Case 4:12-cv-00037-ALM Document 207 Filed 11/30/15 Page 1 of 26 PageID #: 3803
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`United States District Court
`EASTERN DISTRICT OF TEXAS
`SHERMAN DIVISION
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`CASE NO. 4:12-CV-37/4:15cv105
`Judge Mazzant
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`§
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`FRISCO MEDICAL CENTER, L.L.P.
`d/b/a BAYLOR MEDICAL CENTER
`AT FRISCO
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`V.
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`CYNTHIA A. BLEDSOE and
`MICHAEL R. BLEDSOE
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`MEMORANDUM OPINION
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`Pending before the Court is Plaintiff’s Motion for Summary Judgment (Dkt. #190). Having
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`considered the motion, and the lack of response thereto, the Court finds that the motion should be
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`granted.
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`BACKGROUND
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`Plaintiff Frisco Medical Center, L.L.P. d/b/a Baylor Medical Center at Frisco (“Baylor
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`Frisco”) is a hospital that provides a broad range of surgical procedures and health care for residents
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`of North Texas. As part of its delivery of quality health care, as a health care facility, Baylor Frisco
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`is subject to the Health Insurance Portability and Accountability Act (“HIPAA”), and must enact
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`safeguards to ensure that protected health information pertaining to individuals or patient-identifying
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`information that is protected from disclosure by HIPAA is not disclosed or disseminated. Baylor
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`Frisco also has a peer review committee that conducts peer review activities, which are privileged
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`and confidential. Baylor Frisco has developed, compiled, and maintained a substantial amount of
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`non-public, patient health information, as well as confidential and proprietary information and trade
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`secrets, including, without limitation, information relating to its delivery of patient care, marketing,
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`safety practices, and strategic planning.
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`Baylor Frisco actively seeks to maintain the confidentiality of such information by requiring
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`employees to agree to and execute confidentiality agreements, pursuant to which its employees agree
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`to maintain the confidentiality of Baylor Frisco’s confidential information and to refrain from
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`disseminating such information.
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`Defendant Cynthia A. Bledsoe (“Ms. Bledsoe”) is a registered nurse who was employed by
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`Baylor Frisco in various capacities from 2002 to November 2011. On or about September 1, 2011,
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`she was promoted from Sr. Vice President, Operations, to Chief Operating Officer (“COO”) of
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`Baylor Frisco. On or about August 7, 2002, Ms. Bledsoe signed a Confidentiality and Security
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`Agreement, pursuant to which she agreed as follows:
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`I understand that Frisco Medical Center (the “Hospital”)…must assure the confidentiality of
`its human resources, payroll, fiscal, research, internal reporting, strategic planning,
`communications, computer systems and management information (collectively, with patient
`identifiable health information, “Confidential Information”).
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`In the course of my employment/assignment at the Hospital, I understand that I may come
`into possession of this type of Confidential Information. I will access and use this
`information only when it is necessary to perform my job related duties in accordance with
`the Hospital’s Privacy and Security Policies. I further understand that I must sign and comply
`with this Agreement in order to obtain authorization for access to Confidential Information.
`. . .
`6. I will not make any unauthorized transmissions, inquiries, modifications or purgings of
`Confidential Information.
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`Ms. Bledsoe also signed a “Receipt and Acknowledgment of Frisco Medical Center
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`Employee Handbook” (the “Acknowledgment of Employee Handbook”), pursuant to which Ms.
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`Bledsoe represented that she understood she would be provided with confidential information that
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`must not be used outside of the necessary course of business. The Employee Handbook also states,
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`“[n]o one is permitted to remove or make copies of any Baylor Medical Center at Frisco records,
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`reports or documents without prior management approval.”
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`In her various positions with Baylor Frisco, including COO, Ms. Bledsoe had access to
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`non-public, confidential and proprietary information, trade secrets, and patient health care
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`information, subject to the limitations set forth in the Confidentiality and Security Agreement and
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`Acknowledgment of Employee Handbook signed by Ms. Bledsoe, both of which delineated that such
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`access was permitted only for job-related duties or in the necessary course of business and prohibited
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`removal or copying of materials without approval. Ms. Bledsoe understood Baylor Frisco
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`endeavored to protect its confidential information, and that as COO, she had responsibilities to
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`ensure that Baylor Frisco met its responsibilities to safeguard the privacy of patient health
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`information, as well as other confidential information.
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`Ms. Bledsoe resigned from Baylor Frisco on or about November 1, 2011. Ms. Bledsoe
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`resigned from Baylor Frisco to accept a position with Forest Park. Ms. Bledsoe received a written
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`employment offer from Forest Park on October 21, 2011, after receiving an oral offer on October
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`18, 2011. She accepted the offer on October 23, 2011. She believed that she might be asked to leave
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`Baylor Frisco upon tendering her resignation.
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`Michael R. Bledsoe (“Mr. Bledsoe) was employed by Baylor Frisco for approximately nine
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`years, and most recently served as the Information Systems Administrator for Baylor Frisco. On or
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`about August 26, 2002, Mr. Bledsoe signed a Confidentiality and Security Agreement which
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`contained the same definition of “Confidential Information” as the Confidentiality and Security
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`Agreement signed by Ms. Bledsoe.
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`On June 23, 2006, and on December 16, 2010, Mr. Bledsoe signed acknowledgments that
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`he received Baylor Frisco’s Employee Handbook, pursuant to which Mr. Bledsoe agreed that he
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`understood he would be provided with confidential information that must not be used outside of the
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`necessary course of business. As Information Systems Administrator, Mr. Bledsoe had
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`administrative access to all network systems of Baylor Frisco, and therefore had the ability to access
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`non-public, confidential and proprietary information, and trade secrets, subject to the limitations set
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`forth in the Confidentiality and Security Agreement and Acknowledgments of Employee Handbook
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`signed by Mr. Bledsoe, all of which delineated that such access was permitted only for job-related
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`duties or in the necessary course of business and prohibited removal or copying of materials without
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`approval. On or about December 13, 2011, Mr. Bledsoe tendered a letter of resignation stating that
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`his last day of employment would be December 26, 2011.
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`After tendering her resignation, Ms. Bledsoe contacted Margaret Garcia, Baylor Frisco’s
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`Manager of Human Resources and, in a conversation about her departure, Ms. Bledsoe made a
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`reference that “…she knew where too many bodies were buried.” Upon learning about Ms.
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`Bledsoe’s comment, Baylor Frisco retained Hewlett-Packard (“HP”) IT Security Investigations to
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`conduct a forensic investigation of the computer equipment of Ms. Bledsoe and Mr. Bledsoe
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`(collectively, “Bledsoe Defendants”). HP IT Security Investigations conducted its investigation and
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`issued a report reflecting its findings and conclusions on January 6, 2012 (the “HP Report”).
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`The HP Report provides a detailed description of the investigation, which included an
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`examination of the desktop system assigned to and utilized by Ms. Bledsoe while she was employed
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`with Baylor Frisco, as well as the examination of two laptop computers and an Apple iPad assigned
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`to and utilized by Mr. Bledsoe while he was employed by Baylor Frisco. The investigation also
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`included the examination and analysis of the network user home drives stored on Baylor
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`Friscoservers for both Ms. Bledsoe and Mr. Bledsoe, as well as the Outlook Exchange accounts for
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`both individuals, all of which were offloaded and provided to HP IT Security Investigations for
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`Case 4:12-cv-00037-ALM Document 207 Filed 11/30/15 Page 5 of 26 PageID #: 3807
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`examination and analysis.
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`The investigation revealed that both Ms. Bledsoe and Mr. Bledsoe utilized “Dropbox,” a
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`web-based file hosting service that uses “cloud” storage to enable users to store and share files with
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`others across the Internet using file synchronization. When files are uploaded to Dropbox by a user,
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`they automatically “sync” with another computer selected by the user, meaning that the files are
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`transferred from one computer to another.
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`The investigation revealed that Ms. Bledsoe uploaded numerous folders and/or files
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`containing statutorily protected patient health care information, privileged peer review materials, and
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`highly confidential and proprietary information and trade secrets belonging to Baylor Frisco from
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`her assigned Baylor Frisco computer to her Dropbox account from the period of October 25, 2011,
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`through October 31, 2011.
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`A review of Ms. Bledsoe’s “Home” drive contained within the Baylor Frisco computer
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`network revealed that the file “Pt info.pdf” was located within the folder/file structure
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`“Dropbox\Medical Staff\Peer Review\PR Letters\PR086.” It appears that Ms. Bledsoe uploaded the
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`file “Pt info.pdf” to Dropbox when she uploaded the folder “Dropbox\Medical Staff\Peer Review\PR
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`Letters.” Sharon Kucyk, the HP forensic analyst who conducted the investigation, concluded that
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`this file and other documents within the folder contained confidential patient information.
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`Upon review of these folders and/or files, Baylor Frisco determined that they contained
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`protected confidential patient information, peer review materials, confidential and proprietary
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`business information and trade secrets of Baylor Frisco. Baylor Frisco also concluded that the files
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`named “Pt info.pdf” and “SKMBT_C35311103110390.PDF” contain protected health information,
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`including the name of the patient, address, telephone number, and clinical information. The above
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`folder and files that have “Medical Staff/Peer Review” as part of the folder or file name contain
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`information relating to reviews conducted by the Baylor Frisco peer review committee, which is
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`privileged and confidential. One file includes Baylor Frisco’s strategic business plan data, which
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`is confidential. The above files also included copyrighted material such as the file named “Just
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`Culture Training\Baylor_Frisco - Continuing the Just Culture Journey_Print.ppt.” The information
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`in this file is subject to the terms of “Safe Choices End User License Agreement” between Baylor
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`Frisco and Outcome Engineering, LLC, and Baylor Frisco paid in excess of $10,000 to obtain this
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`license and has invested substantial additional funds associated with training and implementation
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`of this program.
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`The HP Report also indicated that Mr. Bledsoe also utilized Dropbox to upload files to his
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`personal Dropbox account. The investigation revealed that Mr. Bledsoe “wiped clean” and reset the
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`Apple iPad assigned to him for use at Baylor Frisco. Mr. Bledsoe also impeded the investigation by
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`modifying permissions that were non-standard to Baylor Frisco’s policies and procedures. For
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`example, Mr. Bledsoe admitted in his deposition to “wiping” the Apple iPad2 clean in order to
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`prevent Baylor Frisco from viewing its contents.
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`The investigation established that Ms. Bledsoe uploaded Baylor Frisco’s confidential and
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`proprietary information, trade secrets, peer review materials, and statutorily protected patient health
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`information to her personal Dropbox account immediately prior to submitting her resignation with
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`Baylor Frisco. These actions were in direct violation of the terms of her Confidentiality and Security
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`Agreement and the agreements contained in her Acknowledgment of Employee Handbook.
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`After HP issued its report, Baylor Frisco retained Navigant Consulting (PI) LLC (“Navigant”)
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`to conduct a thorough forensic investigation of the Baylor Frisco-issued computer equipment of
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`Case 4:12-cv-00037-ALM Document 207 Filed 11/30/15 Page 7 of 26 PageID #: 3809
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`Cindy Bledsoe and Mike Bledsoe. Navigant conducted an investigation and issued a report reflecting
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`its findings and conclusions on March 28, 2014 (the “Initial Navigant Report”). On April 22, 2014,
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`Navigant issued a supplemental report reflecting additional findings and conclusions (the
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`“Supplemental Navigant Report,” together with the Initial Navigant Report, the “Navigant Reports”).
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`Navigant conducted a forensic investigation of four computer hard drive images owned by
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`Baylor Frisco and formerly assigned to the Bledsoe Defendants, forensic images of two USB thumb
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`drives from Alan Willis, the contents of two network home directories of “shared drives” assigned
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`to Cindy Bledsoe and Mike Bledsoe, and an iPad from Mr. Bledsoe.
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`Navigant’s investigation of the desktop computer system assigned to and utilized by Ms.
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`Bledsoe revealed that Ms. Bledsoe installed Dropbox on her computer on October 21, 2011,
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`approximately ten days before she resigned from Baylor Frisco and after she had accepted
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`employment with Forest Park. The investigation further revealed that Dropbox was uninstalled from
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`Ms. Bledsoe’s computer on October 31, 2011, one day before she tendered her letter of resignation
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`to Baylor Frisco.
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`Ms. Bledsoe’s computer was configured to sync her network home folder (the “H” drive
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`residing on Baylor Frisco’s network) with Dropbox, meaning that the files and folders within her
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`network home folder were transferred or uploaded to Dropbox. Navigant’s analysis of the contents
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`of Ms. Bledsoe’s Dropbox folder on her “H:” drive (which were synced to her Dropbox account)
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`revealed folders containing Baylor Frisco’s confidential information and data were transferred to
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`Dropbox by Ms. Bledsoe. Within these folders, Navigant was able to determine that Ms. Bledsoe
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`synced, at a minimum, the following files between her Baylor Frisco computer and her home
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`computer using Dropbox:
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`Case 4:12-cv-00037-ALM Document 207 Filed 11/30/15 Page 8 of 26 PageID #: 3810
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`the Just Culture
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`H:\Dropbox\Business Planning\2012 Business Planning\Business Plan (cid:129)]2012
`Strategies_Packet.pdf
`H:\Dropbox\cbledsoe.xlsx
`H:\Dropbox\Just Culture Training\A Just Culture.pptm
`H:\Dropbox\Just Culture Training\Baylor_Frisco (cid:129)]Continuing
`Journey_Print.pptx
`H:\Dropbox\Just Culture Training\Creating a Just Culture.ppt
`H:\Dropbox\Just Culture Training\Creating a Just Culture_2010.pptx
`H:\Dropbox\Medical Staff\Peer Review\[redacted]\ [redacted]_Oct 2011 MSPRC.pdf
`H:\Dropbox\Medical Staff\Peer Review\[redacted]\ [redacted]_Oct 31 2011 letter.doc
`H:\Dropbox\Medical Staff\Peer Review\[redacted]\Message from KMBT_C353.msg
`H:\Dropbox\Medical Staff\Peer Review\PR Letters\Herzog Dec 9 2008.doc
`H:\Dropbox\Mom.s folder\3stooges.jpg
`H:\Dropbox\Mom.s folder\Bo05.jpg H:\Dropbox\Mom.s folder\brownie man.JPG
`H:\Dropbox\Mom.s folder\Copy of picture 050.jpg H:\Dropbox\Mom.s folder\Field trip
`014.jpg
`H:\Dropbox\Mom.s folder\Nick 4.JPG H:\Dropbox\Mom.s folder\Nick at the Creek 008.jpg
`H:\Dropbox\Mom.s folder\Nick.s B(cid:129)]Day party 044.jpg
`H:\Dropbox\Mom.s folder\Reed_Navy Man.jpg
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`Navigant also concluded that Ms. Bledsoe had accessed several files and folders
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`demonstrating knowledge on Ms. Bledsoe’s part that such files were in her Dropbox account.
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`Specifically, Exhibit 4 to the Supplemental Navigant Report revealed 358 individual files synced to
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`Ms. Bledsoe’s home computer from her Dropbox. Many of these folders and files that Ms. Bledsoe
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`appropriated (notably, numbers 54 through 83 in Exhibit 2 of the Supplemental Navigant Report)
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`contain or consist of documents containing protected health information—including the names of
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`and clinical information relating to patients, privileged and confidential peer review materials,
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`strategic business plans, copyrighted material for which Baylor Frisco paid licensing fees, proprietary
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`program information specifically developed by Baylor Frisco, and sensitive financial information.
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`For example, the “Sr Leadership” folder contains numerous Monthly Operations Reports
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`(“MORs”), which highlights achievements and opportunities for improvements in various areas such
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`as customer service, technology, community involvement, recruitment/retention, clinical excellence,
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`Case 4:12-cv-00037-ALM Document 207 Filed 11/30/15 Page 9 of 26 PageID #: 3811
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`quality management, and finance/growth. The MORs also contain confidential and sensitive
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`financial information. The “Sr Leadership” folder also contains documents relating to a Life Safety
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`Action Plan developed by Baylor Frisco, a 2011 Business Action Plan, emails, documents relating
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`to Incentive Planning that divulge information about the financial performance of Baylor Frisco, a
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`document that identifies occurrences at Baylor Frisco and risks associated with those occurrences,
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`a document relating to Baylor Frisco’s planning of a Community Health Fair (which Baylor Frisco
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`developed and implemented over a ten-year period), documents relating to a Resource Utilization
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`Project being developed by Baylor Frisco, documents relating to drug screening of Baylor Frisco
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`employees, a salary grid and compensation information regarding Baylor Frisco employees for which
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`Baylor Frisco paid consultants to develop, and documents relating to exclusive programs and
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`curriculum that Baylor Frisco paid consultant Jon Stigliano to develop and implement. In total, the
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`“Sr Leadership” folder contains over 500 files/documents representing data and information
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`compiled by Baylor Frisco that was only accessible by senior executives.
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`The “Medical Staff\Peer Review” folder contains hundreds of documents pertaining to Baylor
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`Frisco’s peer review activities, which are confidential and privileged pursuant to state and federal
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`law. Such documents include multiple Medical Staff Reappointment Profiles, which provide
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`information about doctors such as number of patient contacts, clinical performance reviews, and
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`evaluations, and conclude with a recommendation of whether the doctor should be reappointed to
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`his department, and communications with physicians regarding peer review activities.
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`The “Employee Issues” folder contains over 700 documents, including documents regarding
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`Baylor Frisco’s Employee Performance Improvement Plan, which is a program developed by Baylor
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`Frisco and used to evaluate employees, set expectations for employees, and outline actions to take
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`to facilitate an employee’s success. The “Employee Issues” folder also contains a master list of
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`physicians for peer review purposes, Medical Executive Meeting minutes, as well as highly
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`confidential and sensitive documents regarding resignations, terminations, behavior concerns, and
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`conflicts between employees.
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`The information and trade secrets contained in the folders and/or files, including but not
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`limited to its business methods and strategies, marketing approach, processes and procedures, and
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`proprietary programs are not known outside of Baylor Frisco, nor are they available to the general
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`public (access to Baylor Frisco’s computer network is password-protected). Baylor Frisco takes
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`steps to ensure that this information is and remains confidential and limits access to the
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`above-described information and trade secrets within the facility itself. Baylor Frisco goes to great
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`lengths to protect such confidential and proprietary information and trade secrets, including requiring
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`the limited number of executive-level employees with access to Baylor Frisco’s trade secrets to sign
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`Confidentiality and Security Agreements and Acknowledgments of Employee Handbooks, as
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`described above. Further, Baylor Frisco’s Information Technology department tailors an employee’s
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`access to documents and data available on Baylor Frisco’s computer network based upon his or her
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`job description and seniority. Baylor Frisco vigorously protects its confidential and proprietary
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`information and trade secrets because such information and trade secrets are extremely valuable to
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`Baylor Frisco, and equally valuable to its competitors such as Forest Park. Baylor Frisco has
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`expended substantial amounts of time, effort, and money in developing its confidential and
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`proprietary information and trade secrets, which cannot be easily obtained or duplicated by
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`individuals both within and outside of Baylor Frisco due to Baylor Frisco’s security measures.
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`Shortly before uninstalling Dropbox, Ms. Bledsoe also connected two external USB storage
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`devices to her computer. USB storage decides are a common method to transfers files and folders
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`between computers. Navigant’s investigation also revealed that Mr. Bledsoe installed Dropbox on
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`one of his Baylor Frisco computers on August 2, 2011, and that this computer was configured to sync
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`the computer’s home folder to Dropbox. Navigant also confirmed that the Apple iPad2 assigned to
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`Mr. Bledsoe contained no retrievable user data, and Navigant determined that a user had run a
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`program to wipe the device clean so as to render unrecoverable any information previously stored.
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`On July 31, 2012, the Court appointed Dennis Williams (“Mr. Williams”), a partner with
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`Pathway Forensics LLC (“Pathway”), to conduct a forensic investigation of the Bledsoe Defendants’
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`personal computer equipment, electronic storage devices, and smart phones. Mr. Williams and
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`Pathway confirmed many of the findings and conclusions reached by Ms. Kucyk, including that
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`Baylor Frisco data had been transferred to Ms. Bledsoe’s Dropbox account. Mr. Williams testified
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`at his deposition that adding or transferring files to a Dropbox account is an intentional action.
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`Mr. Williams and Pathway conducted an investigation, and Mr. Williams issued his Third
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`Party Forensic Examiner Report on October 16, 2012 (the “Williams Report”). The “Executive
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`Summary” of the Williams Report states:
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`The examination found files, folders and fragments which are responsive to files and folders
`listed on the Plaintiff’s Second Amended Complaint…A Dropbox folder was created on the
`Bledsoe desktop computer on November 2, 2011. Dropbox is an application which provides
`Internet storage of files and allows files to be transferred (synchronized) between computers.
`On the same day, the Bledsoe desktop computer accessed the Baylor Medical Center Frisco
`(BMFC) [sic] computer system. Then the Desktop computer accessed www.Dropbox.com,
`an online data storage website. Shortly thereafter and on the same day, files and folders were
`deleted from the desktop Dropbox folder. Numerous responsive file fragments were
`recovered from the unallocated space and file slack on the second hard drive in the Bledsoe
`desktop computer. These files appear to be associated with BMCF. A report showing the
`carved responsive files is attached to this report as Exhibit B.
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`Exhibit B to the Williams Report consists of a fourteen-page spreadsheet identifying the files
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`associated with Baylor Frisco. With regard to this portion of his report, Mr. Williams testified:
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`Q: In light of the allegations in the complaint that you reviewed, you felt like these events
`described in your executive summary were significant, correct?
`A. Yes, sir.
`Mr. Hamilton: Objection, form.
`Q. And it would also be accurate to say that in your experience with the FBI and with white
`collar crime, you found those events to be suspicious, as well?
`A. Yes, sir.
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`As part of the investigation, Mr. Williams and Pathway conducted “text carving searches,”
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`which involves searching unallocated space for deleted information on a second hard drive
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`associated with the Bledsoe Defendants’ desktop computer. These searches revealed “95 unique
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`files” and 203 “responsive text carve files,” and Mr. Williams concluded that “a large number of
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`these carved files appear to be BMCF files. As stated in the Williams Report, non-privileged
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`responsive files were produced to the parties on September 19, 2012. The documents included a
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`spreadsheet of peer review activity from November 2005, form agendas for meetings of Baylor
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`Frisco’s Medical Executive Committee and Medical Staff Peer Review Committee, a memorandum
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`from Ms. Bledsoe to Mr. Keaton regarding the Medical Staff Peer Review Committee dated
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`December 27, 2010, a document relating to the BMCF Senior Management Incentive Program 2010,
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`and an Orientation Outline for “Surgical Fellow/Resident.”
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`Mr. Williams and Pathway conducted a search of the “carved files for the file path
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`fragments” in order to produce a list of Dropbox file path fragments, which contained
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`“approximately 728 unique file paths, with over 460 file paths with the base path of ‘/incentive
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`planning/medical staff/peer review’” and “approximately 30 unique paths with the base path of
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`“/incentive planning/just culture training/.” Because the file path for the files included a reference
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`to Dropbox, Mr. Williams concluded the files were transferred to the Bledsoe Defendants’ computer
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`Case 4:12-cv-00037-ALM Document 207 Filed 11/30/15 Page 13 of 26 PageID #: 3815
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`via Dropbox. Mr. Williams provided a list of the Unallocated Dropbox Path Fragments to the
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`parties, which is also attached to the Williams Report as Exhibit D. The Path Fragments existed on
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`the Bledsoe Defendants’ desktop computer (via Dropbox).
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`The “Conclusion” of the Williams Report states:
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`An examination of the forensic images provided indicated the usage of the Dropbox
`application on the Bledsoe devices. On November 2, 2011, at 11:54 AM, the Bledsoe
`Desktop computer accessed the Dropbox website. A few minutes later, a Dropbox folder was
`created on the computer and it appears the Dropbox application was installed. Later that day
`the Bledsoe desktop accessed the BMCF server on several occasions . . . . Carving and index
`searching recovered a large number of files and fragments from Bledsoe desktop computer
`which appear to be BCMF files.
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`At his deposition, Mr. Williams testified his investigation confirmed that Ms. Bledsoe
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`transferred data from Baylor Frisco via Dropbox to her personal computer.
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`Following the issuance of the expert reports described above, Baylor Frisco deposed the
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`Bledsoe Defendants. Ms. Bledsoe testified that beginning October 21, 2011, she transmitted folders
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`and files from her computer drive at Baylor Frisco to the Dropbox application she had installed on
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`her Baylor Frisco computer and that this Dropbox application synced with a folder on her home
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`computer to which she alone had access. This data included, among other items, peer review
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`information, Baylor Frisco’s monthly operating reports, employee information, and patient medical
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`records. Ms. Bledsoe further testified that she was aware on approximately November 2–3, 2011,
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`that she had downloaded such files to her home computer from Dropbox. In his deposition, Mr.
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`Bledsoe admitted “wiping” the Apple iPad2 clean so as to prevent Baylor Frisco from viewing its
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`contents after Mr. Keaton requested the password for the device.
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`Baylor Frisco paid Navigant the total sum of $120,764.37 for Navigant’s forensic
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`investigation. Baylor Frisco paid Pathway Forensics the total sum of $98,148.72 for Pathway
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`Forensic’s forensic investigation. Baylor Frisco has incurred approximately $1,193,671.44 for
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`attorneys’ fees and expenses retaining the undersigned counsel due to the Defendants’ actions.
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`On January 23, 2012, Plaintiff filed suit against the Bledsoe Defendants in the United States
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`District Court for the Eastern District of Texas in this case, styled Frisco Medical Center, L.L.P.
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`d/b/a Baylor Medical Center at Frisco v. Bledsoe et al., Civil Action No. 4:12-cv-00037 (the “Fraud
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`Lawsuit”). The Fraud Lawsuit was set to be tried before a jury on September 15, 2014, and the
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`parties had submitted their pre-trial disclosures. On August 22, 2014, on the eve of trial, the Bledsoe
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`Defendants filed Suggestions of Bankruptcy. On August 25, 2014, this Court stayed the Fraud
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`Lawsuit pending further order of the Court.
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`On November 25, 2014, Baylor Frisco initiated an adversary proceeding styled Frisco
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`Medical Center, L.L.P. d/b/a Baylor Medical Center at Frisco v. Bledsoe et al. (In re Bledsoe), Adv.
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`No. 14-04102 (Bankr. E.D. Tex. filed Nov. 25, 2014) (the “Adversary Proceeding”) and filed its
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`Original Complaint of Frisco Medical Center, L.L.P. to Determine Dischargeability of a Debt
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`Pursuant to 11 U.S.C. § 523 (the “Adversary Complaint”). In the Adversary Complaint, Baylor
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`Frisco sought to have its claims against Defendants, along with its attorneys’ fees, costs, and
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`expenses incurred prosecuting the Fraud Lawsuit and the Adversary Complaint, declared
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`non-dischargeable in the Bankruptcy Case pursuant to 11 U.S.C. §§ 523(a)(4) and (6). On February
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`9, 2015, U.S. Bankruptcy Judge Brenda T. Rhoades entered a Report and Recommendation,
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`recommending that the District Court sua sponte withdraw the reference of the Adversary
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`Proceeding. On March 11, 2015, U.S. District Judge Marcia A. Crone granted the Bankruptcy
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`Court’s Report and Recommendation and entered an order withdrawing the Adversary Proceeding
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`to the District Court and transferring the case to this Court.
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`Case 4:12-cv-00037-ALM Document 207 Filed 11/30/15 Page 15 of 26 PageID #: 3817
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`On May 13, 2015, Baylor Frisco filed its Motion for Status Conference, wherein it asked the
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`Court to consolidate the Fraud Lawsuit and the Adversary Proceeding. The Court held a status
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`conference on June 5, 2015. The Court entered its Order consolidating the Fraud Lawsuit and the
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`Adversary Proceeding on June 11, 2015. The Court also issued an Amended Scheduling Order,
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`which sets the final pretrial conference for December 9, 2015.
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`On August 10, 2015, Plaintiff filed its motion for summary judgment (Dkt. #190). After no
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`response was filed, the Court gave Defendants until September 17, 2015, to file a response to the
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`motion for summary judgment (Dkt. #200). No response was filed.
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`LEGAL STANDARD
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`The purpose of summary judgment is to isolate and dispose of factually unsupported claims
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`or defenses. See Celotex Corp. v. Catrett, 477 U.S. 317, 327 (1986). Summary judgment is proper
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`if the pleadings, the discovery and disclosure materials on file, and any affidavits “[show] that there
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`is no genuine dispute as to any material fact and that the movant is entitled to judgment as a matter
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`of law.” FED. R. CIV. P. 56(a). A dispute about a material fact is genuine “if the evidence is such
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`that a reasonable jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby,
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`Inc., 477 U.S. 242, 248 (1986). The trial court must resolve all reasonable doubts in favor of the
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`party opposing the motion for summary judgment. Casey Enters., Inc. v. Am. Hardware Mut. Ins.
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`Co., 655 F.2d 598, 602 (5th Cir. 1981) (citations omitted). The substantive law identifies which
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`facts are material. Anderson, 477 U.S. at 248.
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`The party moving for summary judgment has the burden to show that there is no genuine
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`issue of material fact and that it is entitled to judgment as a matter of law. Id. at 247. If the movant
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`bears the burden of proof on a claim or defense on which it is moving for summary judgment, it must
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`Case 4:12-cv-00037-ALM Document 207 Filed 11/30/15 Page 16 of 26 PageID #: 3818
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`come forward with evidence that establishes “beyond peradventure all of the essential elements of
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`the claim or defense.” Fontenot v. Upjohn Co., 780 F.2d 1190, 1194 (5th Cir. 1986). Where the
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`nonmovant bears the burden of proof, the movant may discharge its burden by showing that there
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`is an absence of evidence to support the nonmovant’s case. Celotex, 477 U.S. at 325; Byers v. Dallas
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`Morning News, Inc., 209 F.3d 419, 424 (5th Cir. 2000). Once the movant has carried its burden, the
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`nonmovant must “respond to the motion for summary judgment by setting forth particular facts
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`indicating there is a genuine issue for trial.” Byers, 209 F.3d at 424 (citing Anderson, 477 U.S. at
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`248-49). The nonmovant must adduce affirmative evidence. Ande