Issue # 4:3, March 2016

Another Blow to Nursing-Home Arbitration
Agreements

Norton v. United Health Services of Georgia, Inc.,
— S.E.2d — (Ga.App.2016), 2016 WL 802948

Georgia’s Court of Appeals has recently held that an arbitration agreement between a nursing home and its resident does not prevent the resident’s family from filing an independent suit against the home for the resident’s wrongful death.

In the case at bar, the arbitration agreement expressly provided that it will apply to wrongful-death beneficiaries as well, but there was no evidence that those beneficiaries joined the agreement. Because the beneficiaries’ independent claims against the nursing home never belonged to the resident, the court refused to compel arbitration. The beneficiaries’ independent claims, however, are limited. They include the loss of consortium, grief, and (if any) pecuniary losses based on the projected duration of the decedent’s life.

For my discussion of a similar decision, Boler v. Security Health Care, L.L.C., 336 P.3d 468 (Okla. 2014), see http://www.steinmedicalmalpractice.com/another-blow-to-nursing-home-arbitration-agreements/.

Failure to Sterilize Surgical Instruments: Medical
Malpractice or Regular Negligence?

Dupuy v. NMC Operating Co., L.L.C., — So.3d — (La. 2016),
2016 WL 1051523

This case involved a tort suit complaining about a hospital’s failure to properly maintain and service equipment utilized in the sterilization of surgical instruments. The Louisiana Supreme Court characterized this suit as alleging medical malpractice for purposes of state’s statutory requirement, La. R.S. 40:1231.8.2, that such suits be presented to a medical review panel before filing.

This decision applied the following multifactor test, set forth in Coleman v. Deno, 813 So.2d 303 (La. 2002):

(1) whether the particular wrong is “treatment related” or caused by a dereliction of professional skill;

(2) whether the wrong requires expert medical evidence to determine whether the appropriate standard of care was breached;

(3) whether the pertinent act or omission involved assessment of the patient’s condition;

(4) whether an incident occurred in the context of a physician-patient relationship, or was within the scope of activities which a hospital is licensed to perform;

(5) whether the injury would have occurred if the patient had not sought treatment; and

(6) whether the tort alleged was intentional.

The Court clarified that although “ordinary laypersons would be capable of concluding that surgical instruments should be properly sterilized before surgery …, whether instruments were in fact properly sterilized is a question that requires medical expertise.”

Fraudulent Concealment by Nonfeasance as
an Exception to the Statute of Repose

In re Estate of Doyle, 2016 WL 857204 (Mich.App.2016)

By Alex Stein

As a general rule, malpractice suits against physicians and hospitals must be filed within the repose period that starts running on the day of the alleged malpractice. Expiration of that period kills the plaintiff’s suit regardless of whether she was able to file it on time. Unlike statutes of limitations, this absolute time-bar does not depend on the accrual of the plaintiff’s cause of action nor is it subject to the discovery rule and equitable tolling. Typically, states recognize only one exception to the statute of repose: fraudulent concealment. Under that exception, when a negligent doctor or hospital intentionally gives the aggrieved patient (or her successor) false or misleading information about the treatment, the patient (or her successor) becomes entitled to toll the repose period until she becomes aware of the true facts. Many courts have ruled that this exception was only available to plaintiffs who could establish affirmative misrepresentation on the part of the doctor or the hospital. According to these decisions, fraud capable of tolling the repose period could only be committed by misfeasance, that is, by active conduct rather than by failure to disclose the relevant facts. More recent court decisions, however, obliterate the omission-commission distinction in the context of fraudulent concealment by doctors and hospitals: see, e.g., DeLuna v. Burciaga, 857 N.E.2d 229, 245-46 (Ill. 2006).

A recent decision of Michigan’s Court of Appeals, In re Estate of Doyle, 2016 WL 857204 (Mich.App.2016), continues this trend.

This case involved an open-heart cardiac bypass surgery during which doctors placed 40 sponges inside the patient’s body. At the conclusion of the surgery, doctors and nurses conducted multiple sponge counts as they removed those sponges. The counts yielded a return of only 39 sponges: one sponge was missing and could not be located. The care providers did not inform the patient, his family, or his doctors about the missing sponge. This sponge was discovered seven years later when the patient developed an acute infection in the heart area. Eleven months after this discovery and following the patient’s death, his heirs sued the doctors for medical malpractice. The doctors argued that the plaintiffs’ suit was time-barred under Michigan’s statute of repose, MCL 600.5838a(2), because it was not filed within the six-year repose period. The plaintiffs invoked the “fraudulent concealment” exception. The trial court held that this exception was unavailable because the plaintiffs failed to show any affirmative act or misrepresentation by the doctors that prevented their discovery of material facts.

The Court of Appeals reversed that decision. The Court of Appeals agreed with the trial court that the plaintiffs have shown no affirmative misrepresentations by the defendants. According to the Court, however, this finding “does not end the analysis” because “there is an exception to the affirmative—act rule when the defendant has a fiduciary relationship with the plaintiff.” This exception was applicable because “a physician/patient relationship [is] a fiduciary relationship.”

Hence,

“Although a fiduciary cannot be expected to disclose information about which he or she is unaware (e.g. inadvertently perforating a nearby organ without realizing it) or to disclose a breach when he or she failed to appreciate that his or her conduct breached the standard of care (e.g. misdiagnosing a patient’s presenting condition), a fiduciary cannot shirk his or her duty to disclose by pleading ignorance to the fact that it was malpractice despite knowing what happened (e.g. realizing that a nearby organ was inadvertently perforated but claiming not to realize it was malpractice, and thus, not telling the patient, or realizing the patient’s condition was wrongly diagnosed but claiming such misdiagnosis was not malpractice, and thus, not telling the patient). Allowing a defendant to plead ignorance in the presence of known and undisputed facts that implicate malpractice would promote self-serving defenses that would thwart the viability of the fraudulent concealment exception in fiduciary matters. Consistent with the purpose of the fraudulent-concealment exception … the intentional failure to disclose known, pertinent information, in order to deprive plaintiff of the ability to realize that he or she has a potential cause of action constitutes fraudulent concealment.”

Based on this understanding of the law, the Court of Appeals allowed the plaintiffs to toll the repose period and proceed with the suit.

Negligent Credentialing is Now Actionable in Kentucky

Spalding v. Spring View Hospital, LLC, — S.W.3d — (Ky.App. 2016),
2016 WL 929507

The Court of Appeals of Kentucky has recently allowed patients to sue hospitals for negligent credentialing of physicians.

As a historical matter, Illinois was first to recognize negligent credentialing as a cause of action against hospitals: Darling v. Charleston Cmty. Mem’l Hosp., 211 N.E.2d 253 (Ill. 1965). Between 1965 and now, more than half of the states have followed the Darling decision. This development was driven by the shift in hospital ownership and management from small, charitable organizations to for-profit corporations. Courts and legislatures responded to this shift by abolishing the charitable immunity that shielded charitable hospitals against suit in order to protect charitable assets against dilution. For Kentucky’s charitable immunity, see Cook v. John N. Norton Mem’l Infirmary, 202 S.W. 874, 875 (1918); and for its abolition, see Mullikin v. Jewish Hosp. Ass’n of Louisville, 348 S.W.2d 930 (Ky. 1961).

Many courts across the nation have also recognized negligent hiring, negligent supervision, and corporate negligence as actionable torts. Kentucky, for example, came to recognize each of these causes of action. See, e.g., Ten Broeck Dupont, Inc. v. Brooks, 283 S.W.3d 705 (Ky. 2009); Turner v. Pendennis Club, 19 S.W.3d 117, 121–22 (Ky.App. 2000); Oakley v. Flor–Shin, Inc., 964 S.W.2d 438, 442 (Ky.App. 1998) (cited with approval in Spalding). In parallel, courts ruled that hospitals are generally not liable for malpractice committed by doctors working as independent contractors with attending privileges. As attested by the court in Spalding, “This remains the law in Kentucky, and [we] will not disturb that well-founded rule today.” This rule, however, “does not bar relief on a claim of negligent credentialing.” Spalding, id.).

The Spalding court’s decision to recognize negligent credentialing of physicians as an actionable tort rested on the following reasons:

“[The defendants] offer various policy-based arguments against recognition of negligent credentialing under this and other common law theories. They first contend that such a cause of action would negatively, even disproportionately, affect rural hospitals’ ability to recruit doctors and would result in a broader “chilling effect” on the participation of credentialing committee members due to concerns of personal liability. While we do not take these concerns lightly, they are nonetheless too speculative and tenuous to bar recognition of the tort under the facts presented to us in these appeals. …

[The defendants] also argue that subjecting healthcare facilities to liability for credentialing decisions would add to the already exorbitant cost of healthcare in Kentucky and would effectively make hospitals the insurers of the physicians with which they have merely contracted. This would be true if we were proposing to hold hospitals vicariously liable for the negligent actions of their independent contractors. That is not what is proposed. Rather, the tort we are asked to recognize … would impose liability upon a hospital for its own decision to credential a physician the hospital knew or reasonably should have known was incompetent. Thus, hospitals would be liable for, and would insure themselves against, only their own negligence. This is not a novel or irrational concept, nor is it necessarily bad public policy. In fact, it is a standard to which our laws and courts hold other individuals, other professionals, and other corporations.

[The defendants] also express[] concern that, if combined and tried with medical malpractice claims, negligent credentialing claims could give rise to the introduction of potentially irrelevant or prejudicial evidence concerning a physician’s background or a credentialing committee’s decision-making process. Among the present facts, [the treating physician’s] history of chemical dependency best exemplifies this potential problem. However, we are confident that faithful application of the Rules of Evidence, especially those concerning relevance, would provide sufficient protection regarding this concern.”