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IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF TEXAS AUSTIN DIVISION THE ASSOCIATION OF AMERICAN PHYSICIANS & SURGEONS, INC., Plaintiff, v. THE TEXAS MEDICAL BOARD (TMB), et al., Defendants. ) ) ) ) ) ) ) ) Civil Action No. 1:08-cv-675-LY PLAINTIFF AAPS’S CLOSING BRIEF: REQUEST FOR JUDGMENT AND OPPOSITION TO DEFENDANTS’ RULE 52 MOTION Andrew L. Schlafly Karen Tripp General Counsel Attorney at Law Association of American Physicians and Surgeons, Inc. Texas Bar No. 03420850 New Jersey Bar No. 04066-2003 P.O. Box 1301 939 Old Chester Rd. Houston, TX 77251 Far Hills, NJ 07931 Phone: (713) 658-9323 Phone: (908) 719-8608 Fax: (713) 658-9410 Fax: (908) 934-9207 Attorneys for Plaintiff

Plaintiff Closing Brief 08 Cv 675 LY

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Page 1: Plaintiff Closing Brief 08 Cv 675 LY

IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF TEXAS

AUSTIN DIVISION

THE ASSOCIATION OF AMERICAN PHYSICIANS & SURGEONS, INC.,

Plaintiff,

v.

THE TEXAS MEDICAL BOARD (TMB), et al., Defendants.

) ) ) ) ) ) ) )

Civil Action

No. 1:08-cv-675-LY

PLAINTIFF AAPS’S CLOSING BRIEF:

REQUEST FOR JUDGMENT AND

OPPOSITION TO DEFENDANTS’ RULE 52 MOTION

Andrew L. Schlafly Karen Tripp General Counsel Attorney at Law Association of American Physicians and Surgeons, Inc. Texas Bar No. 03420850 New Jersey Bar No. 04066-2003 P.O. Box 1301 939 Old Chester Rd. Houston, TX 77251 Far Hills, NJ 07931 Phone: (713) 658-9323 Phone: (908) 719-8608 Fax: (713) 658-9410 Fax: (908) 934-9207

Attorneys for Plaintiff

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ii Plaintiff AAPS’s Closing Brief

TABLE OF CONTENTS

Table of Contents ............................................................................................................................ ii

Table of Authorities ....................................................................................................................... iii

Argument and Authority ..................................................................................................................1

I. Defendants Engaged in a Pattern and Practice of Equal Protection Violations .........................1

A. General Pattern and Practice of Equal Protection Violations ..............................................2

B. Initiation and Manipulation of Complaint against Competitor Eric Bennos .......................3

C. Initiation and Manipulation of Complaints against Competitor Dan Munton ......................................................................................................................................4

D. Initiation and Manipulation of Complaints against Competitor Debbie Crawford ...................................................................................................................................5

E. Investigation of an Entire Medical Executive Committee in Abilene .................................7

F. Additional Consequences of the Foregoing Pattern and Practice ........................................8

II. AAPS Proved Its Claim for Equitable Relief against Conflicts of Interest at the TMB ....................................................................................................................................9

A. Specific Example of Keith Miller’s Conflict of Interest ...................................................12

III. AAPS Proved Its Claim for Equitable Relief to Stop Retaliation against Physicians Who Exercise Their First Amendment Rights. ....................................................14

A. Retaliation against Dan Munton ........................................................................................15

B. Retaliation against Ryan Potter ..........................................................................................15

C. Retaliation against Roland Chalifoux ................................................................................15

IV. The Trial Evidence Supports Declaratory and Injunctive Relief. ............................................16

V. Defendants Failed to Meet Their Burden of Proving that Violations Will Not Recur .......................................................................................................................................17

VI. Defendant Roberta Kalafut Remains Subject to Section 1983 as a Private Person, Despite Leaving the Texas Medical Board Earlier This Year ...................................19

Conclusion .....................................................................................................................................20

Certificate of Service .....................................................................................................................22

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iii Plaintiff AAPS’s Closing Brief

TABLE OF AUTHORITIES

CASES

Adickes v. S. H. Kress & Co., 398 U.S. 144 (1970) .......................................................................19 Ass’n of Am. Physicians & Surgs. v. Tex. Med. Bd., (TMB), 627 F.3d 547 (5th Cir. 2010) ......................................................................................................................1 Ballard v. Wall, 413 F.3d 510 (5th Cir. 2005) ...............................................................................19 Baum v. Blue Moon Ventures, LLC, 513 F.3d 181 (5th Cir. 2008) ...............................................20 Colson v. Grohman, 174 F.3d 498 (5th Cir. 1999) ........................................................................14 Ctr. for Individual Freedom v. Carmouche, 449 F.3d 655 (5th Cir. 2006) ...................................16 Gibson v. Berryhill, 411 U.S. 564 (1973) ..............................................................................9,10,14 Hall v. Board of School Commissioners of Conecuh County, 656 F.2d 999 (5th Cir. 1981) ...........................................................................................12 In re Murchison, 349 U.S. 133 (1955) ...........................................................................................14 Morrow v. Washington, 277 F.R.D. 172 (E.D. Tex. 2011)............................................................18 NAACP v. Button, 371 U.S. 415 (1963) .........................................................................................14 Newman Marchive P'ship. v. Hightower, 349 Fed. Appx. 963 (5th Cir. 2009) (App. 116a) ..............................................................14 Poliner v. Tex. Health Sys., 537 F.3d 368 (5th Cir. 2008) ...............................................................1 United States v. Oregon State Medical Society, 343 U.S. 326, 333 (1952) ...................................19 United States v. Phosphate Export Assn., 393 U.S. 199 (1968) ....................................................18 United States v. Price, 383 U.S. 787 (1966) ..................................................................................19 United States v. Trans-Missouri Freight Assn., 166 U.S. 290 (1897) ...........................................18 United States v. W. T. Grant Co., 345 U.S. 629 (1953) .................................................................18 Valley v. Rapides Parish Sch. Bd., 118 F.3d 1047 (5th Cir. 1997) ................................................10 Village of Willowbrook v. Olech, 528 U.S. 562 (2000) ...................................................................2

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Walling v. Helmerich & Payne, Inc., 323 U.S. 37 (1944) .............................................................18 Walter v. Horseshoe Entm’t, 2012 U.S. App. LEXIS 11413 (5th Cir. June 6, 2012) (App. 119a) ..................................19 Wilson v. Birnberg, 667 F.3d 591 (5th Cir.), cert. denied, 183 L.Ed.2d 678 (2012) ............. passim Withrow v. Larkin, 421 U.S. 35 (1975)..........................................................................................13

RULES AND STATUTES

FED. R. CIV. P. 52 .............................................................................................................................1 FED. R. EVID. 801(d)(2)(D) ..............................................................................................................8 TEX. OCC. CODE § 153.016. ...........................................................................................................12 TREATISE

K. Davis, Administrative Law Text (1972) ...................................................................................10 INTERNET http://www.tsbde.state.tx.us/index.php?option=com_content&task=view&id=55&Itemid

=66 (Texas State Board of Dental Examiners - viewed Dec. 1, 2012) .............................17

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TO THE HONORABLE JUDGE LEE YEAKEL:

Plaintiff The Association of American Physicians & Surgeons, Inc. (“AAPS”) hereby

submits its Closing Brief to request judgment in the form of declaratory and injunctive relief

against violations of the Equal Protection Clause (under the “class of one” theory), the Due

Process Clause (for conflicts of interest), and the First Amendment (based on retaliation).

AAPS also opposes Defendants’ renewed Rule 52 motion. Because Defendants did not

present a substantial case-in-chief, their motion amounts to a request for reconsideration of their

same motion that was denied at the close of AAPS’s case-in-chief, and should be denied again.

“The doors to the courts remain open to doctors who are subjected to unjustified or

malicious peer review, and they may seek appropriate injunctive and declaratory relief in

response to such treatment.” Poliner v. Tex. Health Sys., 537 F.3d 368, 381 (5th Cir. 2008).

Likewise, the Fifth Circuit’s decision in this case supports equitable relief. Ass’n of Am.

Physicians & Surgs. v. Tex. Med. Bd. (TMB), 627 F.3d 547, 553 (5th Cir. 2010). The trial

evidence established a pattern of (1) the initiation and manipulation of complaints outside of

ordinary procedures, in violation of the Equal Protection Clause, (2) conflicts of interest by

decisionmakers at the Texas Medical Board (TMB) in violation of the Due Process Clause, and

(3) retaliation by the TMB in violation of the First Amendment.

Argument and Authority

I. Defendants Engaged in a Pattern and Practice of Equal Protection Violations.

The “class of one” doctrine prohibits different treatment of someone by the State in the

absence of a rational basis. Supreme Court “cases have recognized successful equal protection

claims brought by a ‘class of one,’ where the plaintiff alleges that she has been intentionally

treated differently from others similarly situated and that there is no rational basis for the

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2 Plaintiff AAPS’s Closing Brief

difference in treatment.” Village of Willowbrook v. Olech, 528 U.S. 562, 564 (2000). Proof of

“subjective ill will” is not required “under traditional equal protection analysis.” Id. at 565.

The Fifth Circuit upheld, earlier this year, equal protection “class of one” claims similar

to AAPS’s claim here. “[T]he plaintiff [need only] establish (1) he was intentionally treated

differently from others similarly situated and (2) there was no rational basis for any such

difference.” Wilson v. Birnberg, 667 F.3d 591, 599 (5th Cir.), cert. denied, 183 L.Ed.2d 678

(2012) (quotations omitted). The two-pronged Wilson test applies squarely to the trial evidence

here, specifically the examples of Eric Bennos (who read MRI images for a competitor of

Kalafut), Dan Munton and Debbie Crawford (who had office practices in competition with

Kalafut’s practice), and the entire Medical Executive Committee at Hendrick Medical Center

(whom Kalafut disliked). Support for this claim includes trial testimony by Munton, Crawford,

Vickie Meyers, Kalafut herself, and compelling documentary evidence produced by the TMB.

A. General Pattern and Practice of Equal Protection Violations

Vickie Meyers, the office manager for Defendant Kalafut for 5½ years,1 gave compelling

testimony at trial about the intent and conduct of Kalafut in singling out competitors for the

initiation and manipulation of complaints, in satisfaction of the Wilson test:

Q. Did Dr. Kalafut discuss the possibility of having complaints filed against her competitors? Vickie Meyers: Yes. ... She would get very upset at a patient that would come into the medical practice that had seen one of these physicians. And she’d make comments that she was going to turn their, quote, ass in and various comments about their ability to care for a patient. And she would get them. Q. And would this be after a patient had seen the competitor and then came in to Kalafut’s office? A. Correct.

… Q. Did Dr. Kalafut have friends that she would work with who were located at the Texas Medical Board or the staff in connection with the complaint process?

1 From “August of 2000 to February of 2006.” (Tr. Oct. 2, at 129, App. 75a) This lawsuit was filed in December 2007. The citations to the record include the page number in the accompanying Appendix as “__a”.

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A. Yes.

(Tr. Oct. 2, at 131-33, App. 76a-78a) (emphasis added) Examples include the following.

B. Initiation and Manipulation of Complaint against Competitor Eric Bennos

“Eric Bennos ... was a radiologist who read for chiropractors that [Kalafut] said that she

despised and put them out of business,” testified Kalafut’s former partner, Dan Munton. (Tr.

Oct. 1, at 111, App. 32a) But the TMB, where Kalafut was president, has no jurisdiction over

chiropractors (id. at 43, App. 10a), so Kalafut instead arranged for her partner-husband Dr. Ed

Brandecker to file a complaint in 2003 against an innocent physician who read MRIs for the

local chiropractor in competition with them. Kalafut then demanded that then-TMB Executive

Director Donald Patrick manipulate this complaint against the competitor.

Vickie Meyers and Dan Munton, both of whom worked for Kalafut, confirmed this:

Q. Did the chiropractic group for which Dr. Bennos read the MRIs, did that chiropractic group compete with Drs. Kalafut and Brandecker? Vickie Meyers: Yes. … Q. Did Dr. Kalafut ask Dr. Brandecker to file this complaint [against Bennos]? A. Yes.

(Tr. Oct. 2, at 135-36, App. 79a-80a)

Dan Munton also testified about how Defendant Kalafut used her influence at the TMB to

seek harsher punishment against Bennos:

Dr. Munton: Eric Bennos ... was a radiologist who read for chiropractors that [Kalafut] said that she despised and put them out of business. She would -- then she did not like the verdict that came down from the Medical Board. She even said she was going to call the Medical Board and try to change the verdict. She called someone named Donald and said, Donald, we have to change this. This can't stand. This is a doctor in Abilene that works for Abilene practitioners who is actually out of Dallas doing teleradiography for the Abilene practitioners. And she spoke with him regarding trying to change that verdict.

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(Tr. Oct. 1, at 111-12, App. 32a-33a) “Donald” Patrick was the TMB’s Executive Director (id.

at 113-14, App. 34a-35a).

Dr. Munton: [Kalafut] told me that she did not feel like the verdict that came out of that finding was harsh enough, given the fact that she said that her husband, Ed, had turned in this physician and that she felt like it needed to be a harsher punishment than was divvied out.

(Id. at 114, App. 35a) In sum, Defendant Kalafut, working with the TMB, thereby “intentionally treated

[Bennos] differently from others similarly situated,” simply because Bennos was reading MRIs

for Kalafut’s competitor. This satisfies the first prong of the Wilson test.

C. Initiation and Manipulation of Complaints against Competitor Dan Munton AAPS member Dan Munton, M.D., did not have a complaint against him with the TMB

in 11 years of practicing medicine prior to when he opened a practice in competition with

Kalafut,2 but soon thereafter (in Dec. 2006 and Feb. 2007) he received two frivolous complaints,

plus one against his physician assistant, which were then manipulated against him by the TMB:

Q. So is it correct that you had no complaints filed against you in 11 years, but upon your return to Abilene, you had two complaints filed against you and one against your physician assistant in a period of time of, what, perhaps nine months? A. Eight months.

(Tr. Oct. 1, at 121, App. 36a) Munton went from 0 complaints in 132 months before competing

with Kalafut to 2 frivolous complaints in 8 months, plus another complaint against his assistant.

One of these complaints was in handwriting, and became “smoking gun” evidence

because Defendant Kalafut’s distinctive handwriting matched it. Kalafut admitted writing and

sending it directly to the TMB’s General Counsel – thereby bypassing ordinary procedures –

with special instructions to “Subpoena on-call logs of doctor” Munton. (Tr. Oct. 1, at 40, App.

7a; Pl. Exh. 2, p. 3, App. 97a). Then the special manipulation of this complaint with the TMB 2 Kalafut admitted that Munton is a competitor of hers. (Tr. Oct. 1, at 73-74, App. 29a-30a)

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began. The TMB added this command to its typed-up version: “DO NOT CLOSE W/OUT

DISCUSSING WITH MARI.” (Pl. Exh. 2, p.2, App. 96a, emphasis in original) “Mari” is Mari

Robinson, now the TMB’s Executive Director. The other complaint against Munton likewise

received special manipulation within the TMB, with the following marking: “Special

Instructions: Do Not Close Without Speaking to Mari First.” (Pl. Exh. 2, p.1, App. 95a,

emphasis in original)

Extensive trial evidence showed special manipulation of these complaints to the

detriment of Munton:

*a complaint that should have taken only “[a] matter of minutes” to dismiss was kept open for more than a year (Tr. Oct. 1, at 126-127, App. 41a-42a) *the TMB denied closure and prompt dismissal on the handwritten complaint by Kalafut, demanding a “[m]ore thorough investigation” of Munton (Defs. Exh. 28, App. 115a) *the TMB quickly turned the inquiry into a formal investigation against Munton without even considering his proof that the complaint was utterly without merit (Tr. Oct. 1, at 124, App. 39a) *Kalafut knew this complaint was unjustified because she admitted that she had her office call Munton’s answering service to check up on him, and found a proper response – yet failed to inform the TMB to correct the allegations she admits sending to the TMB. (Tr. Oct. 1, at 41-42, App. 8a-9a) Munton testified to the resultant harm. (Oct. 1, at 128-30, App. 43a-45a) He “was

intentionally treated differently from others similarly situated and … there was no rational basis

for any such difference,” which satisfies both prongs of the Wilson test for an Equal Protection

violation.

D. Initiation and Manipulation of Complaints against Competitor Debbie Crawford

The trial testimony by AAPS member Debbie Crawford, D.O., was likewise compelling,

and likewise corroborated by documentary evidence. She practiced in the proximity of Kalafut’s

husband-partner Brandecker, and Crawford competed with Brandecker for the “designated

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doctor” evaluations. (Tr. Oct. 1, at 184-86, App. 48a-50a) But a patient of Crawford saw

Brandecker one day, and by sheer coincidence the following day (Dec. 16, 2005) a different

patient of Crawford, having different insurance coverage, saw Kalafut. Within merely a few

hours of Crawford’s patient seeing Kalafut, Mari Robinson opened a TMB investigation of

Crawford with sweepingly false allegations against her on both patients. Within the time it took

for mail to be delivered back to Crawford, she received a single complaint from the TMB

concerning both of the unrelated patients. (Id. at 187, App. 51a)

Q. Did you have a complaint filed against you with the Texas Medical Board relating to two different patients, one that was seen by Ed Brandecker and one that was seen by Roberta Kalafut, in the same complaint? A (by Crawford). Yes, sir. Q. Is there any possible source for that complaint other than Brandecker and Kalafut's office? ... A. In my opinion, no, sir. They had different insurance companies. And I continued to see the patients, so it wasn't the patients that were the source.

(Tr. Oct. 1, at 186, App. 50a)

Crawford’s testimony is thoroughly corroborated by the documentary evidence ultimately

produced by the TMB in this action, and introduced at trial. An internal email from Mari

Robinson, dated in the early afternoon of the same day that Kalafut saw Crawford’s patient,

opened this investigation with false claims of wrongdoing by Crawford. (Pl. Exh. 4, App. 98a)

This email from the TMB’s Mari Robinson bypassed ordinary complaint procedures and

“open[ed] a new case on Debbie Crawford … under TMB” with baseless allegations that “she is

over treating two patients” and “she has ordered every test in the book even when they were not

called for.” (Id.) In fact, Kalafut testified at trial that she saw nothing wrong with the care

provided by Crawford. (Tr. Oct. 1, at 65, App. 28a) Robinson has no medical training and “has

never given a medical opinion on medical records.” (Tr. Oct. 2, at 190-91, App. 84a-85a)

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The following year (Nov. 2006), when another Crawford patient moved to the Abilene

area and saw another partner of Kalafut, Crawford was hit with yet another complaint, which

also bypassed ordinary procedures. (Tr. Oct. 1, at 191-92, App. 52a-53a; Pl. Exh. 4, App. 98a-

99a) This unrelenting pattern against Crawford ultimately caused her to shut down her practice

that competed with Brandecker, though she wants to reopen it if this Court enjoins the

harassment. (Id. at 14, App. 58a) There was never any merit in Robinson’s false allegations

against Crawford, and she was never disciplined for “over treating” or “order[ing] every test in

the book.” Instead the TMB ultimately disciplined her for something innocuous and commonly

done in the Workers’ Comp. program, which Crawford understood to be perfectly legal, and for

which apparently no other physician was disciplined: utilizing services offered in interstate

commerce to read tests results. (Tr. Oct. 1, at 193, App. 54a, Tr. Oct. 3, at 95, App. 94a)

Vickie Meyers, who was Kalafut’s office manager at the time of the first complaint about

two patients against Crawford, testified compellingly that Crawford was a competitor of

Kalafut’s partner-husband Brandecker (Tr. Oct. 2, at 153, App. 82a) and that “Dr. Kalafut was

very upset and said that she was going to file a complaint.” (id. at 155, App. 83a)

In sum, Debbie Crawford “was intentionally treated differently from others similarly

situated and … there was no rational basis for any such difference,” in full satisfaction of both

prongs of the Wilson test for an Equal Protection Clause violation.

E. Investigation of an Entire Medical Executive Committee in Abilene While Kalafut was on staff at Hendrick Medical Center in Abilene, an unprecedented

investigation was opened at the TMB against nearly its entire medical executive committee:

Q. Are you aware that an investigation was opened by the Texas Medical Board against nearly every member of the medical executive committee at Hendrick Medical Center? A (by Kalafut). Yes, sir. Q. Is that unusual?

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A. I believe so. Yes, sir. Q. Have you ever seen that happen to a medical executive committee at any other hospital? A. Not to my knowledge. Q. Were you a staff physician at Hendrick Medical Center when ... the Texas Medical Board opened an investigation against nearly the entire medical executive committee? A. Yes. I held privileges there. Q. And, evidently, you were aware that the investigation was opened, correct? A. I was aware, yes.

(Tr. Oct. 1, at 45-46, App. 12a-13a) Kalafut testified that earlier she had held a lucrative position

at Hendrick, but it “refused to renew our four-year contract after it expired.” (id. at 44, App. 11a)

The only plausible source for this unprecedented TMB-initiated investigation – initiated in Dec.

2006 by again circumventing ordinary procedures – was Kalafut herself, without a legitimate

reason.

Vickie Meyers, Kalafut’s longtime office manager, confirmed the obvious in this portion

of her testimony, which was not initially admitted but is subject to reconsideration:3

Q. What information did Lana Rodgers [employed by Kalafut but left sometime near the time of this conversation with Meyers] give you about this? A (by Meyers). She had said that Dr. Kalafut was behind submitting a complaint on a group of physicians and executive committee. Q. And did she say why Dr. Kalafut was behind submitting that complaint? A. She said that Dr. Kalafut hated Hendrick and hated the doctors there. Q. And did she say why Dr. Kalafut hated Hendrick and hated the doctors there? A. Because of how they treated her when she was a director there.

(Tr. Oct. 2, at 152, App. 81a)

F. Additional Consequences of the Foregoing Pattern and Practice The foregoing pattern and practice required the active participation of other individuals at

the TMB in addition to Kalafut. As William J. Rea, M.D., observed at the end of his testimony:

3 Given the probative and highly credible nature of this testimony, AAPS respectfully submits that F.R. EVID. 801(d)(2)(D) should not be construed to exclude it simply because Meyers was not “totally sure” whether this statement may have been made shortly after the declarant’s employment by Kalafut. (Tr. Oct. 2, at 152, 81a) Meyers was sure that the declarant had been employed by Kalafut in close proximity to making this statement.

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Dr. Rea: [The TMB had] some ideas that they were going to hurt certain physicians, and I just happened to be one of them. I had other friends that had been hurt.

(Tr. Oct. 2, at 32, App. 63a) In seeking declaratory and injunctive relief against the pattern,

AAPS seeks to prevent future harm that would inevitably flow from the lack of safeguards at the

TMB. Such harm would include additional bad faith complaints, such as racist, politically

motivated, and/or improper attempts to obtain highly personal medical records:

Q. If someone sends a complaint to TMB, and there are, like, racist remarks all over the complaint, the TMB procedure is to process that complaint regardless of the racial animus that’s in it, correct? A (by Ms. Robinson). ... If there were other allegations related to potential violations, then, yes, it would be processed like any other complaint. Q. Even though it’s obvious from the face of the complaint that this was a racist who filed it? A. Yes. That doesn’t mean they’re lying about what occurred. Q. How about a politically motivated complaint? Same answer? A. ... [A]ssuming that they are alleged violations of the Act, then, yes, it would be put through the process. ... Q. So, for example, if someone knew that Mitt Romney had seen a physician in Texas and somebody, a stranger, a political hack, filed a complaint about the care provided to Mitt Romney by a physician in Texas, then the process would require the TMB to order those records -- those patient records about Mitt Romney to go up to the TMB, correct? ... Q. Isn’t there a likelihood that those records could leak out? A. Not from my agency.

(Tr. Oct. 3, 11-12, 19, App. 89a-91a) No safeguards protected against the pattern proven at trial,

and TMB presented no evidence of new protections against future violations.

II. AAPS Proved Its Claim for Equitable Relief against Conflicts of Interest at the TMB.

The constitutional standard against allowing conflicts of interest at state medical boards

was established by the U.S. Supreme Court in Gibson v. Berryhill, 411 U.S. 564, 569 (1973).

There, similar to here, a group of optometrists sued their state licensing board, seeking injunctive

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relief against biased disciplinary proceedings. Id. at 569-70. The optometrists prevailed4 and the

Supreme Court established that a state licensing board, as an adjudicative body, is subject to the

same strict requirements against conflicts of interest as a court of law. “It has also come to be

the prevailing view that ‘most of the law concerning disqualification because of interest applies

with equal force to . . . administrative adjudicators.’” Berryhill, 411 U.S. at 579 (quoting K.

Davis, Administrative Law Text § 12.04, p. 250 (1972), emphasis added). Accordingly,

allowance by the TMB of conflicts of interest, which would be impermissible in a court of law,

should be enjoined here. In Berryhill, the improper conflict of interest prohibited was that the

optometry board members were in private practice and “would possibly” benefit by a ruling

against optometrists who worked as employees of business corporations. 411 U.S. at 578. Here,

the conflict of interest is how TMB members receive payments from sources adverse to the

physicians subjected to TMB discipline. Where, as here, “[t]he thrust of the complaint was that

the Board was biased and could not provide the plaintiffs with a fair and impartial hearing in

conformity with due process of law,” injunctive relief is warranted. Id. at 570, 581.

The Fifth Circuit has applied the Berryhill standard to affirm a preliminary injunction

against a school board and order the reinstatement of a superintendent, based on a conflict of

interest by members of the school board. Valley v. Rapides Parish Sch. Bd., 118 F.3d 1047,

1049 (5th Cir. 1997). “[A]djudicative decisions, or issues not of a legislative, policy or legal

nature, should be free of bias or prejudice.” Id. at 1053.

Proof for this Due Process violation comes from the trial testimony of Kalafut, Robinson,

and former TMB Board member Keith Miller. No meaningful TMB policy exists to prevent

conflicts of interest, as each TMB member is allowed to decide purely in his own discretion

4 While agreeing with the district court, the U.S. Supreme Court did order reconsideration of its injunction due to an intervening decision by the Alabama Supreme Court. 411 U.S. at 580-81.

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whether to recuse himself. Moreover, there are no meaningful disclosure requirements about

financial payments received by TMB Board members, so no one knows when to object.

Receiving money from insurance companies adverse to physicians – which gives rise to conflicts

of interest – simply goes unreported.

Defendant Kalafut, who was on the TMB from 2002 to December 2008 and then on a

District Review Committee until January 2012 (Tr. Oct. 1, at 52, App. 19a), testified that she

never saw the TMB require anyone to recuse himself:

Q. In that decade that you were officially associated with the Board and the Committee, was there a single instance where the Board required someone to recuse himself from a case? Dr. Kalafut: No, sir. Not to my knowledge. (Id.)

Kalafut also testified that there was no disclosure requirement for Board members who

received compensation from insurance companies having positions adverse to physicians:

Q. If a doctor on the Board were receiving $100,000 a year in compensation for consulting with an insurance company, are you aware of any requirement of disclosure of that specific potential conflict of interest? A. No, sir.

(Tr. Oct. 1, at 54, App. 21a) Mari Robinson, the TMB Executive Director, testified that a

physician (licensee) subjected to discipline by the TMB has no way to learn of specific conflicts

of interest:

Q. [W]hen the licensee doesn’t know that someone has a financial conflict of interest, is there any way the licensee challenge it? Can a licensee ask for that disclosure, for example? A. Not that I’m aware of outside of the governmental filings. ...

(Tr. Oct. 2, at 206, App. 86a) The “governmental filings” to which Ms. Robinson referred are

three-fold and wholly inadequate: a one-time application to be appointed to the Board (or have

an appointment renewed), a biography based on that application, and disclosures required of

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12 Plaintiff AAPS’s Closing Brief

mostly non-adjudicatory government officials. Defendant Kalafut testified that her disclosure

obligations stopped when shifted to a district review committee:

Q: [B]y making that shift from president to review committee, that enabled you to stop disclosing your finances. Isn’t that right? A. Yes, sir.

(Tr. Oct. 1, at 101, App. 31a)

A. Specific Example of Keith Miller’s Conflict of Interest

Keith Miller served as a member of the TMB from “early 2003 until late 2007.” (Tr. Oct.

2, at 45, App. 64a) Miller did not recuse himself as a member of the TMB from a meeting in

which he voted to discipline AAPS member Robert Chris Kuhne (id. at 53-54, App. 68a-69a),

despite receiving compensation for testimony as a malpractice witness (Id. at 46-47, 53-54, App.

68a-69a; Pl. Exh. 34, App. 108a).5 Then-TMB President Kalafut felt that Miller had a conflict of

interest, Texas public policy (as reflected by H.B. 1973) established that he had a conflict, but

neither Kalafut nor the TMB could require a recusal by Miller. As former TMB President

Kalafut confirmed:

Q. Isn’t it true that Keith Miller continued to serve on the Board after you told him it was a conflict of interest? A. I told him how I felt that it was a conflict of interest, but we had no rules in place to enforce any kind of action one way or another. Q. So is it your testimony that you lack power as the president of the Texas Medical Board to tell Keith Miller to recuse himself? A. Yes, sir.

(Tr. Oct. 1, at 49, App. 16a) No disclosure requirement enables the physician subject to

discipline to learn about the conflicts. Miller testified that the decision to recuse is in the sole

discretion of the TMB member, and that he was never asked by the TMB or other TMB members

to recuse himself. (Tr. Oct. 2, at 48, App. 67a) Miller did not disclose that he was receiving

5 The Texas statute (H.B. 1973) prohibiting this type of conflict of interest became effective on June 15, 2007. TEX. OCC. CODE § 153.016.

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monthly payments from an insurance company as its advisor, while he served on the TMB. (Id.

at 67, App. 71a)

While receiving compensation as an expert in malpractice cases and also receiving

monthly payments as an advisor to an insurance company adverse to physicians, Miller presided

over the informal settlement conference of AAPS member William J. Rea, M.D. (Tr. Oct. 2, at

24, App. 61a) and participated in a TMB meeting in August 2007 that disciplined AAPS member

Robert Chris Kuhne, M.D. (Pl. Exh. 34, p.8, App. 114a)

The complaint and investigation against Dr. Rea was initiated entirely by an insurance

company in 2005 (Tr. Oct. 2, at 23-24, App. 60a-61a; Pl. Exh. 5, App. 100a-103a), and yet

Miller never disclosed to Rea that Miller was simultaneously being paid by an insurance

company as he presided over the discipline of Rea:

Q. In fact, throughout your whole process that lasted several years … was there any disclosure by Keith Miller or anyone at the Board about a possible conflict of interest of being compensated by insurance companies? Dr. Rea: No.

(Tr. Oct. 2 at 28, App. 62a) The lack of any requirements by the TMB for its decisionmakers to disclose potential

conflicts of interest – such as compensation from insurance companies for advisory positions –

means that neither licensees nor fellow TMB members are typically even aware of the conflicts.

Defendant Kalafut testified that she only learned of Miller’s role as an expert witness in

malpractice cases from a tip by someone outside of the TMB who at first was unable to identify

who at the TMB had the conflict. (Tr. Oct. 1, at 47-48, App. 14a-15a) Miller never did

voluntarily disclose his monthly compensation from an insurance company; only after he left the

TMB, in discovery in this action, did Miller disclose it, and only then when ordered to by a

federal judge. (Tr. Oct. 2, at 67, App. 71a)

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14 Plaintiff AAPS’s Closing Brief

Under Berryhill, this sheer absence of safeguards against conflicts of interest is

unconstitutional. “Not only is a biased decisionmaker constitutionally unacceptable but ‘our

system of law has always endeavored to prevent even the probability of unfairness.’” Withrow v.

Larkin, 421 U.S. 35, 47 (1975) (quoting In re Murchison, 349 U.S. 133, 136 (1955)). Equitable

relief is necessary to stop the TMB’s allowance of conflicts of interest.

III. AAPS Proved Its Claim for Equitable Relief to Stop Retaliation against Physicians Who Exercise Their First Amendment Rights.

Retaliation against those who exercise First Amendment rights causes a chilling effect

warranting strict scrutiny by federal courts. This First Amendment protection safeguards the

right to speak out and the right to sue in court,6 as held by the Fifth Circuit in reversing a district

court’s judgment against a constitutional retaliation claim because “[a] decision to litigate was

precisely the trigger for the city’s adverse actions.” Newman Marchive P'ship. v. Hightower, 349

Fed. Appx. 963, 967 (5th Cir. 2009) (App. 116a). See also Colson v. Grohman, 174 F.3d 498,

508 (5th Cir. 1999) (deploring “adverse government action against an individual because of her

exercise of First Amendment freedoms”).

A. Retaliation against Dan Munton

AAPS member Dan Munton was subjected to retaliation by then-TMB President Kalafut

and the TMB General Counsel after Munton exercised his First Amendment rights to provide

information to a legislative committee in 2007. (Tr. Oct. 1, at 138, App. 47a) In response,

Kalafut arranged for the TMB General Counsel to write a letter falsely indicating that Kalafut

had not initiated any complaints against Munton. (Pl. Exh. 8, App. 104a) This was the same

TMB General Counsel (Robert Simpson) to whom Kalafut sent her handwritten allegations to

initiate a complaint (and a subpoena demand) against Munton less than a year earlier. (Tr. Oct. 6 Filing a lawsuit is a First Amendment right, protected by freedom of expression. See, e.g., NAACP v. Button, 371 U.S. 415, 444 (1963) (basing the right to litigate in the right to “expression” in the First Amendment).

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15 Plaintiff AAPS’s Closing Brief

1, at 40, App. 7a) Kalafut then sent the false denial to Munton’s referring physicians in Abilene,

causing Munton harm. (Id. at 58-59, 63, App. 25a-27a; Pl. Exhs. 8-9, App. 104a-105a)

B. Retaliation against Ryan Potter

AAPS member Ryan Potter, M.D., exercised his First Amendment right to seek judicial

relief against someone who repeatedly filed bad faith complaints him, and the TMB then

retaliated against Dr. Potter in January 2012 by filing a formal complaint against him for

obtaining judicial relief. (Pl. Exh. 16, App. 107a) The TMB expressly seeks to punish Dr. Potter

for “filing a lawsuit regarding the complaints Ms. Malowitz filed with the TMB” and for having

“obtained a court order that expressly prohibited Ms. Malowitz from filing any further

complaints with the Medical Board.” (Id.) The TMB’s own words prove it is retaliating against

exercise of a First Amendment right: Potter (like any American) has a right to seek a court order.

C. Retaliation against Roland Chalifoux

AAPS member Roland Chalifoux, D.O., moved to practice in West Virginia after the

TMB overruled the SOAH administrative judge and revoked Chalifoux’s license in Texas. (Tr.

Oct. 2, at 94, App. 72a) Chalifoux publicly – but fairly – criticized the TMB’s handling of his

case. The TMB retaliated by declaring to a newspaper that it was somehow “frightening” that

Chalifoux was practicing in another state. Kalafut so told the Fort Worth Star Telegram, which

was published to Chalifoux’s enormous detriment. (Tr. Oct. 1, at 54-57, App. 21a-24a). Kalafut

admitted that she actually had no meaningful knowledge of Chalifoux’s case or competence (id.

at 54, App. 21a), and Defendants never produced any evidence for such a defamatory remark.

The clear inference is that the TMB, without bothering to check the facts, struck back at a

physician merely because he exercised his First Amendment rights.

Chalifoux testified at trial about how devastating this retaliation by the TMB was to him:

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16 Plaintiff AAPS’s Closing Brief

Dr. Chalifoux: It sent chills throughout the entire state [of West Virginia]. … Q. Did you lose a contract because of the newspaper article we’ve been discussing? A. Yes, I did.

(Oct. 2, at 98-99, 73a-74a).

In sum, TMB has engaged in a pattern and practice of retaliation against physicians who

exercise their First Amendment rights. Equitable relief is warranted to prevent the chilling

effect. See Ctr. for Individual Freedom v. Carmouche, 449 F.3d 655, 660-61 (5th Cir. 2006).

IV. The Trial Evidence Supports Declaratory and Injunctive Relief. The trial made clear that the TMB is not going to change its ways, and will continue to

violate the U.S. Constitution, unless this Court orders it to act differently. Many times at trial

Defendants candidly stated that they are merely applying state law, regardless of their own views

of it. But state law cannot trump the U.S. Constitution. TMB Executive Director Robinson said:

Q. So isn’t it correct, Mrs. Robinson, that you feel you cannot change any of the TMB procedures relevant to what we've been talking about at this trial unless either the law is changed or there's a court order? Ms. Robinson: … [T]hat’s not what I feel. The truth of the matter, you and I both know, the statute says complaints are confidential. I don't have the authority to change that. ...

(Tr. Oct. 3, at 30-31, App. 92a-93a) Ending violations of the U.S. Constitution is within the

bailiwick of federal courts.

In its “Prayer for Relief” in the Amended Complaint, Plaintiff AAPS broadly requests

“Declaratory and injunctive relief for violation of 42 U.S.C. § 1983,” related statutory relief, and

“such other relief as the Court may deem appropriate.” (Dist. Ct. Doc. 130, Am. Compl., p. 14)

This request is sufficiently broad to support any relief that this Court finds to be warranted.

One approach is to prohibit confidential complaints in the absence of good cause, as

already done by the Texas State Board of Dental Examiners: “The dentist against whom a

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complaint is brought … is forwarded a copy of the complaint.”7 More specific equitable relief

should also be ordered, including:

(1) a declaration about the unconstitutionality of specially manipulating bad faith complaints, and an injunction requiring the TMB and/or Kalafut to disclose to the accused any complaints that are initiated by Kalafut, and the TMB to disclose any complaint brought by a competitor of an accused;

(2) an injunction against Kalafut individually from bypassing the formal complaint process or otherwise attempting to influence the TMB against another physician;

(3) an injunction requiring disclosure by members of the TMB (and its district review

committees) of consulting or advisory arrangements with insurance companies and other potential conflicts of interests so that an accused physician may request recusal;

(4) an injunction authorizing the TMB to order the recusal of a member as appropriate; (5) an injunction ordering the TMB to reopen any prior decisions that were tainted by

conflicts of interest; and (6) an injunction preventing the TMB from retaliating against physicians for exercising

their First Amendment rights, and/or a declaration that such retaliation is unconstitutional.

V. Defendants Failed to Meet Their Burden of Proving that Violations Will Not

Recur. Numerous precedents reject Defendants’ argument that a lack of violations during the

pendency of this case (since December 2007) negates the appropriateness of injunctive relief.

A “heavy” burden is on the Defendants to prove that they will not restart or continue their

unconstitutional conduct, and they have not met their burden. AAPS cannot be expected to meet

this burden for them about conduct the TMB keeps confidential. It is not enough for Defendants

simply to assert that a challenged policy no longer exists, or that they have no intent to revive it;

“voluntary cessation of allegedly illegal conduct does not deprive the tribunal of power to hear

7 http://www.tsbde.state.tx.us/index.php?option=com_content&task=view&id=55&Itemid=66 (viewed Dec. 1, 2012). This Court may take judicial notice of this publicly stated policy of a Texas state licensing agency.

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and determine the case, i.e., does not make the case moot.” United States v. W. T. Grant Co.,

345 U.S. 629, 632 (1953). See also United States v. Phosphate Export Assn., 393 U.S. 199, 202-

03 (1968); Gray v. Sanders, 372 U.S. 368, 376 (1963); Walling v. Helmerich & Payne, Inc., 323

U.S. 37, 43 (1944); United States v. Trans-Missouri Freight Assn., 166 U.S. 290, 308-10 (1897).

Where, as here, “the defendant is free to return to his old ways,” and there is a “public interest in

having the legality of the practices settled,” it is not moot. W.T. Grant Co., 345 U.S. at 632.

The Fifth Circuit held, for example, that “the plaintiffs were entitled to injunctive relief

that would be binding upon the [school system], regardless of changes in personnel.” Hall v.

Board of School Commissioners of Conecuh County, 656 F.2d 999, 1001 (5th Cir. 1981)

(emphasis added). There the Fifth Circuit rejected an argument that a lawsuit challenging the

constitutionality of a high school’s policy, which had allowed students to give morning

devotionals over the school’s public address system, was mooted by the school’s voluntary

decision to discontinue the practice. 656 F.2d at 1000-01. The school board abandoned its

policy after the filing of the lawsuit, but the Fifth Circuit found that “the plaintiffs were entitled

to injunctive relief that would be binding upon the [school system], regardless of changes in

personnel.” Id. at 1001 (emphasis added). “To defeat jurisdiction … defendants must offer more

than their mere profession that the conduct has ceased and will not be revived.” Id.

Similarly, the mere departure of employees from the City of Tenaha and Shelby County

was “not enough to satisfy Defendants’ heavy burden of proving that there is no reasonable

expectation that the City of Tenaha or Shelby County will reinstate the allegedly discriminatory

interdiction program.” Morrow v. Washington, 277 F.R.D. 172, 199-200 (E.D. Tex. 2011).

Indeed, the U.S. Supreme Court emphasized the need for injunctive relief in the same

context of the practice of medicine as presented here. “It is the duty of the courts to beware of

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efforts to defeat injunctive relief by protestations of repentance and reform, especially when

abandonment seems timed to anticipate suit, and there is probability of resumption.” United

States v. Oregon State Medical Society, 343 U.S. 326, 333 (1952). Here, Defendants did even

not make any “protestations of repentance and reform,” so this mandate for injunctive relief is far

more compelling, and Defendants should not object to an order if they are already complying.

VI. Defendant Roberta Kalafut Remains Subject to Section 1983 as a Private Person, Despite Leaving the Texas Medical Board Earlier This Year.

It is well-established that private persons are subject to Section 1983 remedies when they

act in concert with state officials to deprive constitutional rights, and there is no merit to

Defendant Kalafut’s attempts to be dismissed from this case because she is no longer a TMB

official. The U.S. Supreme Court has emphasized:

“Private persons, jointly engaged with state officials in the prohibited action, are acting ‘under color’ of law for purposes of the statute. To act ‘under color’ of law does not require that the accused be an officer of the State. It is enough that he is a willful participant in joint activity with the State or its agents.”

Adickes v. S. H. Kress & Co., 398 U.S. 144, 152 (1970) (quoting United States v. Price, 383 U.S.

787, 794 (1966)).

The Fifth Circuit has repeatedly emphasized this standard, including several times in

2012 alone. See, e.g., Walter v. Horseshoe Entm’t, 2012 U.S. App. LEXIS 11413, *4 (5th Cir.

June 6, 2012) (“While employees of private enterprises are not generally considered to be state

actors, a private person … may be considered a state actor for the purposes of § 1983 when he

is a willful participant in joint activity with the State or its agents.”) (emphasis added, inner

quotations omitted). Likewise, “a private individual may act under color of law in certain

circumstances, such as when a private person is involved in a conspiracy or participates in joint

activity with state actors.” Ballard v. Wall, 413 F.3d 510, 518 (5th Cir. 2005).

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20 Plaintiff AAPS’s Closing Brief

The trial demonstrated that Kalafut has participated personally in a “joint activity with

state actors” (and even been the impetus of many of the constitutional violations) with respect to

investigations and complaints manipulated by the TMB. Moreover, Kalafut remained on the

TMB in an official capacity for an additional four years after this lawsuit was filed alleging her

participation in the wrongdoing. While Kalafut did finally leave the TMB in January 2012, she

has provided no evidence of any change in her conduct in working with TMB officials to target

her competitors. She did not even state any intention to change her ways. AAPS sued Kalafut in

her individual capacity, the prayer for relief expressly requests all “[d]eclaratory and injunctive

relief for violation of 42 U.S.C. § 1983” (Dist. Ct. Doc. 130, Am. Compl. p. 14), and her specific

individual wrongdoing is included in Am. Compl. ¶¶ 26-27. AAPS’s specific request to stop

unconstitutional confidential complaints in Am. Compl. ¶¶ 57-58 supports an order that

Defendant Kalafut disclose any future complaints she initiates against competitors. See, e.g.,

Baum v. Blue Moon Ventures, LLC, 513 F.3d 181, 194 (5th Cir. 2008) (enjoining a vexatious

litigator from filing new claims unless he discloses and obtains pre-approval for them from a

federal judge). Dr. Munton testified about his reasonable fear that Kalafut will “pass more

allegations to the Board that are baseless about” him (Tr. Oct. 1, at 131, App. 46a); Crawford

testified that she would like to return to practice medicine in proximity to Kalafut’s partner-

husband Brandecker and would feel comfortable returning if the court provided some protection

against additional complaints by Kalafut against her. (Tr. Oct. 2, 14-15, App. 58a-59a)

Conclusion

This Court should enter declaratory and injunctive relief to stop Defendants’ violations of

the Equal Protection Clause, the Due Process Clause, and the First Amendment.

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Dated: December 7, 2012 Respectfully submitted,

/s/ Andrew L. Schlafly Andrew L. Schlafly General Counsel Association of American Physicians and Surgeons, Inc. New Jersey Bar No. 04066-2003 939 Old Chester Rd. Far Hills, NJ 07931 Phone: (908) 719-8608 Fax: (908) 934-9207

Karen Tripp Attorney at Law Texas State Bar No. 03420850 P.O. Box 1301 Houston, TX 77251 Phone: (713) 658-9323 Fax: (713) 658-9410 Attorneys for Plaintiff

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CERTIFICATE OF SERVICE

I hereby certify that on December 7, 2012, I electronically filed the foregoing “Plaintiff

AAPS’s Closing Brief: Request for Judgment and Opposition to Defendants’ Rule 52 Motion”

with the Clerk of the Court using the Electronic Case Filing system, which I understand to have

caused service of Assistant Attorney General Nancy K. Juren of the Office of the Attorney

General of the State of Texas, on behalf of all Defendants.

/s/ Andrew L. Schlafly Andrew L. Schlafly