Patel v. St. Luke’s Sugar Lang P’ship (Summary)

PHYSICIAN – HOSPITAL PARTNERSHIP

Patel v. St. Luke’s Sugar Lang P’ship., No. 01-13-00273-CV (Tex. App. Nov. 7, 2013)

The Court of Appeals of Texas reversed a trial court’s denial, because of mootness, of an application for injunction by several physicians against a partnership in which they held interests. 

The partnership was created to own and operate a hospital.  The partners included the physicians and a subsidiary of a health system.  The subsidiary was the managing partner.  The partnership’s governing board initiated a capital call without the participation of any board members appointed by the physician partners.  The physician partners refused to respond to the capital call, claiming it was an ultra vires act disallowed under the amended partnership agreement.  The partnership terminated the physicians’ interests because they failed to respond to the capital call. The physicians filed suit seeking a temporary injunction to prevent the managing partner from taking certain actions, including terminating the partnership interests of the physicians.  While a ruling on the injunction was pending, the managing partner considered the physicians’ interest terminated and began the process of assuming direct responsibility for operating the hospital by transferring essential licenses and paperwork into its own name.  Based on this, the partnership argued that the physicians’ request for a temporary injunction was moot because of a change in circumstances.  The lower court denied the temporary injunction since the acts sought to be enjoined were already performed by the partnership.  The appellate court disagreed, holding that it could not infer that any of the actions taken by the managing partner, including transferring the partnership’s CMS provider number, indicated an actual transfer of the hospital’s ownership from the partnership to the managing partner.  Accordingly, the appellate court reversed the lower court’s ruling finding as moot the application for a temporary injunction.