SANA HEALTHCARE CARROLLTON LLC CARROLLTON REGIONAL MEDICAL CENTER v. BAYLOR MEDICAL CENTER AT CARROLLTON BAYLOR SCOTT WHITE MEDICAL CENTER CARROLLTON AND HEALTHTEXAS PROVIDER NETWORK (2026)

MEMORANDUM OPINION

Following hearings on Appellant Sana Healthcare Carrollton, LLC D/B/A Carrollton Regional Medical Center's (“Sana”) and Appellees Baylor Medical Center at Carrollton D/B/A/ Baylor Scott & White Medical Center-Carrollton's (“Baylor”) and HealthTexas Provider Network's (“HealthTexas”) (collectively, “Appellees”) cross-motions for summary judgment, the trial court granted Baylor and HealthTexas's motion and denied Sana's motion. On appeal, Sana asserts, among other things, that the trial court misinterpreted the settlement agreement. We reverse the trial court's grant of summary judgment in favor of Baylor and HealthTexas and render judgment in favor of Sana.

Background

A. Factual Background

Baylor operated a hospital in Carrollton, Texas (“Hospital”) and owned related assets. HealthTexas contracted with Baylor to provide medical providers for the Hospital pursuant to the Master Services Agreement (“MSA”).

On November 20, 2019, Baylor and Sana entered into the Operations Transfer Agreement (“OTA”) in which Baylor transferred operations and related assets to Sana. Pursuant to section 2.3 of the OTA, Baylor retained title to all “Retained Assets” which the OTA defined as including “all amounts payable to [Baylor] in respect of Payors pursuant to retrospective settlements for claims accruing on or prior to the Closing Date.” Section 7.6(a) requires Sana to remit, after the closing, “any refund or other amount that is a Retained Asset” to Baylor. The parties agree that Baylor retained the right to collect unremitted Medicare reimbursements for the time that it operated the Hospital. Section 7.7(b) of the OTA specifically provided:

[Baylor] shall prepare and timely file all Cost Reports relating to the periods ending on or prior to the Closing Date or required as a result of the consummation of the transactions described in this Agreement (the “Pre-Closing Cost Reports”). On a monthly basis beginning on the last day of the month following the Closing Date, Sana shall forward to [Baylor] any and all correspondence it receives relating to the Pre-Closing Cost Reports or rights to settlements and retroactive adjustments on the Pre-Closing Cost Reports related to the Hospital for periods before the Closing Date (“Pre-Closing Agency Settlements”). Sana shall not reply to any such correspondence without [Baylor]'s written approval. On a monthly basis beginning on the last day of the month following the Closing Date, Sana shall remit any funds it receives relating to Pre-Closing Cost Reports or Pre-Closing Agency Settlements and shall forward to [Baylor] any demand for payments within fifteen (15) business days. Sana (and its respective successors-in-interest, assigns and Affiliates) shall have neither the right to offset amounts payable to [Baylor] against, nor the right to contest its obligation to transfer, assign and convey any such amount to [Baylor] because of, outstanding claims, liabilities or obligations asserted by Sana or any of its Affiliates against [Baylor], including pursuant to the indemnification provisions of Article VIII of this Agreement. [Baylor] shall retain all rights to Pre-Closing Cost Reports, including any payables resulting therefrom or receivables relating thereto, whenever arising or made, and, notwithstanding anything to the contrary in Section 8.5, the right to appeal and settle any Medicare or Medicaid determinations relating to the Pre-Closing Agency Settlements and Pre-Closing Cost Reports.

The OTA does not contain a termination clause but section 7.7(e) provides that section 7.7—which includes the Medicare reimbursements at issue—“shall survive for six (6) years after the Closing.”

Baylor and Sana also executed the Transition Services Agreement (“TSA”), effective February 29, 2020, where Baylor agreed to provide support services to Sana for the Hospital's daily operations. The TSA provides that “[t]he term of this Agreement shall commence on the Effective Date and, unless sooner terminated or extended as provided herein or extended by mutual written agreement of the Parties, shall continue in effect until June 30, 2020.”

HealthTexas agreed that the MSA could be assigned from Baylor to Sana. The MSA provided for a term of five years but it could be terminated prior to that time.

In May 2020, HealthTexas sent written notice to Sana that it was in default of its payment obligations under the MSA.

In June 2020, Baylor sent Sana default letters alleging that Sana was in default of its payment obligations under the OTA. In addition, HealthTexas sent written notice to Sana that HealthTexas was terminating the MSA and notified Sana of additional past due amounts under the MSA.

In July 2020, Baylor notified Sana that Baylor was terminating the TSA.

In August 2020, Sana notified Baylor that Baylor had breached the TSA. Sana also invoked the OTA's dispute resolution mechanism under the OTA.

In September 2020, Baylor sent written notice to Sana that Sana was in breach of the OTA, TSA, and MSA.

In October 2020, Baylor and HealthTexas filed a demand for arbitration against Sana, alleging breaches of the OTA, TSA and MSA and seeking to accelerate all amounts owed by Sana under the OTA. Appellees broadly summarized the disputes at issue in the arbitration as follows:

This arbitration centers on [Sana]'s multiple breaches of the contracts entered into between [Appellees] and [Sana] as part of a transfer of assets relating to a hospital located in Carrollton, Texas from [Appellees] to [Sana]. Despite giving [Sana] numerous opportunities to cure its breaches, [Sana] has failed to do so. At this time, [Sana] now owes [Appellees] over $14,000,000, with the amount increasing daily. [Appellees] bring this arbitration based on [Sana]'s refusal to perform its contractual obligations.

In October 2021, the parties agreed to settle their disputes pursuant to the Compromise Settlement Agreement and Release (“Settlement Agreement”). The Settlement Agreement contained reciprocal releases:

c. Release by [Appellees]. In consideration of the receipt of the aforementioned Total Payment, the execution of this Agreement, and the promises and covenants contained herein, [Appellees] release Sana, its parents, subsidiaries, affiliates, agents, officers, directors, employees, insurance and attorneys (the “Sana Released Parties”), from any and all—whether known or unknown, fixed or contingent, liquidated or unliquidated—past, present, and future claims, actions, causes of action, demands, obligations, rights, damages, costs, expenses, and compensation of any nature whatsoever, whether at law or equity, tort, contract, statute, or common law, which it either has or may have under any theory—whether such claims, actions, causes of action, demands, obligations, rights, damages, costs, expenses, and compensation are legal or equitable, known or unknown, disclosed or undisclosed—which [Appellees] have incurred or expects to incur from the beginning of time to the Effective Date, including without limitation all such claims that were asserted or could have been asserted in the Dispute. Nothing herein releases Sana from the obligations and representations contained in this Agreement or the Documents.

d. Release by Sana. In consideration of the acceptance of the aforementioned Total Payment, the execution of this Agreement, and the promises and covenants contained herein, Sana releases [Appellees], their parents, subsidiaries, affiliates, agents, officers, directors, employees, insurance companies and attorneys (the “[Appellees] Released Parties”), from any and all—whether known or unknown, fixed or contingent, liquidated or unliquidated—past, present, and future claims, actions, causes of action, demands, obligations, rights, damages, costs, expenses, and compensation of any nature whatsoever, whether at law or equity, tort, contract, statute, or common law, which it either has or may have under any theory—whether such claims, actions, causes of action, demands, obligations, rights, damages, costs, expenses, and compensation are legal or equitable, known or unknown, disclosed or undisclosed—which Sana has incurred or expects to incur from the beginning of time to the Effective Date, including without limitation all such claims that were asserted or could have been asserted in the Dispute. Nothing herein releases [Appellees] from the obligations and representations contained in this Agreement or the Documents.

Under section E of this agreement, the parties further agreed:

e. Termination of Prior Contractual Relations. The Parties agree that the releases provided for in this section shall be interpreted to the broadest extent allowed by law and that the prior contractual relationships between the Parties, as listed in Exhibit D to this Agreement, are terminated pursuant to the terms of those contracts, except for the obligations provided for in this Agreement.

Exhibit D to the Settlement Agreement lists several contracts including the OTA, the TSA and the MSA. In paragraph 10, the Settlement Agreement also contained a “no prior agreements” provision which provides as follows:

This Agreement and the Documents constitute the entire agreement and understanding of the Parties and supersedes any and all other prior agreements of the Parties, whether oral or written, relating to the subject matter of this Agreement and the Dispute unless otherwise stated herein.

The Settlement Agreement also provides that Sana will pay Baylor $10 million to settle the claims in arbitration.

In 2022, Baylor learned that Sana had received compensation for medical services rendered during the period in which Baylor operated the Hospital. Baylor made a demand that Sana forward all Medicare and Medicaid payments to Baylor pursuant to the terms of the OTA.

The parties then attended a mediation on this issue but were unable to resolve their differences.

B. Legal Background

On August 17, 2023, Sana filed a petition seeking a declaratory judgment that the Settlement Agreement terminated the OTA.

Baylor and HealthTexas filed their Original Answer and Affirmative Defenses. Baylor also filed its Original Counterclaims seeking declaratory judgment that the OTA remained valid and enforceable. Baylor also asserted claims for money had and received and unjust enrichment.

On March 28, 2024, Baylor and HealthTexas filed their Motion for Partial Summary Judgment. The motion asserted two arguments: (1) the Settlement Agreement did not terminate Sana's duty to remit Medicare reimbursements to Baylor; and (2) the Medicare reimbursements belong to Baylor “in equity and good conscience (as money had and received).”

Sana filed its response and objections to the summary judgment motion as well as a motion to strike the summary judgment evidence.

On May 21, 2024, Sana filed a motion for summary judgment which requested that the trial court declare (1) the Settlement Agreement is valid, binding and enforceable to all parties and (2) the OTA is terminated by the Settlement Agreement. Sana also asked the trial court to dismiss Baylor's unjust enrichment and money had and received claims based on the argument that these “quasi-contract remedies” are not available when a valid contract, such as the Settlement Agreement, governs the dispute's subject matter.

Baylor and HealthTexas filed a response to Sana's summary judgment motion.

On May 21, 2024, the trial court held a hearing on Baylor and HealthTexas's motion for partial summary judgment.

On July 12, 2024, the trial court held a hearing on Sana's motion for summary judgment.

On July 12, 2024, the trial court signed an order granting Baylor and HealthTexas's motion for partial summary judgment. The trial court also overruled Sana's objection to Baylor and HealthTexas's summary judgment evidence.

On October 25, 2024, the trial court entered a final judgment and ordered Sana to pay Baylor and HealthTexas $4,564,069.00 in Medicare/Medicaid reimbursements under the OTA in addition to interest, attorneys' fees and costs.

On November 22, 2024, Sana filed its motion to reconsider and motion for new trial.

Sana timely filed its notice of appeal on January 23, 2025.

Analysis

A. Standard of Review

An appellate court rules de novo on the grant or denial of a motion for summary judgment. Tenet Health Sys. Hosps. Dallas, Inc. v. N. Tex. Hosp. Physicians Group, P.A., 438 S.W.3d 190, 196 (Tex. App.—Dallas 2014, no pet.). Although a denial of summary judgment is not normally reviewable, we may review such a denial when both parties move for summary judgment and the trial court grants one motion and denies the other. Tex. Mun. Power Agency v. Pub. Util. Comm'n of Tex., 253 S.W.3d 184, 192 (Tex. 2007). In our review of such cross-motions, we review the summary judgment evidence presented by each party, determine all questions presented, and render the judgment that the trial court should have rendered. Id.

In a traditional motion for summary judgment, the movant carries the burden of showing that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law. See TEX. R. CIV. P. 166a(c). An appellate court reviewing a summary judgment must consider all the evidence in the light most favorable to the nonmovant, indulging every reasonable inference in favor of the nonmovant and resolving any doubts against the motion. Goodyear Tire and Rubber Co. v Mayes, 236 S.W.3d 754, 756 (Tex. 2007).

B. Summary Judgment

On appeal, Sana asserts three arguments: (1) the trial court misinterpreted the Settlement Agreement; (2) the trial court erred in relying on parol evidence to contradict the plain meaning of the Settlement Agreement; and (3) Baylor and TexasHealth cannot rely on quasi-contractual remedies.

1. The Settlement Agreement

A settlement agreement is a contract, and its construction is governed by legal principles applicable to contracts generally. Austin Tr. Co. v. Houren, 664 S.W.3d 35, 42 (Tex. 2023). When construing a contract, the terms are typically given their plain, ordinary, and generally accepted meaning. In re Davenport, 522 S.W.3d 452, 456-57 (Tex. 2017). The Court must read contractual provisions so none of the terms of the agreement are rendered meaningless or superfluous. Id. at 457. Courts may not rewrite the parties' contract, nor should courts add to its language. Id. We cannot make new contracts between the parties and must enforce the contract as written. Id. When the terms are plain, definite, and unambiguous, the court cannot vary these terms. Id.

Here, the dispute centers on whether the Settlement Agreement terminated Sana's duty to remit Medicare reimbursements to Baylor. The language at issue is contained in a section entitled “Termination of Prior Contractual Relations” which provides:

The Parties agree that the releases provided for in this section shall be interpreted to the broadest extent allowed by law and that the prior contractual relationships between the Parties, as listed in Exhibit D to this Agreement, are terminated pursuant to the terms of those contracts, except for the obligations provided for in this Agreement.

The parties do not dispute that the OTA is listed in Exhibit D or that the obligation for Sana to reimburse Baylor for Medicare reimbursements arises from the OTA. It is also not disputed that the OTA does not contain a termination provision.

Appellees argue that the plain language of the phrase “pursuant to the terms of those contracts” is unambiguous and the Settlement Agreement's termination provision is not self-executing with respect to the termination of the OTA. Appellees note that although the OTA does not contain a termination provision, the sections at issue regarding the Medicare reimbursements contain a provision which provides that they “shall survive for six (6) years after the Closing.” Thus, Appellees contend Sana's obligation to remit Medicare reimbursements survives the Settlement Agreement because those sections contain wording that they “shall survive for six (6) years after the Closing.”

Sana asserts a different interpretation of the Settlement Agreement. Sana argues that if a particular contract contained a termination clause, then the contract would terminate according to those terms. Since the OTA did not contain a termination clause, Sana contends the OTA terminated with the execution of the Settlement Agreement and required no further action by any party.

In reviewing the entirety of the Settlement Agreement, we conclude that the obligations under the OTA terminated with the execution of the Settlement Agreement. As an initial matter, the Settlement Agreement contains a broad recital demonstrating the intent of the agreement:

WHEREAS, the Parties have agreed, without either Party admitting liability of any kind, to enter into this Agreement pursuant to which each and every claim and/or cause of action which was asserted or which could have been asserted by the Parties against each other by way of the Dispute or any other claim or controversy existing as of the Effective Date, whether known or unknown, will be finally and forever released.

The release provisions of the Settlement Agreement further emphasized the extent to which the parties intended to terminate their business relationship by including such expansive language as “past, present, and future claims, actions, causes of action, demands, obligations, rights, damages, costs, expenses, and compensation of any nature whatsoever” and “whether such claims, actions, causes of action, demands, obligations, rights, damages, costs, expenses, and compensation are legal or equitable, known or unknown, disclosed or undisclosed—which [Appellees] have incurred or expects to incur from the beginning of time to the Effective Date, including without limitation all such claims that were asserted or could have been asserted in the Dispute.” The mutual releases agreed to in the Settlement Agreement intended to sever the business relationships by releasing all claims which were or could have been asserted in the arbitration.

We next look to the language of the “Termination of Prior Contractual Relations” section of the Settlement Agreement. This section used the present tense “are terminated” and listed the OTA in Exhibit D as one of the contracts being terminated. This section also contained the phrase “except for the obligations provided for in this Agreement.” Thus, the parties could have elected to exclude the Medicare reimbursements from the effect of this provision or excluded it from releases described above. However, the Settlement Agreement contains no mention of the Medicare reimbursements, much less a carve-out of the Settlement Agreement's termination of the Medicare reimbursements.

The Settlement Agreement further contains a “no prior agreements” section which states that the Settlement Agreement “supersedes any and all other prior agreements of the Parties, whether oral or written, relating to the subject matter of this Agreement and the Dispute unless otherwise stated herein.” Once again, the parties could have elected to specifically carve out the Medicare reimbursements from this section of the Settlement Agreement and the parties elected not to do so.

Here, the OTA did not contain a termination provision. It contained a survival clause for a portion of the OTA. If the parties wanted the Medicare reimbursements to survive the Settlement Agreement, they could have negotiated those terms and included them in the contract. We conclude that the survival clause of the OTA was superseded by the terms of the Settlement Agreement. Accordingly, and for all of the reasons discussed above, we conclude that the Settlement Agreement terminated the OTA.³

2. Money Had and Received

In addition to the contractual argument, Baylor also asserted a claim for money had and received in its summary judgment motion. The trial court granted appellees' motion for partial summary judgment without specifying the basis for the ruling. On appeal, Baylor asserts that this Court must affirm the trial court's final judgment because Sana failed to challenge the claim for money had and received on appeal. Baylor argues that Sana only made introductory references in its brief without any argument, legal authority or substantive analysis. See TEX. R. APP. P. 38.1(i) (“The brief must contain a clear and concise argument for the contentions made, with appropriate citations to authorities and to the record.”).

As an initial matter, we note that the Supreme Court has repeatedly stated that courts should hesitate to resolve cases based on procedural defects and instead endeavor to resolve cases on the merits. See Bertucci v. Watkins, 709 S.W.3d 534, 541 (Tex. 2025). The Supreme Court has further stated:

[t]o determine whether an issue was waived, a court looks not only to the wording of the issue but the argument under each heading to assess the intent of the parties. While it is preferred that parties independently brief distinct legal theories, certain claims and theories can be “inextricably entwined,” or the evidence and nature of claims may contain overlapping legal theories. Thus, it is essential for courts to look not simply at the wording of parties' issues, but also the arguments, evidence, and citations relied on by those parties to determine which issues the parties intended to and actually briefed.

Lion Copolymer Holdings, LLC v. Lion Polymers, LLC, 614 S.W.3d 729, 732-33 (Tex. 2020) (internal citations omitted).

With these guidelines in effect, we note that Sana argued in its brief as follows:

Baylor also urged quasi-contractual remedies, including unjust enrichment and money-had-and received; however, a party may not rely on a quasi-contractual theory when, as here, a valid, express contract governing the dispute's subject matter exists. The Settlement Agreement covers this dispute's subject matter–whether the obligations in the OTA are terminated.

Sana asserted that because the Settlement Agreement terminated its obligations under the OTA, Baylor could not advance an argument under the equitable remedy of money had and received. Thus, Sana spent the majority of its briefing addressing the contractual argument since this argument precluded the equitable remedy. For this reason, despite the brevity of its argument, we decline to conclude that Sana's briefing constituted waiver of an argument.

We next look to the merits of the argument. As stated above, we concluded that the Settlement Agreement terminated the obligations described in the OTA. Sana argues that a quasi-contract right, like unjust enrichment and money had and received, is unavailable when a valid, express contract governing the dispute's subject matter exists. See Fortune Prod. Co. v. Conoco, Inc., 52 S.W.3d 671, 684 (Tex. 2000) (“Generally speaking, when a valid, express contract covers the subject matter of the parties' dispute, there can be no recovery under a quasi-contract theory[.] That is because parties should be bound by their express agreements. When a valid agreement already addresses the matter, recovery under an equitable theory is generally inconsistent with the express agreement. Accordingly, when a party claims that it is owed more than the payments called for under a contract, there can be no recovery for unjust enrichment “ ‘if the same subject is covered by [the] express contract.’ ”) (internal citations omitted).

In response, Baylor argues that the “Texas Supreme Court has expressly determined that the existence of a contract does not preclude the recovery of wrongly-retained overpayments based on a claim for money had and received.” In support of this assertion, Baylor cites (1) Sw. Elec. Power Co. v. Burlington N. R.R. Co., 966 S.W.2d 467 (Tex. 1998); (2) Staats v. Miller, 243 S.W.2d 686 (Tex. 1951); and (3) Villarreal v. First Presidio Bank, 744 F. App'x 204, 207 (5th Cir. 2018). In the Southwestern Electric Power case, the Supreme Court held that “in some circumstances, overpayments under a valid contract may give rise to a claim for restitution or unjust enrichment.” 966 S.W.2d at 469. In this case, however, the Supreme Court affirmed the Court of Appeal's conclusion that “the express provisions of the contract governed the rates to be paid and accordingly, that submission of unjust enrichment to the jury was improper.” Id. Essentially, the express contract terms precluded a claim for unjust enrichment. That same argument is equally applicable in this case. Here, Baylor cannot assert a claim for unjust enrichment when the terms of the Settlement Agreement expressly terminated the OTA and Sana's requirement to make the reimbursements.

In the Staats case, the court allowed a claim for money had and received because the defendant wrongfully retained proceeds from a sale in excess of the amount contracted. 243 S.W.2d at 688. This fact pattern is distinguishable from the facts here because we have already concluded that Sana acted in accordance with the contract and did not owe Baylor any reimbursement for Medicare following the execution of the Settlement Agreement.

Appellees also cite the Villarreal case in support of the assertion that “[u]nder Texas law an overpayment beyond what a contract provides may sometimes be recovered as unjust enrichment.” 744 F. App'x at 207. However, this case also concluded:

The express terms of the CDs governed the parties' payment dispute. Instead of suing for breach of contract, however, the plaintiff sued for money-had-and-received, a claim based on quasi-contract. That theory is precluded by Texas law: “[W]hen a valid, express contract covers the subject matter of the parties' dispute, there can be no recovery under a quasi-contract theory[.]” The district court misapplied that settled rule. We therefore REVERSE the district court's judgment and RENDER judgment for the bank.

Id. at 205 (internal citations omitted). Thus, the Villareal case supports the conclusion that if a valid contract (the Settlement Agreement) covers the subject matter of the dispute (the Medicare reimbursements), there cannot be any recovery under a quasi-contract theory. Because the Settlement Agreement terminated the OTA and the duty of Sana to make the Medicare reimbursements, Appellees cannot recover on a claim for money had and received.

For these reasons, we conclude that Appellees cannot recover on a claim for money had and received because a valid contract governing the dispute's subject matter exists. Fortune Prod. Co., 52 S.W.3d at 684.

Conclusion

We reverse the grant of summary judgment in favor of Baylor and HealthTexas and render judgment in favor of Sana.

FOOTNOTES

3.   As we have concluded the language of the Settlement Agreement terminated the OTA, we need not address Sana's argument of whether the trial court improperly considered evidence of the parties' pre-settlement negotiations and the parties' post-settlement conduct. We note, however, that even if a contract is unambiguous as a matter of law, a court may still consider the surrounding facts and circumstances as an aid in the construction of the contract's language. Barrow-Shaver Res. Co. v. Carrizo Oil & Gas, Inc., 590 S.W.3d 471, 483 (Tex. 2019). Although surrounding facts and circumstances cannot be employed to make the language say what it unambiguously does not say or to show that the parties probably meant, or could have meant, the court can consider a fact such as the negotiations took place between sophisticated parties in a commercial context. Id.

J.J. KOCH CHIEF JUSTICE