Issue # 3:4, April 2015

Fraudulent Concealment and the Statute of Repose

Hess v. Philip Morris USA, Inc., — So.3d — (Fla. 2015)

Stemming from the Engle class action, this decision advances the understanding of statutes of repose and how they apply, inter alia, in medical malpractice cases.

Plaintiffs in a tobacco fraud action against Philip Morris have confronted Florida’s statute of repose, under which “[I]n any event an action for fraud … must be begun within 12 years after the date of the commission of the alleged fraud, regardless of the date the fraud was or should have been discovered.” Fla. Stat. § 95.031(2).

The plaintiffs, husband and wife, have established that one of them – Mr. Hess – was a heavy smoker between 1963 and 1996 and that in 1996 he was diagnosed with lung cancer. The plaintiffs have also proved that (1) the defendant, together with other tobacco companies, concealed or failed to disclose the risks associated with cigarette smoking, which constituted a material fact for their fraud allegations; (2) the defendant knew or should have known that this material fact should be disclosed; (3) the defendant knew that its concealment of or failure to disclose this fact would induce Mr. Hess to keep smoking cigarettes; (4) the defendant had a duty to disclose the material fact; and (5) Mr. Hess detrimentally relied on the misinformation between 1963 and the mid-seventies when he attempted to stop smoking.

The plaintiffs, however, have presented no evidence of Mr. Hess’s reliance on the misinformation within the twelve-year repose period between May 1982 and May 1994. For that reason, the defendant argued that the plaintiffs’ right to sue had been extinguished by the statute of repose.

The Florida Supreme Court disagreed. It decided that “the date of the commission of the alleged fraud” for repose purposes refers to the defendant’s wrongful conduct. Hence, “it is not necessary that the smoker relied during the twelve-year repose period. Where there is evidence of the defendant’s wrongful conduct within the repose period, the statute of repose will not bar a plaintiff’s fraudulent concealment claim.”

That is, under Florida’s statute of repose, which is structurally similar to all other statutes of repose, a defendant acquires an immunity against suit when the entire repose period is fraud-free.

The Court based this important decision on two rules of interpretation. First, “Where a statute of limitations shortens the existing period of time the statute is generally construed strictly, and where there is reasonable doubt as to legislative intent, the preference is to allow the longer period of time.” (citing Baskerville–Donovan Eng’rs, Inc. v. Pensacola Exec. House Condo. Ass’n, Inc., 581 So.2d 1301, 1303 (Fla. 1991)). Second, “In construing the statute of repose relating to medical malpractice claims, we have said that “ambiguity, if there is any, should be construed in favor of the plaintiffs.” (citing Silva v. Sw. Fla. Blood Bank, Inc., 601 So.2d 1184, 1187 (Fla. 1992)).

The Court then went on to explain that statutes of repose “bar actions by setting a time limit within which an action must be filed as measured from a specified act, after which time the cause of action is extinguished” and that statutes of repose are “legislative determination[s] that there must be an outer limit beyond which [claims] may not be instituted,” “attempt[ing] to balance the rights of injured persons against the exposure of [defendants] to liability for endless periods of time.” (citing Kush v. Lloyd, 616 So.2d 415, 421-22 (Fla. 1992)). The Court also noted in this connection that there is no tolling provision for the fraud statute of repose and that over time “memories fade, documents are destroyed or lost, and witnesses disappear.” (citing Nehme v. Smithkline Beecham Clinical Labs., Inc., 863 So.2d 201, 209 (Fla. 2003)).

The Court relied in this decision on its definition of “fraud” for purposes of the medical-malpractice statute of repose. Under that definition, “a knowing misrepresentation of the truth or concealment of a material fact to induce another to act to his or her detriment” constitutes fraud. Nehme, 863 So.2d at 205. Because the alleged misconduct of the defendant squarely aligns with that definition, and because it occurred during the repose period, the defendant is precluded from asserting the repose defense.

This decision improves the law along two dimensions. First, it incentivizes wrongdoers to discontinue their fraudulent behavior, which in some cases would require fixing their prior frauds. Second, it keeps the “bright line rule” format of the repose statutes, which makes those statutes easy to apply. The reliance requirement that the defendant attempted to introduce into the fraudulent concealment doctrine would have complicated that doctrine for no good reason.

Injury Notice under the Kentucky Statute of Limitations

Chapman v. Murray, 2015 WL 510444 (Ky.App. 2015)

The Kentucky statute of limitations requires that medical negligence suits be filed within one year of accrual of the action. KRS 413.140(1)(e). Accrual is calculated from the time the aggrieved patient discovers or should discover an injury. In the case at bar, the parties disagreed over the meaning of the “discovers” standard.

The patient suspected that a surgeon who removed a neuroma from his foot left a foreign object in that foot. On January 9, 2012, the patient told his second doctor about that suspicion. On January 31, 2012, the second doctor performed a procedure on the patient’s foot and discovered foreign material. After the removal of that material, the patient’s condition improved, but his foot remained permanently damaged. On January 30, 2012, the patient filed a malpractice suit against the surgeon.

Did the limitations period begin on 1/9/2012 – in which case, the plaintiff’s suit will be time-barred – or on 1/31/2012?

Kentucky’s appellate court ruled that on 1/9/2012, the patient only suspected that he was wronged by the surgeon, but this suspicion was a mere speculation rather than discovery. The patient discovered that he was wronged by the surgeon only on 1/31/2012, when his second doctor confirmed the suspicion. In making this ruling, the court relied on the Kentucky Supreme Court’s decision in Wiseman v. Alliant Hospitals, Inc., 37 S.W.3d 709 (Ky. 2000). In that case, Ms. Wiseman underwent gynecological surgery in 1989. She began experiencing pain in her tailbone immediately after the operation. When the pain did not subside in the time frame as expected, Wiseman asked her doctor if the pain could be related to the surgery. After a series of treatments that ended in 1996, a sliver of a metal surgical tool—specifically, a probe like the one used in Wiseman’s surgery in 1989—was removed from her body. The Supreme Court decided that Wiseman’s malpractice suit, which she filed eleven months after the metal fragment was extracted, was still timely. It explained that “Because [Wiseman’s] injury was not readily apparent until the discovery of the piece of uterine probe, she was unaware that she had a viable claim for medical malpractice. A mere suspicion of injury due to medically unexplainable pain following an invasive surgery does not equate to discovery of medical negligence.” Id. at 713 (emphasis added). The Court also clarified that “[o]ne who possesses no medical knowledge should not be held responsible for discovering an injury based on the wrongful act of a physician.” Id. at 712.

Based on this precedent, the appellate court decided that “[The patient] only suspected but did not have confirmation of his harm or its cause until a second physician performed an exploratory procedure. “[The patient] knew that he had debilitating pain. But … he could not identify the source of his pain. He was consistently (albeit erroneously) treated for infection until the foreign matter was discovered.” For these reasons, [the patient] could not and did not discover that he was wronged by his first doctor until 1/31/2012

Can informed-consent evidence counter medical mistreatment allegations?

Brady v. Urbas, — A.3d — (Pa. 2015)

The Supreme Court of Pennsylvania answered this question in the negative.

The Court properly ruled that “the fact that a patient may have agreed to a procedure in light of the known risks does not make it more or less probable that the physician was negligent in either considering the patient an appropriate candidate for the operation or in performing it in the post-consent timeframe. Put differently, there is no assumption-of-the-risk defense available to a defendant physician which would vitiate his duty to provide treatment according to the ordinary standard of care. The patient’s actual, affirmative consent, therefore, is irrelevant to the question of negligence. … That being the case, in a trial on a malpractice complaint that only asserts negligence, and not lack of informed consent, evidence that a patient agreed to go forward with the operation in spite of the risks of which she was informed is irrelevant and should be excluded.”

The Court added in that connection that “Evidence of the patient’s consent also tends to confuse the issue because … the jury might reason that the patient’s consent to the procedure implies consent to the resultant injury … and thereby lose sight of the central question pertaining to whether the defendant’s actions conformed to the governing standard of care.”

Charitable Immunity and the Definition of “Hospital”

Kuchera v. Jersey Shore Family Health Center, — A.3d — (N.J. 2015)

This case concerns the charitable immunity invoked by a hospital in response to a patient’s slip-and-fall suit. In New Jersey, nonprofit organizations “organized exclusively for religious, charitable or educational purposes” enjoy a complete exemption from liability in torts, whereas “any nonprofit corporation, society or association organized exclusively for hospital purposes” can be held liable for tort damages up to a $250,000 limit. N.J.S.A. 2A:53A–7(a) & 2A:53A–8.

The defendant sought a complete immunity based on its engagement in medical education, but the New Jersey Supreme Court disagreed. The Court held that “The modern hospital is now a place where members of the community not only seek emergency services but also preventative services, therapy, educational programs, and counseling” and that there is “no reason to confine the term “hospital purposes” to the vintage conception of a hospital as a facility providing a site for physicians to provide acute and continuous inpatient care for their patients.” Consistent with this vision, the Court decided that the definition of “hospital” for charitable immunity purposes should encompass “the many medical pursuits of a modern hospital in New Jersey” that include a teaching component, and not just the inpatient and out-patient care. “The education of medical students, physicians, nurses, and other health professionals” – it explained – “is a significant core hospital purpose related to the provision of quality health care to patients.”

Based on this understanding, the Court ruled that the defendant is “subject to liability for negligence applicable to nonprofit corporations, associations, and societies organized exclusively for hospital purposes with any damage award capped at $250,000,” while adding that “In premises liability actions, such as this one, any concerns that this ruling may sap nonprofit hospital resources is ameliorated by the opportunity of the organization to obtain indemnification from those entities with which the hospital contracts to maintain its facilities.”