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Torts No. 01-0841, 6/19/2003. Click here for the full text of this decision FACTS: In this medical-malpractice case, the court decides: 1. whether the grace period contemplated by Texas Revised Civil Statutes article 4590i (Medical Liability and Insurance Improvement Act �13.01(g)), applies to inadequate, but timely filed, expert reports; 2. the standard of review for a trial court’s ruling on a �13.01(g) grace period; and 3. the circumstances under which a mistake of law will negate a finding of intentional conduct or conscious indifference under �13.01(g). HOLDING: Reversed and dismissed with prejudice. The court holds that the �13.01(g) grace period is available to cure timely filed but inadequate reports and that a trial court’s ruling on a request for such a grace period is reviewed under an abuse of discretion standard. The court also holds that, while some mistakes of law may negate a finding of intentional conduct or conscious indifference, the trial court did not abuse its discretion in denying the request for a �13.01(g) grace period in this case because the failure to file an adequate expert report was not the result of such a mistake. If a party fails to file any expert report at all, it has “failed to comply with a deadline established by subsection (d)” and would be entitled to seek the �13.01(g) grace period. The court sees no logical basis, therefore, for denying the same opportunity to a party who has filed a report that does not satisfy the statutory requirements. Such a party has also “failed to comply” with a subsection (d) deadline because, as recognized in American Transitional Care Centers of Texas Inc. v. Palacios, 46 S.W.3d 873 (Tex. 2001), an expert report that is not a good-faith effort to comply with the statutory requirements will not save the case from dismissal. Moreover, failure to make the grace period available to parties who have timely filed inadequate reports would provide a perverse incentive by rewarding parties who do nothing and punishing those who attempt to comply with the statute but fail. The court does not believe the Legislature intended such a result. The statutory text supports this conclusion. Subsection (e) provides that, if a claimant fails “to comply with Subsection (d),” the court must dismiss the case. Thus, if a claimant files an inadequate expert report, subsection (e) requires dismissal of the case. If a claimant’s inadequate report constitutes a failure to comply with subsection (d), then that same action should be deemed a “fail[ure] to comply with a deadline established by Subsection (d),” entitling the claimant to seek a grace period under �13.01(g). Whitworth v. Blumenthal, 59 S.W.3d 393 (Tex. App.-Dallas 2001, pet. dism’d by agr.). Thus, the court holds that a party who files a timely but inadequate expert report may seek relief under the grace period provisions of �13.01(g). Like �13.01(e), �13.01(g) vests the trial court with discretion; a claimant is entitled to a grace period only if “after hearing, the court finds that the failure of the claimant or the claimant’s attorney was not intentional or the result of conscious indifference but was the result of an accident or mistake.” Similarly, because �13.01(g) applies only if a party has failed to comply with a deadline established by subsection (d), the failure to grant a grace period will result in the dismissal of the case pursuant to �13.01(e), a sanction which, as noted in Palacios, is typically reviewed under an abuse of discretion standard. The court notes that the language of �13.01(g) mirrors the standard for setting aside default judgments, also reviewed under an abuse of discretion standard. The court holds that a �13.01(g) grace period determination is reviewed under an abuse of discretion standard. This decision comports with lower court decisions, some of which erroneously cited Palaciosfor this proposition. Some courts have held that, under �13.01(g), an accident or mistake must be “characterized by a person’s inadequate knowledge of the facts or an unexpected happening that precludes compliance with the statute.” Nguyen v. Kim, 3 S.W.3d 146 (Tex. App. – Houston [14th Dist.] 1999, no pet.). While this standard has some facial appeal, it fails to take into account the holding in Bank One, Texas, N.A. v. Moody, 830 S.W.2d 81 (Tex. 1992), that some mistakes of law are sufficient to negate conscious indifference. Accordingly, because this rule departs from this court’s precedent, the court does not adopt it. Instead, the court concludes that some mistakes of law may negate a finding of intentional conduct or conscious indifference, entitling the claimant to a grace period under �13.01(g). Consistent with those cases, however, not every act of a defendant that could be characterized as a mistake of law is a sufficient excuse. Were that not the case, a party could, in any case, claim a mistake of law and be entitled to relief. This is contrary to the holding in Bank Oneand would frustrate article 4590i’s express purpose. A party who files suit on claims subject to article 4590i is charged with knowledge of the statute and its requirements. In this case, the expert reports failed to address two of the three statutory requirements: the standard of care and the manner in which the standard was breached. The attorney’s testimony that he “believe[d]” the reports complied with the statute – in light of the clear statutory requirements to the contrary – does not establish a sufficient excuse necessary to support a finding that a party made a mistake of law. Instead, the court holds that, when a claimant files a report that omits one or more of �13.01(r)(6)’s required elements, a purportedly mistaken belief that the report complied with the statute does not negate a finding of “ intentional or conscious indifference.” Accordingly, such a mistake is not a mistake of law that entitles a claimant to a �13.01(g) grace period. Dismissal was appropriate and did not violate the due process clause, even in the absence of a notice of noncompliance prior to the motion to dismiss. OPINION: Jefferson, delivered the opinion of the court.

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