Probate and Probate Litigation/by Chris Wilmoth

You’re going through a loved one’s papers and come across a will. The person who wrote the will (a Texas resident) died years ago. What do you do?

First Things First

First, you should surrender the will to the county probate court where the deceased person lived. Texas law requires you to file with the court the original version of the will of anyone whom you are aware is deceased.[1] Surrendering a will to the county makes it available for any beneficiaries who might want to probate the will.

To Probate or Not to Probate

Texas imposes no legal obligation to probate a will. If a will is never offered for probate, the property of the testator, the person who made the will, passes according to the Texas laws of intestacy as if they died without a will. However, you might want to offer the will for probate if it has favorable terms, or to transfer title of any real property that belonged to the testator.

You don’t have to go to court for title to pass by intestacy. But if you try to sell real property you inherited, the title company might require you to take steps to clear title. That might include asking the probate court to determine the heirs of the person who died and how his or her property passed under Texas law. If you must go to court anyway, you might consider probating the will you found.

Four-Year Deadline

As a rule, courts are not supposed to admit a will into probate more than four years after the testator has died.[2] If it has been more than four years, an exception permits wills to be probated if the applicant offering the will for probate provides an equitable explanation for the delay.[3]

Unfortunately, the reported cases in this area of law do not provide a predictable basis for determining whether the applicant is “in default” for the delay. This is because these cases are so fact specific.

For example, in one case an impoverished widow was permitted to probate her husband’s will, even though he died more than five years before she learned he owned royalty interests.[4]

In another case, a successful attorney with an oil and gas practice, who learned about mineral interests 14 years after his father died, was told he could not probate his father’s will. The applicant was found to be in default because the son “should have known that unexpected events [like discovering mineral interests] often happen in life.”[5]

A recent case from the Supreme Court of Texas provides another example of how courts focus on the particulars of the applicant’s situation.[6] In this case, the independent executor tried to probate the will of a deceased man’s wife because the husband failed to probate his wife’s will during his lifetime. The courts held that the executor could not probate the will on behalf of the husband because the husband had failed to do so within four years of the wife’s death. However, the supreme court also found that, in this particular case, the executor had standing to offer the will in the executor’s personal capacity and was not at fault for the delay.

Even if the person who made the will died more than four years ago, it might be worthwhile to try and probate the will anyway, particularly if the applicant did not personally delay in offering the will for probate.

If you have found a loved one’s will long after their passing, and need help surrendering it to the court or would like to probate the will, seek the counsel of an experienced probate attorney.

[1] Tex. Estates Code § 252.201.

[2] Tex. Estates Code § 256.003(a).

[3] St. Mary’s Orphan Asylum of Tex. v. Masterson, 122 S.W. 587, 592 (Tex. Civ. App. 1909, writ ref’d). The Estates Code provides that the applicant not be “in default” in offering a will for probate more than four year after the death of the person who made the will.

[4] Kamoos v. Woodward, 570 S.W.2d 6 (Tex. Civ. App.—San Antonio 1978, writ ref’d n.r.e.).

[5] In the Estate of Rothrock, 3112 S.W.3d 271 (Tex. App.—Tyler 2010, no pet.).

[6] Ferreira v. Butler, 575 S.W.3d 331 (Tex. 2019).

Hon. Chris Wilmoth is a seasoned probate, guardianship, and trust litigator. He also conducts mediations and accepts appointments as a special judge. Mr. Wilmoth served as Judge of Dallas County Probate Court No. 2 from 2011 through 2014. He has been named one of the best lawyers in Dallas by D Magazine each year since 2018.

Executing Texas Estate Plans in the Era of COVID-19

April 28, 2020/in Estate Planning/by Spencer Turner

These are unprecedented times, even for estate planning attorneys. The advent of COVID-19 has “persuaded” many clients to either consider establishing an estate plan for the first time or to re-assess their current estate plans. As a result, estate planning attorneys across Texas are working hard during this period of great uncertainty to develop and protect their clients’ legacies.

Yet a finely crafted estate plan is useless if it is not properly signed and executed. Texas law has strict parameters for the signing of certain estate planning documents. For example, a valid will in Texas must be in writing, signed by the individual making the will (the testator), and attested by two or more witnesses. The witnesses must be within the physical presence of the testator when witnessing the execution of the will. A notary public signs the will as well (though this is technically not a requirement under Texas law). Between the testator, witnesses, notary, and estate planning attorney, a total of five or more people typically attend a will-signing ceremony. In the era of COVID-19, that’s a social faux pas. Government regulations may forbid a gathering of such size, and in the author’s experience, clients are presently uncomfortable with exposure to more than one non-family member at a time. Therein lies the chief problem facing estate planners: how to safely convene with clients to sign and execute their essential documents?

Governor Greg Abbot’s Emergency Order

In recent weeks, Texas Governor Greg Abbot has attempted to provide estate planners with a method for electronically notarizing wills, powers of attorney, and other estate planning documents. Typically, a notary public must also be in the physical presence of a client while he or she is executing a will. Governor Abbot’s emergency order enables a notary to instead observe a will-signing ceremony over Zoom or similar “electronic means.” The notary would then need to receive a faxed or scanned copy of the will (or other estate planning document) and affix his or her signature and stamp to the same. The notarization process is complete upon the notary’s return of the will and other estate planning documents to the client by scan or fax. This temporary fix aims to alleviate the need for large gatherings and can help clients execute their estate plans without undue delay.

Concerns with Electronic Notarization

But as with any temporary amendment to the law, Governor Abbot’s relaxation of notarial standards remains fraught with questions and legal concerns. For one, the required witnesses must still physically attend a will-signing. That fact alone may still dissuade clients from pursuing execution of their estate plan during the pandemic. Questions also remain about the extent of Governor Abbot’s authority to authorize such a suspension of Texas law. Probate litigators may later capitalize on the legal uncertainty surrounding wills notarized by electronic means and initiate a contest in probate court[1]. All this to say, estate planners must proceed with caution when utilizing electronic notarization for estate plans. Certain clients and potentially contentious dispositions of property in an estate plan may not warrant this unproven method of execution.

Trusts and Holographic Wills

However, estate planners have developed another creative approach to this executionary quandary brought on by COVID-19. Trusts can provide a workaround for the more stringent execution requirements of a will. A valid trust in Texas only requires the signature of the client seeking to establish the trust. As a result, clients may print the final version of a trust instrument and sign in the safety of their own home. No public gatherings are necessary.

A trust’s terms provide for the disposition of the client’s property upon death, much like a will. But for a trust’s terms to be effective, a client must transfer his or her assets into the trust. This can be a tedious task involving the drafting of deeds, assignments of interest, and many more documents. A client might also need to personally visit a financial institution to change accounts into the name of the trust: another no-no in the era of COVID-19.

A holographic will might serve as the catchall for assets that have yet to be transferred into a client’s trust. Unlike typewritten wills, a holographic will is entirely in a client’s handwriting. Texas law does not require witnesses or a notary to sign holographic wills. A client could then print and sign the trust while also drafting his or her own holographic will (with an attorney’s instruction) to sign as well.

These homemade, holographic wills are only intended as an interim solution. But they ensure that the assets in a deceased client’s estate will “pour over” into the trust that he or she established, thereby making the estate assets subject to the trust’s dispositive terms. In short, a properly drafted trust and holographic will can provide clients with a temporary fix to the dangers of gathering in larger groups for signing a will and other estate planning documents. Together with the electronic notarization of wills and estate planning documents, these methods give estate planners a chance to achieve their clients’ goals in the midst of the current pandemic.

Spencer Turner is an associate attorney at Farrow-Gillespie Heath Witter LLP. Since obtaining his license to practice law in 2016, Mr. Turner has focused his legal efforts primarily in the trust and estates arena. He has been featured as a speaker on various aspects of the probate process at several seminars hosted by the National Business Institute. Spencer is a graduate of from Baylor University School of Law.

[1] Few things excite probate litigators more than a video of an elderly testator executing his or will. An astute attorney can use a recorded Zoom session to sow doubt and concern among members of the jury regarding the elderly testator’s mental capacity.

Trust Accountings and the Duty to Inform in Texas

November 26, 2019/in Estate Planning/by Christian Kelso

Trustees have a duty to share trust information with beneficiaries. The nature and extent of the duty to inform is not well defined in the Texas Trust Code, however, and there is little case law on point. There is slightly more guidance with regard to the duty to account, which is a subpart of the duty to inform, although many questions remain and can pose significant problems for trustees.

When considering a trustee’s fiduciary duty, most practitioners turn to the Texas Trust Code first. However, the thoughtful practitioner will notice that the common law duty to inform predates the Trust Code and is broader than the statutory duty to account. Also, the Trust Code directs trustees to “perform all of the duties imposed on [them] by the common law,” so an examination that is limited to the Trust Code may be incomplete.

A broad array of people are generally entitled to trust information and may include “a trustee, beneficiary, or any other person having an interest in or a claim against the trust or any person who is affected by the administration of the trust.”

Trust beneficiaries need information to protect their interests. For a beneficiary to hold a trustee accountable, the beneficiary must know of the trust’s existence, the beneficiary’s interest in the trust, the trust property, and how that property is being managed. Trustees have a duty to provide this information to beneficiaries. This duty to inform is independent of the trustee’s duty of care. Although a trustee holds legal title to trust property, that property is held for the benefit of the beneficiary. Similarly, the books and records of the trust belong to the trust estate. As such, it stands to reason that the beneficiaries should have access to them as well.

On the other hand, settlors may not want their children to know about assets in their trusts for fear that they might become “trust fund babies,” and information sharing may be a security concern in the modern world. Formal accountings, in particular, are burdensome on both trustees and trust assets. A typical accounting takes many hours to prepare. A trustee may be able to do much of the initial work to prepare the accounting, but significant time spent by attorneys, accountants, and other professionals will likely also be required, and the related fees will usually be borne by the trust.

Additionally, the duties to inform and account cannot be waived in a trust instrument. If this were possible, no trustee would serve unless such a waiver were present. However, the duties may be limited in Texas to so-called “first-tier beneficiaries” who are generally entitled to distributions, either presently under the trust’s terms, or hypothetically, if the trust were to terminate. By restricting the non-waivable provisions to first-tier beneficiaries, settlors can minimize frivolous pestering by contingent remainder beneficiaries.

Even where beneficiaries are entitled to information, caution is advised to those seeking it. If a trust is revocable by, or grants a power of appointment to, someone who might be perturbed by such request, the requesting party might find herself written out of the trust!

The common law duty to inform and the statutory duty to account are complicated elements of Texas law. Farrow-Gillespie Heath Witter, LLP has helped many beneficiaries gain the information they need about their trusts. We have also advised many trustees through the accounting process. If you are in either position, we would be glad to talk with you about your rights or responsibilities and the potential risks you face.

Christian Kelso | Farrow-Gillespie &amp;amp;amp;amp; Heath LLP | Dallas, TX

Christian S. Kelso, Esq. is a partner at Farrow-Gillespie Heath Witter LLP. He draws on both personal and professional experience when counseling clients on issues related to estate planning, wealth preservation and transfer, probate, tax, and transactional corporate law. He earned a J.D. and LL.M. in taxation from SMU Dedman School of Law.

City of Dallas Paid Sick Leave Ordinance

August 15, 2019/in Employment Law/by Henry Wehrmann

Chapter 20 of the Dallas City Code entitled Earned Paid Sick Time went into effect August 1, 2019. The provision requires employers to provide paid sick leave to workers. It applies to any private business (governmental employers are exempt) that employs at least one person either full or part time at a minimum of eighty hours a year within the Dallas city limits.

Overview of Dallas Ordinance

The ordinance calculates the accrual of paid leave time at the rate of one hour for every thirty hours worked. An employee can use this accrued hour for illness, injury, preventive medical or healthcare, or health condition. This also extends to the care of a family member’s physical or mental illness. Time off for relating to being the victim of a criminal attack that resulted in injury or illness also qualifies. However, an employer may not inquire as to the nature of the circumstances for employees taking time off for this purpose.

If an employer has sixteen or more employees, an employee may accrue up to sixty-four hours in paid leave time. For employers with fifteen or fewer employees, this total is reduced to forty-eight hours, and for employers with five or fewer employees, this ordinance does not go into effect for two more years.

Employers operating a fiscal year other than a calendar year must provide each employee with written notice of such policy by August 1, 2019, and thereafter at the commencement of employment. Employers are required to maintain records of the accrued paid sick time used and/or available to each employee.

The ordinance also affects bookkeeping and HR departments. It requires that each employee receive a monthly written or electronic statement showing the amount of the employee’s available earned paid sick time. If an employer issues an employee handbook, it must be amended to include a notice of an employee’s rights and remedies under this ordinance.

Fines for violating the ordinance for non-compliance will not be levied until April 1^st, 2020, and per the City of Dallas Chief of Equality and Inclusion, the City will seek “voluntary compliance with the ordinance before seeking payment of a fine.” Civil fines can range up to five hundred dollars per violation.

Lawsuits and Injunctions

Similar ordinances passed by the cities of San Antonio and Austin have been challenged by lawsuits. This litigation has resulted in the City of San Antonio delaying implementation of its program until December 1, 2019. However, the city’s concession did not dispose of the case.

Austin’s paid sick and safe leave law ordinance is subject to a temporary injunction, suspending enforcement of the ordinance. The Austin Court of Appeals has found the ordinance to be unconstitutional. The lawsuit is expected to be resolved in the Supreme Court of Texas.

As of the date of this article (August 15, 2019), the status of Dallas’s ordinance is unclear. The State of Texas, joined by a staffing agency and a law firm, has filed suit in the federal court in Sherman, Texas, to challenge the ordinance. The situation is unresolved and changing week by week, but until the court enters a temporary injunction suspending the Dallas ordinance, it remains in effect.

Employers and employees are urged to contact counsel for legal advice concerning status and enforcement of the ordinance. This article is intended as an overview only, and is not a full legal analysis.

Henry Wehrmann | Farrow-Gillespie & Heath LLP | Dallas, TX — Henry Wehrmann
Business Litigation Defense

Henry S. Wehrmann practices in the primary areas of employment litigation defense, trade secrets and other intellectual property litigation, personal injury litigation defense, and products liability litigation defense. He is Board Certified in Personal Injury Trial Law by the Texas Board of Legal Specialization and is a former chair of the Sports & Entertainment Law section of the Dallas Bar Association.

The Legal Obstacles of Hemp and CBD Retail Sale in Texas

July 29, 2019/in Corporate Law/by Stephen Chance

Texas has legalized hemp and cannabidiol oils (CBD) this year by passing House Bill 1325 (Texas Hemp Bill). However, the new legislation is not a blanket legalization of hemp products. For example, the bill outlaws all hemp products designed for smoking. The Texas Hemp Bill classifies CBD as a consumable hemp product, making it a food, not a drug or controlled substance. This designation generally means no special license is required to sell products. However, retailers of CBD products must still register with the Texas Department of State Health Services (DSHS).

The new law provides for significant regulation of CBD, but the required regulations are still under development. For example, the Texas Hemp Bill places extensive labeling and testing requirements on all CBD products. All consumable hemp products that are sold in Texas must be tested for pesticides, heavy metals, harmful microorganisms, and THC concentration. Usually, these tests will be the responsibility of the grower or manufacturer, but retailers are responsible for testing any products which are not tested prior to entering their inventory. A URL linking to each product’s testing information must be on its container along with the name of the manufacturer, a hemp batch identification number, batch date, product name, and certification that the THC concentration is within the legal range. Further, all this information must be located on each unit intended for individual sale. CBD products produced out of state are allowed to be sold in Texas if they were produced legally in that state.

Several significant problems exist, however. For example, none of the policy and procedures to get the required testing or enforce the labeling requirements has been implemented by the State. Until the regulatory framework is in place, there is no practical way for retailers to comply with the requirements or for the state to enforce them.

Among several major enforcement issues, police departments currently lack the equipment to test THC levels in the field. The current field test deployed by most departments in Texas only report the presence of THC, not its concentration. Therefore, in order for police to check if a product is over the legal THC level, they would need to confiscate it and send it to a lab. This could create problems; especially for CBD products coming into Texas from states where marijuana is legal.

In order to comply with federal law, the Texas Hemp Bill must still be approved by the U.S. Department of Agriculture (USDA). The USDA has stated they will likely not approve any state legislation relating to hemp or CBD until 2020. Federal law explicitly grants the Food and Drug Administration (FDA) full authority to regulate all medical claims related to hemp and CBD and the use of CBD in food and drugs. The FDA is preventing many CBD distributors and producers from making therapeutic claims without an FDA approved study. Further, the FDA is pressuring state health departments to crack down on the sale of CBD food and drink.

Because it is so new, most of the necessary procedures and regulations needed to run and enforce the Texas Hemp Bill have not yet been implemented. Significant equipment upgrades are needed because, prior to the bill, law enforcement treated CBD the same as marijuana in most cases. DSHS is waiting until the USDA approves the Texas Hemp Bill, to start any implementation. The reasoning is federal law requires the USDA approval before most of the bill can go into effect, and the USDA may require Texas to makes some changes. Until the Texas Hemp Bill is approved by the USDA and the infrastructure to implement the bill is set up, CBD will occupy a grey area in the law.

Farrow-Gillespie Heath Witter provides a full range of business and corporate law services to companies from local start-ups to the Fortune 1000. These business law services include LLC formations, copyright and trademarks, corporate governance, general counsel services, and more.

Stephen Chance was an intern at Farrow-Gillespie Heath Witter, LLP. Mr. Chance is a law student at SMU Dedman School of Law in Dallas, Texas, where he is a Lead Articles Editor for SMU Law Review and the Treasurer of the Student Bar Association. Prior to law school, Mr. Chance taught high school world history in Garland, Texas. He holds a B.A. in Historical Studies from the University of Texas at Dallas.

Recovering Attorney’s Fees in Texas

June 25, 2019/in Civil Litigation and Arbitration/by Savannah Judkins

Many potential litigants believe the prevailing party to a lawsuit is always entitled to recover attorney’s fees from the other side. Contrary to this popular belief, the general rule in our American legal system is that each party must pay its own legal fees, unless a specific rule provides otherwise. Even when the law does provide the right to recover attorney’s fees, specific rules govern the total fees that may be recovered. On April 26, 2019, the Supreme Court of Texas handed down its decision in Venture v. UTSW DVA Healthcare, LLP, which clarifies that there is only one acceptable way to recover attorneys’ fees in Texas courts. The framework for measuring the reasonableness and necessity of attorney’s fees established by Venture is the lodestar method.

The lodestar method requires a fact-finding judge or jury to determine whether the requested amount of attorney’s fees is reasonable and necessary before shifting that cost to the losing party. To be awarded fees, the prevailing party’s attorney must present evidence showing how many hours were spent working on the case and why the rates charged for those hours is reasonable. Venture established the following minimum requirements for attorney fee evidence:

The particular services performed,
The person who performed those services,
The approximate date when the services were performed,
The reasonable amount of time required to perform the services, and
The reasonable hourly rate for each person performing such services.

To satisfy the loadstar requirements, attorneys should maintain contemporaneous billing records on a consistent basis. This practice ensures accurate records of the tasks performed and enhances the likelihood of a successful fee application. Ultimately, keeping well-documented fee records assists clients both in understanding the legal work that is being performed for them and in recovering as much of their legal fees as is possible.

Savannah Judkins participated in Farrow-Gillespie Heath Witter’s 2019 Summer Internship Program. She is a law student at Baylor Law School with an interest in Probate Litigation.

2019 Update on Balance Billing and Texas Health Insurance Law

June 19, 2019/in Health Law/by Scott Chase

This article updates the prior article, “Balance billing and Texas healthcare law.”

“Balance billing” occurs when doctors, hospitals, or other health care providers who are not contracted with a patient’s health maintenance organization (HMO) or preferred provider benefit plan (PPO) bill the patient for the difference between the amount the health plan pays and the amount the provider believes to be the adequate cost of a service.

For example, a patient may visit the emergency room at a hospital that is contracted with her health plan, but the emergency room doctor who treats her is not contracted with that health plan. The emergency room doctor and the hospital each bill $1,000 for their services, and the health plan pays them each $400. The hospital, which is contracted with the patient’s health plan, may bill the patient only for the copayments, deductibles, and coinsurance amounts under her plan. However, the emergency room doctor, who is not contracted with the patient’s health plan, may bill her for the $600 that her health plan didn’t pay, as well as any copayments, deductibles, and coinsurance that she owes.

Some providers and health plans display cost information on their websites. Texas law also gives patients the right to request, in advance, estimates of charges from providers and facilities and estimated payments from health plans. However, the law allows doctors, other providers, and health plans up to 10 days to provide patients the estimates. As a result, patients cannot obtain advance notice of possible balance billing costs in emergent situations.

Senate Bill 1264

To combat this issue, the Texas Legislature recently passed Senate Bill 1264 (“SB 1264”), which makes balance billing illegal for emergency services but is limited to Texas regulated health plans. SB 1264 contains an exemption if the provider provides written disclosure to the patient informing them:

that their health plan does not cover the provider,
the projected cost the patient could be responsible for, and
under what circumstances the patient will be responsible for those amounts.

Before SB 1264, Texas law did not give consumers many rights with regard to disputing a balance billing they were surprised to receive. SB 1264 significantly improves the dispute resolution process for consumers by removing the patient from the process altogether.

Instead, the onus is on the health plan to initiate mediation or arbitration because the excess charges cannot be passed down to the patient.

Mediation is conducted for health plans and facility providers, i.e., hospitals, but is only applicable if the patient cannot be billed, and the charges are for emergency services, diagnostic imaging, or laboratory services. Arbitration will be for health plans and providers that are not facilities, i.e., individual physicians. While arbitration is binding, the arbitrator may only determine reasonable cost of the medical services rendered.

While the remedies of SB 1264 are still being implemented, including the mediation and arbitration processes, it is a great first step in protecting Texas consumers from inequitable balance billing practices.

Scott Chase | Farrow-Gillespie & Heath LLP

Attorney Scott Chase is a health law and corporate attorney at Farrow-Gillespie Heath Witter LLP. Mr. Chase has been named to the lists of Best Lawyers in America (U.S. News & World Report), Texas Super Lawyers (a Thomson Reuters service), and Best Lawyers in Dallas (D Magazine) in every year for more than a decade.

Mr. Chase thanks intern Stephen Chance for his contributions to the article. Stephen Chance is a 2019 summer intern with Farrow-Gillespie Heath Witter and a law student at SMU Dedman School of Law.

Data Breach? Your Obligations under the Texas Identity Theft Enforcement and Protection Act

May 17, 2019/in Corporate Law/by Chris Elam

For any business – big or small – customer confidence is critical for success in today’s competitive marketplace. But in the event your company’s security is breached and consumer information is stolen, you may have a legal obligation to notify your customers. Admitting a data breach can be embarrassing, but failure to comply with the law can be devastating to your reputation and your bottom line.

The Texas Identity Theft Enforcement and Protection Act

The Texas Identity Theft Enforcement and Protection Act (Tex. Bus. Com. Code §§521.001 et seq.) applies to anyone who conducts business in Texas and “owns or licenses computerized data that includes sensitive personal information.” Texas businesses are required under the Act to protect the sensitive personal information of their staff and customers. As used in the Act, the term “sensitive personal information” includes unencrypted identifying information, such as an individual’s name in combination with other information, such as a social security number, driver’s license number, or credit card information. The term also includes an individual’s health care information.

The Act requires you to notify the affected individuals as soon as possible after you discover or reasonably believe that there has been a data breach. A data breach isn’t just limited to your computer systems being hacked – the Act’s notification requirements could also be triggered if, for example, an unscrupulous employee steals a customer’s credit card information, or if a customer using your website receives another customer’s information as a result of a coding error. If the data breach affects more than 10,000 individuals, you must also report the incident to consumer reporting agencies.

The Penalties

The penalties for not complying with the notification requirements can be steep. For each violation, the State of Texas can impose a civil penalty of anywhere between $2,000 and $50,000. Plus, for every person that should have received notification of the data breach but did not, there’s an additional penalty of up to $100 per person. If you fail to react appropriately to an extensive data breach, you could be on the hook for up to $250,000 in fines alone. Although individuals themselves cannot bring a lawsuit to enforce the law, the Texas Attorney General may bring an action to recover the penalties and may even seek an injunction. The Attorney General is also entitled to recover reasonable expenses, including attorney’s fees, court costs, and investigatory costs.

If your business collects or maintains the sensitive personal information of its customers such as credit card information or healthcare information, you need to take extra precautions to collect, store, and secure that data properly. If you have experienced a data breach, or even if you suspect one has occurred, we strongly recommend seeking the advice of an experienced attorney to help you avoid the perils of an inadequate response.

Christopher Elam is an attorney at Farrow-Gillespie Heath Witter LLP. Mr. Elam has experience in business transactions, corporate governance, trademarks and real estate transactions, as well as mergers and acquisitions. He graduated from SMU Dedman School of Law in 2010.

Adoption | Farrow-Gillespie Heath Witter

Where Adoption and Inheritance Cross Paths

February 14, 2019/in Adoption, Estate Planning, Probate and Probate Litigation/by Jessica Dunne

When a Texan dies without a will, the decedent’s property passes to his or her heirs in accordance with the laws of intestate succession. Adoption may affect inheritance if either the decedent or an heir is a part of what is known as the adoption triad. The adoption triad consists of the biological parents, the adoptive parents, and the adopted child. This article explains the effects of adoption on inheritance for each member of the adoption triad. Additionally, this article suggests best practices for attorneys who find themselves responsible for, as well as individuals who want to avoid, the legal effects of an intestate estate.

The Adopted Child

An adopted child is the son or daughter of their adoptive parents for all purposes, including inheritance. An adopted child and the adopted child’s descendants inherit from and through the adoptive parents and their kindred as if the adopted child were the biological child of the adoptive parents. An adopted child also may inherit through his or her biological parents, if the right to inherit was not terminated in the adoption court’s order terminating parental rights.

The Adoptive Parents

The adoptive parents and their kindred inherit from and through the adopted child as if the adopted child were the biological child of the adoptive parents.

Biological Parents

Biological parents may not inherit from or through the child they placed for adoption.

Adopted Adult

In the case of adult adoption, which is generally defined in Texas as the adoption of a person age 18 or older, an adopted adult may not inherit from or through the adult’s biological parents, and the biological parents may not inherit from or through the adopted adult.

Determination of Heirs Through Court Proceeding

When a decedent dies without a will, the decedent’s heirs, as well as the heirs’ respective shares and interests in the decedent’s estate, may be determined through a proceeding to declare heirship. In a proceeding to declare heirship, the court is required to appoint an attorney to represent the interests of any unknown heirs. The court-appointed attorney will perform an investigation into the identity and location of the decedent’s heirs, including any heirs who were adopted or placed for adoption.

Practical Considerations for Attorneys

An adoption placement may be difficult for an attorney to ascertain for various reasons. Sometimes women do not share that they placed a child for adoption, even with close family members or friends. Sometimes men are not aware of the existence of a biological child that was placed for adoption by the biological mother. Moreover, it is difficult to unseal parental termination orders, especially from years past, to determine if the child’s right to inherit from their biological parents was terminated. Despite these potential roadblocks, attorneys representing the applicant or the unknown heirs in a proceeding to declare heirship should make reasonable inquiries into whether the decedent ever: (1) placed a child for adoption, (2) adopted a child, (3) had a biological child that was adopted as an adult, or (4) adopted an adult. Such inquiries are required for due diligence, and if discovered, these actions can significantly impact inheritance under the laws of intestacy.

Avoid Surprises by Executing a Will

Texas inheritance laws do not prevent biological or adoptive parents from disposing of their property in any manner of their choosing through a valid will. Thus, if a decedent has a valid will, the scenario discussed above should never become an issue. Regardless of whether adoption is part of your story, all individuals are advised to obtain a comprehensive estate plan to devise their estate as they wish. The attorneys at Farrow-Gillespie Heath Witter LLP are here to help.

Jessica Dunne | Farrow-Gillespie & Heath LLP

Jessica Dunne is an associate attorney at Farrow-Gillespie Heath Witter. Jessica has substantial experience in probate, guardianship, and trust litigation, with a special interest in adoptions. Jessica graduated cum laude from Baylor Law School in 2011 where she was the recipient of the Presidential Scholarship. Jessica is uniquely equipped to represent individuals who are pursuing adoption because she is an adoptive parent herself.

Revised Durable Power of Attorney Act

November 19, 2018/in Guardianship/by Ryan Sellers

Many sign a Durable Power of Attorney (DPOA) in order to name an agent to handle their finances in case of future illness or incapacity. On November, 1, 2017, the Texas Legislature revised the Texas Durable Power of Attorney Act. The revisions address a frustrating and common problem encountered by Texans attempting to act under a durable power of attorney: third parties (including but especially financial institutions) who reject a valid durable power of attorney with no explanation or request impossible demands. It was not uncommon for a third party to reject a power of attorney and insist that the principal, the maker of a DPOA, execute another “form” provided by the third party. Executing such a form, of course, is not possible when the principal has lost the capacity necessary to execute such a document. The revisions, which apply to all powers of attorney whether executed before or after the revisions, take a “stick and carrot” approach to ensuring third parties recognize durable powers of attorney.

The Carrot

The “carrot” provides that if a durable power of attorney is accepted by a third party “in good faith and without actual knowledge that the durable power of attorney is void, invalid, or terminated, that the agent’s authority is void, invalid or terminated, or that the agent is exceeding or improperly exercising the agent’s authority, the person may rely on the power of attorney and the agent’s authority as if it were genuine, valid, and still in effect.” Put simply, third parties relying on a durable power of attorney in good faith won’t be held liable if that document later turns out to be invalid.

The Stick

The revised Act provides limited circumstances in which a third party may refuse a power of attorney and a time limitation for doing so. It also allows a third party to request a certification from the agent or an attorney’s opinion on any particular power of attorney. The “stick” authorizes the agent of the DPOA to sue any third party who does not timely accept or reject a power of attorney, or who rejects a power of attorney for an improper reason. The agent also is entitled to recover reasonable and necessary attorneys’ fees.

Additional Revisions

The revisions also change the statutory durable power of attorney form in helpful ways, such as utilizing the term “termination” where it once used “revocation,” which clarified that a principal may terminate an agent’s authority without terminating the authority of other agents appointed under a common power of attorney.

The revisions are a result of an endeavor by Real Estate, Probate, and Trust Law (REPTL) Section of the State Bar of Texas. While the revisions are still fairly new, agents under a durable power of attorney can act with confidence that third parties will accept a valid power of attorney.

If you or someone you know has had problems with persons, third parties, or companies accepting a power of attorney, an experienced probate attorney can assist. These situations can often be resolved without the necessity of a lawsuit.

Ryan Sellers’s primary practice areas are probate litigation, guardianship litigation, and probate law. Mr. Sellers joined the firm from his solo practice in Hurst, Texas, where he represented individuals and businesses in a wide variety of civil disputes. He graduated from Baylor Law School in 2014, where he was a member of the Baylor Barrister Society.

The Expansion (Finally) of Telemedicine in Texas: A Brief History and Future Applications and Considerations for Healthcare Providers

May 22, 2018/in Health Law/by Katie Ackels

If you are a healthcare provider in Texas looking to supplement, or even transition, your practice into telemedicine, now is your time. Texas has always been a prime candidate for the benefits of telemedicine. It is an expansive state, with a large rural population that is often distant from medical care.

Thus, Texas residents are uniquely situated to take advantage of the outcome improvements and cost savings that telemedicine can provide.

Nevertheless, Texas was the last state to welcome telemedicine into its borders, in that it was the last state to abolish the requirement that a telemedicine provider first establish a patient-physician relationship via an in-patient visit. Now, after a lengthy court battle, this requirement has been eliminated, and providers are free to initiate patient-physician relationships in the telemedicine realm. While there was an immediate reaction by key players in the healthcare landscape to expand telemedicine in Texas, there remain a lot of unknowns that Texas healthcare providers should be aware of as they enter the world of telemedicine.

The Genesis and Outcome of Teladoc, Inc. v. Texas Medical Board

Teladoc, Inc. (“Teladoc”), one of the largest telemedicine providers in the United States, is based in Dallas and had been operating in Texas since 2005. Following amendments by the Texas Medical Board (“TMB”) to the state’s telemedicine regulatory scheme, Teladoc was forced to cease its telemedicine operations.

Eventually, Teladoc filed suit in federal court, alleging the TMB’s actions violated federal antitrust laws and the Commerce Clause of the Constitution. The parties then agreed to stay the proceedings to pursue settlement negotiations. These negotiations culminated in Texas Senate Bill 1107 (“SB 1107”), which was signed into law on May 27, 2017. Senate Bill 1107 abolished the requirement of an in-patient visit prior to utilizing telemedicine services. The new legislation applies across all telemedicine platforms.

Expansion Plans for Texas Telemedicine and Beyond

On September 22, 2017, the DWC announced “New 28 Texas Administrative Code § 133.30, Telemedicine Services” (the “Proposed Rule”). The Proposed Rule’s stated purpose is to “expand the accessibility of telemedicine services in the Texas workers’ compensation system by allowing health care providers to bill and be reimbursed for telemedicine services regardless of where the injured employee is located at the time the services are delivered.”

To reach this goal, the Proposed Rule included the removal of a Medicare-based reimbursement restriction that services be provided to injured employees at an originating site located in an area where there is a shortage of healthcare professionals. In other words, the Proposed Rule now allows a provider to bill and be reimbursed for telemedicine services no matter where the injured employee is located at the time the services are delivered.

Similarly, federal lawmakers are taking heed of the benefits of telemedicine. On November 7, 2017, the U.S. House of Representatives passed The Veterans E-Health and Telemedicine Support Act of 2017 (“VETS Act”). Much like the Proposed Rule issued by the DWC, the VETS Act eases geographic restrictions on telemedicine provided to veterans and aims to ensure that veterans, rural and disabled veterans in particular, can receive care across state lines.

The U.S. Senate passed its version of the VETS Act on January 4, 2018, which is slightly different than the House’s version, in that it bars individual states from taking disciplinary action against physicians who practice telemedicine across state lines.

Private employers are also noticing the benefits of telemedicine, and there has been a sharp increase in the number of large employers who see telemedicine services as a way to optimize how health care is accessed and delivered, while offsetting overall healthcare costs. More specifically, the Large Employers’ 2018 Health Care Strategy and Plan Design Survey found that 96 percent of large employers intend to make telemedicine services available to their employees at some point in calendar year 2018.

Considerations for the Telemedicine Provider

Whether a provider has been offering telemedicine services for some time or is just now getting in the game, there are some important issues to consider in updating or implementing telemedicine policies and procedures:

Telemedicine is a moving target – As of now, there is no uniformity across state lines in the regulation of telemedicine. From state-to-state, many crucial statutory definitions vary significantly. It is unclear how federal legislation like the VETS Act will resolve these discrepancies, if at all. Therefore, providers licensed in different states or providing services across state lines should comply with the rules and regulations of every state they encounter, including formal, regulatory schemes and the practice requirements set forth by the state’s medical board.
Data breach and cybersecurity risks – The provision of telemedicine exposes patients to increased cyber, privacy, and data security risks. Before launching a telemedicine practice, providers should conduct a thorough risk analysis aiming to implement policies and procedures that, at a minimum, comply with the HIPAA Security Rule and set forth an incident response plan that incorporates all applicable regulatory requirements.
The battle for universal reimbursement – One of the major barriers to a provider’s implementation of a robust telemedicine practice is the lack of universal reimbursement, both from Medicare and private payers. Providers should consider this issue in building their telemedicine business models, as ultimately, the telemedicine industry needs universal reimbursement to become widespread and economically sustainable.

Katie M. Ackels is a ligation attorney with broad experience for a diverse client base. Ms. Ackels primary practice areas are business litigation, employment litigation defense, personal injury litigation defense, and healthcare litigation. She graduated magna cum laude from Texas Tech University School of Law.

The Effects of Divorce on Wills and Estate Plans in Texas

May 21, 2018/in Estate Planning/by Elaine Price

Here is a guide to the legal effects of divorce on Wills, Trust instruments, and financial accounts in Texas.

Wills and Divorce in Texas. When a person’s marriage is dissolved by divorce, the former spouse cannot receive any payments, benefits or inherit property from that person’s will unless it expressly states otherwise. Not only is the former spouse not allowed to take any benefits or serve in a fiduciary role with regard to the estate, but neither can a relative of the former spouse do so, unless the relative is also a relative of the testator.

Trust Instruments and Divorce in Texas. A person can create a trust through provisions in a will. However, if that person’s marriage is dissolved by divorce, Texas law will operate as if the former spouse has disclaimed his or her interest in the trust. The divorce cancels the former spouse’s right to receive any property from the trust, to act as trustee, or to be appointed in any other fiduciary capacity. However, this rule applies only to trusts created in a will, and not to trusts created during one’s lifetime.

Divorce on P.O.D. and Multiple-party accounts. If a deceased individual has established a “pay on death”, multiple-party account, or any other beneficiary designation during a marriage that ends in divorce, the beneficiary designation of the former spouse, as well as of relatives of the former spouse who are not a relative of the decedent, are no longer effective.

Exceptions to the Rule. Some exceptions to the general rules occur under the following circumstances:

The Court’s divorce decree so orders.
Express terms in a trust instrument grant rights regardless of divorce.
An express provision of a pre-nup or post-nup relates to the division of the marriage estate.
The decedent reaffirms the survivorship agreement in writing.
There are express provisions in joint trust documents.
The former spouse is re-designated as the P.O.D. payee or beneficiary after a divorce.

This article brushes the surface of the many estate planning issues that can occur after a divorce in Texas. Be sure to review your estate planning documents yearly and seek the counsel of an attorney when there has been a major life event, such as marriage, birth, death, changes in investment accounts, property changes, or divorce.

Elaine Price practices in the areas of probate, heirship, and guardianship proceedings. Ms. Price is a graduate of the Thurgood Marshall School of Law and holds a Bachelor of Arts in political science from Prarie View A&M. Elaine was formerly with the law office of Rhonda Hunter.

Ten Legal Considerations for Texans Considering Adoption

May 26, 2017/in Adoption/by Jessica Dunne

This article is based on Texas law only. If you are adopting from another state or nation, you should seek appropriate legal counsel licensed by the jurisdiction from which you are adopting.

Photo used with client permission.

If you are considering adoption, you may feel excited, overwhelmed, and even concerned. While the excitement is expected and the paperwork is certainly daunting, your concern likely comes from the unknown. There are so many questions to answer when beginning the adoption process. International, domestic, or foster care? Attorney or private agency? Open, closed, or semi-open? And the question in the back of your mind – could the birth mother or father change their minds and take the child back?

Your concerns are valid and normal of any hopeful adoptive parent. Fortunately, Texas law is quite favorable when it comes to adoption, especially for the adoptive parents.

These ten legal considerations for Texans considering adoption are intended to put many of your worries at bay and allow you to focus on the journey toward growing your family through adoption.

Who Can Adopt

Single or married adults are eligible to adopt. If a married person files a petition for adoption, their spouse must join in the petition for adoption.

General Process of Adoption in Texas

Adoption is a two-step process, which includes: (1) termination of parental rights and (2) adoption of the child. An adoption of a child cannot occur without first terminating the parent-child relationship as to each living biological parent of the child.

Relinquishment of Birth Parents’ Rights — Timing

The birth parents cannot sign a relinquishment of parental rights until at least 48 hours after the birth of the child. A pre-birth contract or other written agreement for an adoption plan is unenforceable against a birth parent. For that first 48 hours, the birth parent has full legal authority to change his or her mind, choose to parent, and refuse to sign a relinquishment of parental rights. Understandably, the first 48 hours after the birth of the child can be nerve-racking for hopeful adoptive parents.

Relinquishment of Birth Parents’ Rights — Revocability

A written relinquishment of parental rights that designates the Department of Family and Protective Services or a licensed child-placing agency to serve as the managing conservator is irrevocable. The birth parents cannot simply change their minds, and the relinquishment is used in the proceeding to terminate parental rights. The birth parents can appeal an order terminating parental rights, but only on the basis of fraud, duress, or coercion in the execution of the affidavit. Those grounds are difficult to prove. Accordingly, once the relinquishment is signed, the adoptive parents should feel a sense of security.

Termination of Birth Father’s Rights – Waiver of Interest

The birth father (or an alleged birth father) can sign an affidavit of waiver of interest in the child, which may be signed before the birth of the child. This waiver is irrevocable and can be used in the proceeding to terminate parental rights.

Termination of Birth Father’s Rights – Without Notice

The birth father’s parental rights may be terminated without notice to him if he fails to register with the state paternity registry before the 31^st day after the child is born and does not commence a proceeding to adjudicate his paternity before the court has terminated his parental rights.

Although this termination procedure without notice is possible under the Texas Family Code, a judge has discretion to require that notice be given, if the father is known.

Six-Month Residence Before Adoption

The adopted child must reside with the proposed adoptive parent(s) for at least six months prior to finalizing the adoption. This allows time for the required post-placement evaluations, which are often performed by the adoption agency.

Inheritance Rights of an Adopted Child

An adopted child is the son or daughter to the adoptive parent(s) for all purposes, including inheritance. An adopted child may also inherit through the child’s biological parents; however, the biological parents may not inherit from or through the adopted child.

Contact with Birth Parents

Adoptive parents ultimately call the shots regarding contact with the birth parents, if any. Although open and semi-open adoption is very common now, especially in domestic adoption, open and semi-open adoption agreements are not enforceable by law. With that said, it is advisable to be honest with your agency about the amount of contact with which you are comfortable, and you should follow through accordingly.

Adult Adoption

Adults can be adopted. An adopted adult is the son or daughter of the adoptive parent for all purposes, including inheritance. However, the adopted adult may not inherit through the adult’s biological parents, and the biological parents may not inherit from or through an adopted adult.

Texas Law Favorable to Adopting

Texas law is designed to give assurances to prospective adoptive parents. Although we have all heard stories of unsuccessful adoptions or children returned to their biological parents, these scenarios are uncommon. The main area of risk occurs during the termination of parental rights. No matter how you adopt – internationally, domestically, or through the foster care system – this first step will likely be handled without much or any of your involvement. Most agencies include termination of the biological parents’ rights in the adoption fee package, and the Department of Family & Protective Services will terminate the biological parents’ rights for children in the foster care system.

Legal Counsel

You will likely have to retain legal counsel to perform the second step, finalizing the adoption. The adoption consists of submitting appropriate paperwork to the Court and attending a hearing in front of a judge. These hearings are short, relatively informal, and provide much cause for celebrating your new family!

Do your research and team up with experienced and respected adoption professionals to guide you through the process. The attorneys at Farrow-Gillespie Heath Witter are here to help.

Jessica Dunne is an attorney at Farrow-Gillespie Heath Witter LLP. Jessica has substantial experience in civil litigation with a special interest in estate planning, probate, guardianships, and adoption. Jessica graduated cum laude from Baylor Law School in 2011 where she was the recipient of the Presidential Scholarship. Jessica’s professional memberships include the Dallas Bar Association, Dallas Association of Young Lawyers, Texas Aggie Bar Association, Attorneys Serving the Community and the State Bar of Texas.

Fooling Mother Nature Requires a Texas License

July 27, 2016/in Corporate Law/by Liza Farrow-Gillespie

By Maria Folkerth
July 27, 2016
Maria Folkerth was a summer intern at Farrow-Gillespie Heath Witter LLP.

Section 301.11 of the Texas Agricultural Code provides that a person must have a license and fill out an application for a permit to modify the weather. Cloud seeding is the most common form of weather modification in the state of Texas.

Cloud seeding is the use of silver iodide or dry ice to create larger clouds that produce more rain[1]. The reason Texans use cloud seeding is to make a good source of water for crops, especially in a drought or throughout dry seasons. Silver iodide copies the ice nuclei that allow water droplets to form. Cloud seeding uses aircraft as well as artillery guns. Aircraft are the most direct and efficient way to seed clouds. Using artillery guns is effective as well; however, that approach does not directly hit the clouds and takes longer to seed.

Cloud seeding is widespread in South and West Texas[2]. The cloud seeding season is from early spring to early fall.

People have tried to use cloud seeding in one other way: hail prevention. Hail is a form of weather that can completely obliterate crops. Farmers in Hale County and Lamb County believed that cloud seeding could also reduce the number of hailstorms. Instead of releasing small amounts of silver iodide into the clouds, they experimentally released larger amounts into clouds before large hail stones were formed. Unfortunately the experiments not only reduced the hail, but also reduced the amount of rain[3].

According to studies conducted, cloud seeding is not harmful to the environment or humans[4]. The main reason for this is that the amount of silver iodide used for cloud seeding is significantly below the 50 micrograms that is allowed per liter of water[5].

There is no discernible difference between normal non-seeded rain and seeded rain.

Notes:

[1] https://weather.com/science/news/can-we-control-weather-20130616#/1

[2] https://www.tdlr.texas.gov/weather/weathermod.htm

[3] https://tshaonline.org/handbook/online/articles/ymwed

[4] www.weathermodification.org/images/AGI_toxicity.pdf

[5] http://www.wichitafallstx.gov/DocumentCenter/View/21261

Probate Law | Farrow-Gillespie & Heath LLP

The Probate Process for a Valid Texas Will

November 17, 2015/in Probate and Probate Litigation/by Jennifer Lewis

The Executor of a Will has the responsibility of submitting the Will for probate. Under the rules of the probate courts, an individual desiring to probate a Will must be represented by an attorney; and the attorney must appear in court on behalf of the executor of the will whenever a court appearance is required. The first steps an Executor should take are (1) finding the Will and putting it in a secure place; and (2) contacting a probate attorney.

If a Texas Will properly provides for an Independent Representation, the role of the probate court (and thus the expense to the estate) is minimized — and the procedure is quick and easy. If the Will is in order, and no will contest is filed, the Will can be probated in as little as two or three weeks, at a fixed fee.

Assuming that there is no will contest or other significant delay or complexity, the usual procedure for probate and administration of a valid Texas will naming an independent executor is as follows:

As your attorneys, we file the original will and an application for probate with the probate court.
A 10-day waiting period ensues while the court publishes notice that the will has been filed.
After the 10-day waiting period, a hearing is held on the application for probate.

The Executor of the will (or someone close to the decedent whom the Executor designates) must accompany us to the hearing.
If the will is being probated in Dallas County, the hearing is held on the 2nd Floor of the Records Building, on the corner of Main Street and Houston, in downtown Dallas.
The Executor must testify as to the date of death and other facts. We will go over the testimony with the Executor in advance of the hearing, and we will answer any questions that the Executor has about the hearing or any other aspect of probate.
To serve as Executor, a person must not be
- a legally incapacitated person;
- a convicted felon;
- a non-resident of Texas, unless the person appoints a resident agent in this State; or
- a person whom the court finds unsuitable.

The Executor must sign the Executor’s Oath, which will be notarized and filed with the court clerk.
After the hearing and the filing of the Oath, the court clerk will issue “Letters Testamentary.” The Letters Testamentary are certified documents that serve as authority for the Executor to do everything that must be done – e.g., transfer title to property, access bank and brokerage accounts, sell assets, distribute cash and other assets to the beneficiaries, etc. — to administer the estate.
We will send the following notices; and we will then file with the court clerk proof that the notices were sent:

Mandatory published notice (in the Daily Commercial Record) to general unsecured creditors.
Mandatory notice by certified mail, and a copy of the will, to each of the named beneficiaries.
Mandatory notice by certified mail to each secured creditor, such as mortgage holders.

The Executor must arrange for a final tax return to be filed for the decedent, and possibly for a tax return to be filed on behalf of the estate. We can recommend a CPA for those tasks, if you do not already have one who is experienced in filing estate returns, or we can do the returns ourselves, as you prefer.
The Executor must contact all insurance companies with which the decedent held life insurance policies, and all institutions at which the decedent held retirement accounts, to ascertain whether the proceeds are probate assets or non-probate assets. We will do these tasks for you if you prefer; and we can advise how to distribute the proceeds from these assets.
The Executor is responsible for making a written Inventory of the estate. We can assist in this process to whatever degree the Executor prefers.
In the event the deceased person owed money to creditors, and the creditors file a valid claim with the Executor, the Executor must pay those valid claims out of the estate’s funds.
After the Inventory is completed and filed (or an affidavit of completion and delivery is filed instead), and valid creditors are paid, the Executor must proceed to carry out the terms of the will. The Executor may need to sell certain assets, but in any event, the Executor must transfer and distribute all of the bequests to the named beneficiaries. We can assist you in that process at an hourly charge, including drafting any deed transfers or other documents that are necessary. Once Letters Testamentary are obtained in an Independent Representation, no permission from or involvement by the court is necessary to sell any of the assets, or to distribute the bequests. However, the Executor should keep good records of every transaction; and in some estates, it is a good idea to obtain receipts and releases from each beneficiary as his or her distribution is completed.
Once the terms of the will are satisfied, the process is complete. Nothing further needs to be filed with the court.

Health Law | Farrow-Gillespie & Heath LLP

Balance Billing and Texas Healthcare Law

November 2, 2015/in Health Law/by Scott Chase

Balance billing occurs when doctors, hospitals, or other health care providers who are not contracted with a patient’s HMO or preferred provider benefit plan (PPO) bill the patient for the difference between the amount the health plan pays and the amount the provider believes to be the adequate cost of a service.

For example, a patient may visit the emergency room at a hospital that is contracted with her health plan, but the emergency room doctor who treats her is not contracted with that health plan. The emergency room doctor and the hospital each bill $1,000 for their services, and the health plan pays them each $400. The hospital, which is contracted with the patient’s health plan, may bill the patient only for the copayments, deductibles, and coinsurance amounts under her plan. It may not bill the patient for the additional amount not paid by her health plan. However, the emergency room doctor, who is not contracted with the patient’s health plan, may bill her for the $600 that her health plan didn’t pay, as well as any copayments, deductibles, and coinsurance that she owes.

Texas law gives patients the right to request, in advance, estimates of charges from providers and facilities and estimated payments from health plans. Doctors, other providers, and health plans have 10 days to give patients the estimates, so they won’t be able to get them in advance in cases of emergencies. Some providers and health plans also have cost information on their websites.

Texas law does not give consumers many rights when they are surprised by a “balance billing.” However, in some cases, patients can require providers and carriers to attend mediation to try to work out the claim. For details on how to determine if you’re eligible for mediation, visit www.tdi.texas.gov/consumer/cpmmediation.htm.

Scott Chase | Farrow-Gillespie & Heath LLP | Dallas, TX

Corporate Practice of Medicine

January 21, 2015/in Health Law/by Scott Chase

Texas law generally prohibits the practice of medicine by any corporation, entity, or non-physician individual. The “corporate practice of medicine” doctrine forbids a physician from entering into an agreement with a non-physician under which the non-physician would in any way control the physician’s medical practice. Based on this doctrine, non-physician individuals and entities generally cannot employ physicians.

There are, of course, exceptions to this general rule. For example, a nonprofit certified by the Texas Medical Board under Section 162.001(b) of the Texas Occupations Code– often called a “5.01(a) corporation” after the section of the Texas Medical Practice Act under which they were originally formed—may employ a physician if certain requirements are met. The directors of such a corporation must all be licensed by the Texas State Board of Medical Examiners and must retain the sole authority to direct all medical, professional, and ethical aspects of the practice of medicine within the corporation. Additional requirements must be met in case of any non-physician members of the corporation. Further, a 5.01(a) corporation, like any Texas non-profit corporation, may not pay dividends to its members, so any profits must be paid through management agreements or as compensation.

In 2011, the Texas Legislature enacted laws designed to allow specific types of hospitals and hospital districts to hire physicians and to allow physicians to form certain ownership-sharing agreements with physician assistants. Critical access hospitals, sole community hospitals, and hospitals in counties of 50,000 or fewer people may now employ physicians if certain protections are in place. Physicians may also form corporations, partnerships, professional associations, and professional limited liability companies together with physician assistants, provided that statutory ownership and control requirements are met.