                                        In The
                                   Court of Appeals
                          Seventh District of Texas at Amarillo

                                         No. 07-17-00135-CV


                        LEONARD MICHAEL HABERMAN, APPELLANT

                                                   V.

                        TEXAS MEDICAL BOARD, ET AL., APPELLEES

                              On Appeal from the 250th District Court
                                      Travis County, Texas1
              Trial Court No. D-1-GN-16-004988, Honorable Gisela D. Triana, Presiding

                                        September 25, 2018

                                 MEMORANDUM OPINION
                         Before CAMPBELL and PIRTLE and PARKER, JJ.


        This is an appeal of a contested case under the Texas Administrative Procedure

Act.2 Leonard Michael Haberman, appellant, filed an application with the Texas Medical

Board for a license to practice medicine. After the Board determined he was ineligible for



        1Originally appealed to the Third Court of Appeals, this case was transferred to this Court by the
Texas Supreme Court pursuant to its docket equalization efforts. See TEX. GOV’T CODE ANN. § 73.001
(West 2013). Should a conflict exist between precedent of the Third Court of Appeals and this Court on
any relevant issue, this appeal will be decided in accordance with the precedent of the transferor court.
TEX. R. APP. P. 41.3

        2   TEX. GOV’T CODE ANN. ch. 2001 (West Supp. 2017 and West 2016).
a license, Haberman filed suit for judicial review in the district court of Travis County. The

district court affirmed the Board’s order, and Haberman filed this appeal. We affirm.


                                        Background


       Haberman earned a bachelor’s degree in chemistry from New York University and

a doctoral degree in chemistry from the University of Minnesota. He also received a

master’s degree in business from the University of Texas. Following an eighteen-year

career at Shell Chemical and its affiliates, Haberman returned to school as a medical

student. He graduated from the Texas Tech University Health Sciences Center School

of Medicine in 2009. He then joined a general surgery residency program at Baylor

College of Medicine in Houston, but left the program after eight months. In 2011, he

entered a post-graduate medical education program in clinical and anatomic pathology in

Colorado Springs, Colorado. The program was accredited by the Accreditation Council

on Graduate Medical Education and sponsored by Catholic Health Initiative Colorado

d/b/a Centura Health—Penrose-St. Francis Health Services.


       Haberman completed the first two years of the program; however, he was placed

on academic probation for some of that time. Four months into his third year, Haberman

was dismissed from the residency program for lack of improvement.


       In 2014, Haberman applied to the Board for licensure. His application was referred

to the Board’s licensure committee for consideration. Based on Haberman’s dismissal

from the residency program, the committee determined that Haberman had been subject

to “disciplinary action” and was therefore ineligible for a license.




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       The Board adopted the committee’s recommendation. Haberman was advised of

his right to contest the decision at a hearing at the State Office of Administrative Hearings

(SOAH), which he did. Following the SOAH hearing, the administrative law judge (ALJ)

issued a proposal for decision which included factual findings and conclusions of law.

The ALJ determined that the Board had authority to deny Haberman’s application for a

medical license. The Board then issued a final order adopting the ALJ’s findings and

conclusions and determining Haberman ineligible for a Texas medical license. The Board

denied Haberman’s request for a rehearing and Haberman sought judicial review. The

trial court determined that the Board’s order was supported by substantial evidence and

affirmed it. Haberman filed this appeal, contending that his dismissal from the residency

program was not “disciplinary action,” and that he meets the requirements for licensure

in Texas.


                                          Analysis


Issue 1: Substantial Evidence


       In his first issue, Haberman argues that the Board’s final order is not supported by

substantial evidence.    When reviewing an agency decision under the “substantial

evidence” standard, a court “may not substitute its judgment for the judgment of the state

agency on the weight of the evidence on questions committed to agency discretion . . . .”

TEX. GOV’T CODE ANN. § 2001.174 (West. 2016). Whether the agency’s order satisfies

the substantial-evidence standard is a question of law. See Firemen’s & Policemen’s

Civil Serv. Comm’n v. Brinkmeyer, 662 S.W.2d 953, 956 (Tex. 1984).               Substantial

evidence review is essentially “a rational-basis test to determine, as a matter of law,



                                             3
whether an agency’s order finds reasonable support in the record.” Jenkins v. Crosby

Indep. Sch. Dist., 537 S.W.3d 142, 149 (Tex. App.—Austin 2017, no pet.). To meet the

substantial evidence standard, one must show “such relevant evidence as a reasonable

mind might accept as adequate to support a conclusion of fact.” CPS Energy v. Public

Util. Comm’n of Tex., 537 S.W.3d 157, 169 (Tex. App.—Austin 2017, pet. filed). We

presume that the Board’s order is supported by substantial evidence. Id.


       The Board’s decision was based on section 164.051 of the Medical Practice Act,

which provides that the Board may refuse to issue a license to practice medicine to

someone who:


       is disciplined by a licensed hospital or medical staff of a hospital, including
       removal, suspension, limitation of hospital privileges, or other disciplinary
       action, if the board finds that the action: (A) was based on unprofessional
       conduct or professional incompetence that was likely to harm the public;
       and (B) was appropriate and reasonably supported by evidence submitted
       to the board.


TEX. OCC. CODE ANN. § 164.051(a)(7) (West 2012). According to Haberman, he was not

subject to “disciplinary action”; was not disciplined by a licensed hospital or the medical

staff of one; did not face removal, suspension, or limitation of his hospital privileges; and

did not have action taken against him that was based on professional incompetence likely

to harm the public. We will address each of Haberman’s challenges in turn.


Disciplinary Action


       The Board concluded that Haberman’s dismissal from the residency program

constituted disciplinary action by a licensed hospital or medical staff of a hospital under

section 164.051(a)(7). Haberman asserts that substantial evidence does not support this


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finding.   Haberman contends that “disciplinary action” concerns behavior that the

institution deems unacceptable, and does not encompass action meant to regulate

academic matters.


       In the administrative hearing, Haberman testified that he was never disciplined

while in the postgraduate training program. According to Haberman, his probation and

dismissal from the program were based on academic issues. During cross-examination,

Haberman acknowledged that, other than being a resident, he did not have experience in

physician discipline.


       Dr. David Newton, the former director of the pathology residency program

Haberman attended, testified that he completed the Board’s form for verification of

Haberman’s postgraduate medical training.        One of the questions asked whether

Haberman had ever been “warned, censured, disciplined, [or] had admissions monitored

or privileges limited.” Newton answered “yes” in response to that question. He explained

that he answered affirmatively because Haberman had been placed on remediation, had

been placed on an individual performance improvement plan, and he was ultimately

recommended for termination from the program. He also answered “yes” in response to

the question asking whether Haberman had been placed on probation, asked to withdraw,

or reprimanded, stating that “probation and remediation are sort of similar,” and that

Haberman “had also been reprimanded on multiple occasions.” Newton testified that

Haberman’s performance in the residency program was not satisfactory; evaluations

indicated Haberman made errors and had difficulty performing bone marrow biopsies,

properly administering anesthesia, and arriving at an accurate diagnosis. Newton gave

Haberman the rating of “poor” on the question of professional ability.

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       On cross-examination, Newton agreed that academic probation and disciplinary

probation were different things. He stated that he was not referring to “aberrant behavior”

but to Haberman’s ability and his progression in the residency program. Newton also

agreed that Haberman “was doing fine in clinical pathology.”


       Monique Johnston, the Board’s licensure manager, testified that the Board’s

concerns about Haberman’s application for licensure were based on Haberman’s

competence during his training program, remediation during training, and his subsequent

dismissal from the program. She stated, “So the last period of his practice was in regards

to his competence, and there was disciplinary action. So that was of concern for the

Board Staff.” According to Johnston, disciplinary action “would attest to someone’s

clinical competence or their professional character, depending on what the issues were.”


       The testimony from Newton and Johnston indicates that “disciplinary action” may

encompass Haberman’s probation during and dismissal from the graduate program. We

conclude that substantial evidence supports the Board’s conclusion that Haberman’s

dismissal from the residency program constituted a disciplinary action within the meaning

of the statute.


Action by a Licensed Hospital


       Next, Haberman challenges whether his dismissal was an action “by a licensed

hospital.” Dr. Newton testified that the residency program Haberman attended is located

in a hospital, namely Penrose-St. Francis in Colorado Springs. He explained that the

hospital is the sponsoring institution for the program and pays the residents their salaries.

His pathology group is contracted to run the residency program and is reimbursed by the


                                             6
hospital.   Newton testified that his group recommended to the hospital’s graduate

education committee that Haberman be dismissed, and the hospital then dismissed

Haberman from the program.


       Haberman concedes in his brief that Colorado law, like Texas law, requires a

hospital to be licensed by the state. During the hearing, Haberman acknowledged that

he signed a resident employment agreement with an entity identified as “Catholic Health

Initiatives Colorado [which] is doing business as Centura Health, Penrose-St. Francis

Hospital, ‘the Hospital.’” The agreement recites that “the Hospital” includes the pathology

residency program which employed and educated Haberman. Haberman’s application

reflected that he obtained work experience during his pathology residency at “Penrose

Hospital.” Haberman also listed “Penrose Hospital” as the evaluating hospital/institution

on his form for verification of postgraduate training.


       We conclude that this is substantial evidence supporting the Board’s finding that

“Penrose-St. Francis is a hospital” and its conclusion that Haberman’s dismissal from the

residency program “constituted a disciplinary action by a licensed hospital or medical staff

of a hospital.”


Action by Medical Staff


       Haberman next challenges whether his dismissal was an action by a “medical staff

of a hospital.” Newton explained that his pathology group “can’t do anything regarding

termination of a resident, as they are hospital employees,” but that they could recommend

to the hospital’s graduate medical education committee that a resident be terminated.

The evidence showed that Haberman was employed by Penrose-St. Francis, and that the


                                              7
residency program was sponsored by and part of the hospital. Newton testified that

Haberman could not participate in the residency program without signing the resident

employment agreement with the hospital. Newton further testified that the members of

the graduate medical education committee who recommended that Haberman be

terminated were employees or medical staff of the hospital.


          We conclude that substantial evidence supports the Board’s conclusion that

Haberman’s dismissal constituted action by the “medical staff of a hospital.”


Removal, Suspension, or Limitation on Hospital Privileges


          Haberman next asserts that the action by the residency program “was not to

remove, suspend or limit” his hospital privileges. We note that not only did the Board not

make any such finding or conclusion, it was not required to do so. Under the plain

language of section 164.051, discipline includes “removal, suspension, [and] limitation of

hospital privileges,” but discipline is not limited to those actions. Because the Board made

no finding of fact or conclusion of law that Haberman’s hospital privileges were affected,

we find that Haberman’s complaint is without merit.


Based on Professional Incompetence Likely to Harm the Public


          In his final substantial-evidence challenge, Haberman argues that his dismissal

was not a disciplinary action based on professional incompetence likely to harm the

public.     Haberman maintains that none of the complained-of errors on which his

termination was based “related to the independent practice of medicine.” Essentially, he

contends that because his mistakes were made in the process of his graduate education,

they do not constitute “professional incompetence.”

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       Newton testified that the pathology staff had enough concerns about Haberman’s

errors that they provided direct supervision for him and reduced the volume of his gross

dissection work by about half. Newton stated that had Haberman not been closely

supervised, his errors could have been harmful to patients. Newton recounted several

instances of misdiagnosis by Haberman, which could have led to improper treatment or

even the “patient’s demise.”


       The Board found that Haberman “made several significant errors or omissions that

resulted in, or had the potential to result in, the misdiagnosis of cancers and other serious

infections in patients” and that such errors, if not caught by Haberman’s supervisors,

“could have seriously harmed patients.” The Board concluded that Haberman’s dismissal

“was based on professional incompetence that was likely to harm . . . the public.” We

conclude that the evidence demonstrates that Haberman lacked or failed to develop

certain professional skills or abilities; therefore, substantial evidence supports the Board’s

conclusion.


       Haberman’s first issue is overruled.


Issue 2: Statutory Authority


       In his second issue, Haberman claims that the Board’s final order exceeds the

statutory authority of the Board.     According to Haberman, the Board exceeded its

statutory authority when it found that the actions of the graduate medical program

constituted disciplinary action by a licensed hospital or medical staff of a hospital in

violation of section 164.051(a)(7).




                                              9
       A state agency has “only those powers expressly conferred upon it by the

Legislature.” Public Util. Comm’n v. City Public Serv. Bd., 53 S.W.3d 310, 316 (Tex.

2001). But “when the Legislature expressly confers a power on an agency, it also

impliedly intends that the agency have whatever powers are reasonably necessary to

fulfill its express functions or duties.” Id. An agency’s construction or interpretation of a

statute that it is charged with enforcing is entitled to serious consideration by reviewing

courts, so long as that construction is reasonable and does not contradict the plain

language of the statute. Employees Ret. Sys. v. Jones, 58 S.W.3d 148, 151 (Tex. App.—

Austin 2001, no pet.).


       Section 164.051(a)(7) gives the Board statutory authority to refuse to issue a

license to practice medicine to a person who “is disciplined by a licensed hospital or

medical staff of a hospital, including removal, suspension, limitation of hospital privileges,

or other disciplinary action.” The Board must determine that “the action was based on

unprofessional conduct or professional incompetence that was likely to harm the public;

and was appropriate and reasonably supported by evidence submitted to the board.” TEX.

OCC. CODE ANN. § 164.051(a)(7).


       The statute governing licensure invests the Board with discretion to decide whether

to issue a license to practice medicine to an individual based on conduct that violated

section 164.051. Haberman’s application was denied on grounds identified in the statute

and, as we have discussed above, the Board’s decision was supported by substantial

evidence. The Board did not exercise any power beyond its statutory grant of authority.




                                             10
       Because we conclude the Board did not exceed its statutory authority in declining

to issue Haberman a license based on section 164.051(a)(7), we overrule Haberman’s

second issue.


Issue 3: Arbitrary or Capricious


       In his third issue, Haberman contends that the Board’s final order is arbitrary or

capricious or characterized by abuse of discretion or a clearly unwarranted exercise of

discretion. “An agency’s decision is arbitrary or results from an abuse of discretion if the

agency: (1) failed to consider a factor the legislature directs it to consider; (2) considers

an irrelevant factor; or (3) weighs only relevant factors that the legislature directs it to

consider but still reaches a completely unreasonable result.” City of El Paso v. Pub. Util.

Comm’n of Tex., 883 S.W.2d 179, 184 (Tex. 1994).


       Appellant argues that the Board failed to consider factors relating to the elements

of section 164.051(a)(7). He alleges the Board “failed to consider that the GME program

did not discipline Dr. Haberman,” “failed to consider that the actions of the GME program

were not taken by a licensed hospital or any hospital at all,” and “failed to consider that

the GME program’s action were [sic] not those of a medical staff of a hospital not based

on professional incompetency.”


       Appellant’s third issue amounts to a repackaging of the arguments made in his first

issue. In addressing appellant’s first issue, we concluded that substantial evidence

supported the Board’s determination that appellant was subject to disciplinary action; was

disciplined by a licensed hospital or the medical staff of a hospital; and had action taken

against him that was based on professional incompetence likely to harm the public. On


                                             11
this record, we conclude that the Board’s order is not arbitrary or capricious. We overrule

Haberman’s third issue.


                                       Conclusion


      We affirm the decision of the Board.




                                                        Judy C. Parker
                                                           Justice




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