Fraud Vitiates Everything (including statutes of repose)

Alldredge v. The Good Samaritan Home, Inc., — N.E.3d —, 2014 WL 2504551 (Ind. 2014)

This case provides a striking example of successful invocation of the fraud exception to the statute of repose.

An elderly nursing home resident fell on the floor and sustained a head injury, from which she died. The nursing home chose not to disclose to the resident’s family that she did not fall on the floor by accident, but rather was attacked and pushed to the floor by another resident. The family learned about it three years after the incident. Two years after this revelation, the family filed a wrongful death suit against the nursing home. The nursing home successfully moved to dismiss the suit under Indiana’s statute of repose that extinguishes plaintiffs’ right to file a suit after two years following the wrongful death.

The case reached the Indiana Supreme Court that ruled in the family’s favor. The Court reiterated its previous holding that “Fraud vitiates anything. Courts will not uphold fraud, or presume the Legislature intended to do so by allowing one in a confidential relationship to conceal an injury done another until the statute of limitations has run. The language of the statute should be so plain that there is no question as to its meaning if the Legislature intends to give a wrongdoer the advantage and benefit of his fraudulent concealment of an injury done [to] another.” (citing Guy v. Schuldt, 138 N.E.2d 891, 896-97 (Ind. 1956)).

The Court reasoned that this broad “fraudulent concealment” exception to the statute of repose is supported by the United States Supreme Court’s decision Glus v. Brooklyn E. Dist. Terminal, 359 U.S. 231, 232-35 (1959) – a workman injury case decided under the Federal Employers’ Liability Act. This decision allowed the plaintiff to pursue an estoppel claim against the defendant who allegedly told the plaintiff—incorrectly—that he had seven years to sue and subsequently invoked the then existing repose provision that extinguished suits after three years. The United States Supreme Court held that “To decide the case we need look no further than the maxim that no man may take advantage of his own wrong” and remanded the case to the trial court to give the plaintiff an opportunity to “make out a case calling for application of the doctrine of estoppel” by proving that he “was justifiably misled into a good-faith belief that he could begin his action at any time within seven years after it had accrued.”

The Indiana Supreme Court also relied on the state’s Fraudulent Concealment Statute, Ind. Rev. Stat. Ch. 1, § 219 (1852), that provides the following: “If any person liable to an action shall conceal the fact from the knowledge of the person entitled thereto, the action may be commenced at any time within the period of limitation, after the discovery of the cause of action.” The Court clarified that the statute presently applies to all civil actions.

The importance of this decision for medical malpractice litigation cannot be overestimated. The repose statutes are drafted in categorical terms, but do not expressly rule out the “fraudulent concealment” exception that derives from the general principle “No man shall profit from his own wrong.” Consequently, the fraudulent concealment exception should apply across the board, as suggested by the United States Supreme Court in Glass.

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