Legislative Protections for
Texas Optometrists
EyeCon 2014
Drew York
Gray Reed & McGraw, P.C.
dyork@grayreed.com
Three Principal Statutes Protecting Optometrists
• Optometry Act (Texas Occupations Code Chapter 351)
• Texas Insurance Code Chapter 1451
• Medical Liability Act (Texas Civil Practice and Remedies Code Chapter
74)
Texas Optometry Act
(Occupations Code Chapter 351)
• Section 408
• “prevent[s] manufacturers, wholesalers, and retailers of ophthalmic goods
from controlling or attempting to control the professional judgment, manner
of practice, or practice of an optometrist or therapeutic optometrist.”
Texas Optometry Act
(Occupations Code Chapter 351)
• Section 408
• “prevent[s] manufacturers, wholesalers, and retailers of ophthalmic goods
from controlling or attempting to control the professional judgment, manner
of practice, or practice of an optometrist or therapeutic optometrist.”
• The defendant must be a manufacturer, wholesaler, or retailer of ophthalmic
goods.
Texas Optometry Act
(Occupations Code Chapter 351)
• Section 408
• “prevent[s] manufacturers, wholesalers, and retailers of ophthalmic goods
from controlling or attempting to control the professional judgment, manner
of practice, or practice of an optometrist or therapeutic optometrist.”
• The defendant must be a manufacturer, wholesaler, or retailer of ophthalmic
goods.
• Section 408 does not apply to other optometrists or any legal entities owned and
controlled by an optometrist unless the optometrist or legal entity has more than three
locations.
Texas Optometry Act
(Occupations Code Chapter 351)
• Section 408
• “control or attempt to control the professional judgment, manner of practice,
or practice of an optometrist or therapeutic optometrist" includes:
• This means the following list is not exhaustive, which is important because the statute is
liberally construed.
Express Examples of Violations of Section 408
(1) setting or attempting to influence the professional fees or office
hours of an optometrist or therapeutic optometrist
Example: You lease space from Supermart for your optometry practice.
Supermart retails glasses and contacts to customers. Your lease with
Supermart states you must be open Monday-Saturday 9 a.m.-7 p.m.
Supermart is violating Section 408 by setting your office hours.
Express Examples of Violations of Section 408
(1) setting or attempting to influence the professional fees or office
hours of an optometrist or therapeutic optometrist
Example: You lease space in a strip mall shopping center from GRM LLC,
a real estate development company. Your lease states you must be
open 24 hours a day, 7 days a week. Because GRM LLC does not
manufacture or sell (either wholesale or retail) ophthalmic goods, the
lease provision does not violate Section 408.
Express Examples of Violations of Section 408
(2) restricting or attempting to restrict an optometrist's or therapeutic
optometrist's freedom to see a patient by appointment
Example: Your lease with Bullseye, a big box “all in one” store, is up. In
the new lease agreement, Bullseye requires that you see patients on a
walk-in basis only. Your practice suffers a 20% drop in patients seen.
The new lease violates your freedom to see a patient by appointment,
and therefore violates Section 408.
Express Examples of Violations of Section 408
(3) terminating or threatening to terminate an agreement, including a lease,
or other relationship in an attempt to control the professional judgment,
manner of practice, or practice of an optometrist or therapeutic optometrist
Example: manufacturer threatens to stop giving you a 20% discount if you
don’t begin selling their newest contact lens product.
NOTE: the phrases “professional judgment” and “manner of practice” are
not defined. In a lawsuit, the plaintiff-optometrist likely proves this through
their own testimony about how the threat attempted to control their
professional judgment or manner of practice.
Express Examples of Violations of Section 408
(4) providing, hiring, or sharing employees, business services, or similar
items to or with an optometrist or therapeutic optometrist
Example: Supermart hires your employees
Express Examples of Violations of Section 408
(5) making or guaranteeing a loan to an optometrist or therapeutic
optometrist in excess of the value of the collateral securing the loan
Example: An optometry practice is looking to open a fifth location. The
location is in Midland, but you live in Dallas. The practice offers you a
$300,000 advance to move to West Texas. The advance is to be paid
back over three years based on your revenue produced, but in the
event you do not produce enough revenue to pay off the entire
advance, the practice will forgive the outstanding balance.
What are an Optometrist’s Remedies for a
Violation of Section 408?
• There are multiple remedies available to optometrists:
•
•
•
•
•
Damages;
Reasonable attorney’s fees;
Court costs;
Injunction against the violator; and
A civil penalty not to exceed $1,000 for each day a violation occurs
• But maybe not after the Forte v. Wal-Mart Stores, Inc. case
• A violation of Section 408 may also be brought under the Texas
Deceptive Trade Practices Act.
When Must You Bring a Lawsuit for a
Violation of Section 408?
• The statute does not have an express limitations period.
• Generally under Texas law, if a claim does not have an express
limitations period, a party must bring the claim within four (4) years
after it accrues.
• There are two cases holding claims for violations of Section 408 must
be brought within 4 years. BUT, there is one case holding the claim
must be brought within two (2) years.
Forte v. Wal-Mart Stores, Inc.
Facts:
Wal-Mart leased space to optometrists and required the optometrists
to make representations about the number of hours their offices would
remain open in the lease agreements. The optometrists sued, claiming
Wal-Mart’s lease agreements violated Section 408.
At trial the court instructed the jury that the plaintiffs did not claim to
have suffered any economic damages, and only sought to recover civil
penalties.
Forte v. Wal-Mart Stores, Inc.
Facts (Cont’d.):
The jury awarded the plaintiffs $3,953,000 in civil penalties, which was
the maximum amount allowed under the Optometry Act. The jury also
awarded the plaintiffs approximately $764,000 in attorney’s fees.
The court subsequently reduced the jury’s civil penalty to $1,396,400.
Forte v. Wal-Mart Stores, Inc.
Issues on Appeal:
Wal-Mart raised two arguments on appeal:
1. The Optometry Act’s prohibition against controlling or attempting
to control the professional judgment or practice of an optometrist
should be limited to controlling or attempting to control the
optometrist’s medical judgment.
2. The jury’s award of civil penalties cannot be allowed under Texas
law because the optometrists did not seek or recover any actual
damages.
Forte v. Wal-Mart Stores, Inc.
Court of Appeals Decision:
The Optometry Act’s prohibition is not limited to situations where a
manufacturer, wholesaler or retailer controls or attempts to control an
optometrist’s medical judgment.
• The plain language of the statute is not limited to situations involving an
optometrist’s medical judgment; AND
• The statute expressly prohibits Wal-Mart from taking any action “setting or
attempting to influence the . . . office hours of an optometrist.”
Forte v. Wal-Mart Stores, Inc.
Court of Appeals Decision:
Could a court find that the Optometry Act should be limited to
situations involving control over an optometrist’s medical judgment?
Potentially.
Forte v. Wal-Mart Stores, Inc.
Court of Appeals Decision:
The optometrists are not entitled to the civil penalty award because
they did not seek or recover actual damages. But how if the
Optometry Act allows for a civil penalty of up to $1,000 per day?
Texas law defines “civil penalties” as a form of punitive damage. In
order to be able to recover punitive damages under Texas law, a
plaintiff must recover some amount of actual damages.
Forte v. Wal-Mart Stores, Inc.
Takeaway:
The court’s ruling on civil penalties is disappointing, but it is a learning
experience. If the Legislature will follow-through, there are ways to
modify the statute to allow optometrists to recover damages even if
the optometrist does not have any actual damages.
Forte v. Wal-Mart Stores, Inc.
Takeaway:
Even if you didn’t suffer any damages, you still have a claim for a
violation of Section 408. In this situation, you may be able to obtain an
injunction and recover your attorney’s fees.
Texas Insurance Code
Insurance Contract Prohibitions
• Chapter 1451’s prohibitions apply only if a “managed care plan”
provides vision or medical eye care services.
• A managed care plan is not required to provide vision or medical eye
care services.
Insurance Contract Prohibitions
• Texas Insurance Code § 1451.155
• Prohibits a “managed care plan” from limiting the fee an
optometrist can charge for a product or service that is not covered
by the insurance policy.
• Example: Vision plan provides insured a $130 allowance for
frames with a 20% discount on the balance. This is okay so
long as the managed care plan is not placing a cap on how
much the optometrist charges for the frames.
Insurance Contract Prohibitions
• Texas Insurance Code § 1451.155
• Also prohibits managed care plan from requiring the optometrist
to discount products or services not covered by the insurance
policy.
• Example: Vision plan allows covers one eye exam every 12
months, but requires the optometrist to discount any
additional eye exams during the 12-month period by 50%. This
violates the statute.
Insurance Contract Prohibitions
• Texas Insurance Code § 1451.153
• If a “managed care plan” provides vision or medical eye care services, the
HMO/PPO is prohibited from excluding an optometrist as a participating plan
practitioner because the optometrist does not have medical staff privileges at
a hospital.
• Also prohibits the HMO/PPO from excluding an optometrist because the
optometrist’s services could be provided by an ophthalmologist or other
health care practitioner.
Insurance Contract Prohibitions
• These prohibitions only apply to insurance contracts entered into
after January 1, 2014.
What is a “Managed Care Plan”
• “a plan under which a health maintenance organization, preferred
provider benefit plan issuer, or other organization provides or
arranges for health care benefits to plan participants and requires or
encourages plan participants to use health care practitioners the plan
designates.
Do Sections 1451.153 and 1451.155 Apply to
Medicaid Managed Care Organizations?
• Possibly
• Definition of “managed care plan” is not limited to HMOs and PPOs.
• An MMCO arranges for health care benefits for its insureds and
requires or encourages insureds to use certain health care
practitioners