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 AAPSS CLOSING BRIEF: REQUEST FOR JUDGMENT AND OPPOSITION TO DEFENDANTS RULE 52 MOTION

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 Bar No. 03420850 P.O. Box 1301 Houston, TX 77251 Phone: (713) 658-9323 Fax: (713) 658-9410

Attorneys for Plaintiff

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 Millers 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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TABLE OF AUTHORITIES
CASES Adickes v. S. H. Kress & Co., 398 U.S. 144 (1970) .......................................................................19 Assn 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 iii
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Walling v. Helmerich & Payne, Inc., 323 U.S. 37 (1944) .............................................................18 Walter v. Horseshoe Entmt, 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 AAPSs 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 Circuits decision in this case supports equitable relief. Assn 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

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 AAPSs 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 Kalafuts 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 5 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 shed 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 Kalafuts 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 Kalafuts 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 TMBs 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 Kalafuts 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 Kalafuts distinctive handwriting matched it. Kalafut admitted writing and sending it directly to the TMBs 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 TMBs 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. 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 Muntons 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 Kalafuts husband-partner Brandecker, and Crawford competed with Brandecker for the designated (Pl. Exh. 2, p.1, App. 95a,

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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 Crawfords 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) Crawfords 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 Crawfords patient, opened this investigation with false claims of wrongdoing by Crawford. (Pl. Exh. 4, App. 98a) This email from the TMBs 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. 98a99a) 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 Robinsons 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 Kalafuts office manager at the time of the first complaint about two patients against Crawford, testified compellingly that Crawford was a competitor of Kalafuts 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, Kalafuts 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:

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 declarants 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 thats 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 its obvious from the face of the complaint that this was a racist who filed it? A. Yes. That doesnt mean theyre 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. Isnt 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 doesnt 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 Im 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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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. Isnt that right? A. Yes, sir. (Tr. Oct. 1, at 101, App. 31a) A. Specific Example of Keith Millers 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. Isnt 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 Millers 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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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 TMBs 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 courts judgment against a constitutional retaliation claim because [a] decision to litigate was precisely the trigger for the citys 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.
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).
6

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1, at 40, App. 7a) Kalafut then sent the false denial to Muntons 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 TMBs 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 Chalifouxs license in Texas. (Tr. Oct. 2, at 94, App. 72a) Chalifoux publicly but fairly criticized the TMBs 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 Chalifouxs enormous detriment. (Tr. Oct. 1, at 54-57, App. 21a-24a). Kalafut admitted that she actually had no meaningful knowledge of Chalifouxs 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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Dr. Chalifoux: It sent chills throughout the entire state [of West Virginia]. Q. Did you lose a contract because of the newspaper article weve 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 isnt 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]hats 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

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. 17
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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, 20203 (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 schools policy, which had allowed students to give morning devotionals over the schools public address system, was mooted by the schools 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 Kalafuts 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 Entmt, 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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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. AAPSs 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 Kalafuts partnerhusband 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 AAPSs 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

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