Copeland v. Healthsouth/Methodist Rehab. Hosp., LP

• Citation: 565 S.W.3d 260
• Decision Date: 20 December 2018
• Docket Number: No. W2016-02499-SC-R11-CV,W2016-02499-SC-R11-CV
• Parties: Frederick COPELAND v. HEALTHSOUTH/METHODIST REHABILITATION HOSPITAL, LP et al.
• Court: Supreme Court of Tennessee

565 S.W.3d 260

Frederick COPELAND

v.HEALTHSOUTH/METHODIST REHABILITATION HOSPITAL, LP et al.

No. W2016-02499-SC-R11-CV

Supreme Court of Tennessee, AT JACKSON.

May 31, 2018 Session Heard at Nashville¹

FILED December 20, 2018

Donald K. Vowell, Knoxville, Tennessee, and David E. Gordon and Erin L. Hillyard, Memphis, Tennessee, for the appellant, Frederick Copeland.

Diana M. Comes, Memphis, Tennessee, for the appellee, MedicOne Medical Response Delta Region, Inc.

Sharon G. Lee, J., delivered the opinion of the Court, in which Jeffrey S. Bivins, C.J., and Cornelia A. Clark, Holly Kirby, and Roger A. Page, JJ., joined.

Sharon G. Lee, J.

A rehabilitation hospital hired a medical transportation company to take a patient to a doctor’s appointment. Before the transport, the company’s driver required the patient to sign an agreement that, in part, released the company from any liability. After the appointment, the patient fell as he was getting into the company’s van. He sued the medical transportation company, which moved to dismiss based on the exculpatory provisions of the agreement. The trial court and the Court of Appeals ruled that the exculpatory provisions were enforceable. We hold that to determine the enforceability of an exculpatory agreement, a court should consider the totality of the circumstances and weigh these non-exclusive factors: (1) relative bargaining power of the parties; (2) clarity of the exculpatory language, which should be clear, unambiguous, and unmistakable about what the party who signs the agreement is giving up; and (3) public policy and public interest implications. We hold that the exculpatory provisions in the agreement between the medical transportation company and the patient are unenforceable based on the unequal bargaining power of the parties, the overly broad and unclear language of the agreement, and the important public interest implicated by the agreement. Thus, the exculpatory language in the agreement does not, as a matter of law, bar the patient’s claim. We vacate the judgment of the trial court, reverse the judgment of the Court of Appeals, and remand this case to the trial court for further proceedings.

I.

Frederick Copeland was a patient at HealthSouth Rehabilitation Hospital North Memphis (HealthSouth or the hospital) after having knee replacement surgery. On December 2, 2014, Mr. Copeland had an appointment to see his orthopedic surgeon. The hospital had contracted with MedicOne Medical Response Delta Region, Inc. (MedicOne), a medical transportation company, to provide transportation services for its patients, including Mr. Copeland.

On the day of Mr. Copeland’s appointment at his orthopedic surgeon’s office, a MedicOne employee driving a wheelchair van² arrived at the hospital to take Mr. Copeland to and from the appointment. After the driver pushed Mr. Copeland in a wheelchair from his room to the entrance of the hospital, Mr. Copeland got out of the wheelchair, walked to the van using a walker, and climbed into the front passenger seat. Before leaving HealthSouth, the MedicOne driver gave Mr. Copeland a pre-printed two-sided document that contained on one side a Wheelchair Van/Transportation Run Report (Run Report) and on the other side a Wheelchair Van Transportation Agreement (Agreement). The Run Report provided that HealthSouth was responsible for MedicOne’s charges. The Agreement consisted of nine single-spaced paragraphs, including three paragraphs of exculpatory language. The exculpatory language provided that Mr. Copeland was releasing MedicOne from any and all claims arising from or in any way associated with any transportation services provided by MedicOne. After Mr. Copeland signed the Run Report and the Agreement, the MedicOne driver took him to his doctor’s appointment.

After the appointment, the MedicOne driver returned to the doctor’s office to take Mr. Copeland back to the hospital. As Mr. Copeland was getting into the van, he lost his footing on the running board, fell, and was injured.

Mr. Copeland sued MedicOne for negligence in the Shelby County Circuit Court.³ MedicOne moved to dismiss or, in the alternative, for summary judgment based on the exculpatory language in the Agreement. The trial court granted summary judgment in favor of MedicOne.⁴ The trial court found that the Agreement was not a contract of adhesion and that the services provided by MedicOne were not professional services, but merely transportation services, and so, the exculpatory provisions were enforceable. The Court of Appeals affirmed, finding that the case involved non-professional transportation services and presented no significant public interest considerations. Copeland v. HealthSouth/Methodist Rehab. Hosp., LP , No. W2016-02499-COA-R3-CV, 2017 WL 3433130, at *3, *5 (Tenn. Ct. App. Aug. 10, 2017).

II.

The issue here is the validity of the exculpatory language in the Agreement signed by Mr. Copeland releasing MedicOne from any liability. We review the trial court’s summary judgment ruling on this question of law de novo with no presumption of correctness. Rye v. Women’s Care Ctr. of Memphis, MPLLC , 477 S.W.3d 235, 250 (Tenn. 2015) (citing Bain v. Wells , 936 S.W.2d 618, 622 (Tenn. 1997) ); Circle C Constr., LLC v. Nilsen , 484 S.W.3d 914, 917 (Tenn. 2016) (citing Hamblen Cnty. v. City of Morristown , 656 S.W.2d 331, 335–36 (Tenn. 1983) ) (stating that contract interpretation is a question of law).

There is a natural tension between Tennessee’s public policy that favors allowing parties to have freedom to contract⁵ and the public policy that disfavors allowing a party to escape the consequences of the party’s negligence. In Olson v. Molzen , 558 S.W.2d 429 (Tenn. 1977), we adopted factors to be considered when determining the enforceability of an exculpatory agreement. Olson involved an agreement, signed by a patient before a medical procedure, releasing the doctor from "any present or future legal responsibility associated with" the procedure. Id. at 429–30. The procedure was unsuccessful, and the patient sued the doctor. The trial court dismissed the lawsuit based on the agreement. Id. at 429. The Court of Appeals affirmed the dismissal. Id.

On review, we acknowledged that parties may agree that one party will not be liable for negligence to the other party, subject to certain exceptions. Id. at 430 (citing Moss v. Fortune , 207 Tenn. 426, 340 S.W.2d 902 (Tenn. 1960) ). This Court recognized a line of Tennessee cases upholding such agreements,⁶ but none involving a physician, who is a "professional person operating in an area of public interest and pursuing a profession subject to licensure by the state." Id. at 430. We distinguished between "tradesmen in the market place" and those "experts" who were practicing state regulated professions. Id. This Court noted that because certain relationships require of one party " ‘greater responsibility than that required of the ordinary person ,’ " an exculpatory agreement between such parties is " ‘peculiarly obnoxious.’ " Id. (quoting Williston on Contracts § 1751 (3d ed. 1972) ). To guide the analysis, this Court adopted a series of factors from Tunkl v. Regents of University of California , 60 Cal.2d 92, 32 Cal.Rptr. 33, 383 P.2d 441 (1963), to be considered in determining whether a transaction affected the public interest:

a. It concerns a business of a type generally thought suitable for public regulation.

b. The party seeking exculpation is engaged in performing a service of great importance to the public, which is often a matter of practical necessity for some members of the public.

c. The party holds himself out as willing to perform this service for any member of the public who seeks it, or at least for any member coming within certain established standards.

d. As a result of the essential nature of the services, in the economic setting of the transaction, the party invoking exculpation possesses a decisive advantage of bargaining strength against any member of the public who seeks his services.

e. In exercising a superior bargaining power the party confronts the public with a standardized adhesion contract of exculpation, and makes no provision whereby a purchaser may pay additional fees and obtain protection against negligence.

f. Finally, as a result of the transaction, the person or property of the purchaser is placed under the control of the seller, subject to the risk of carelessness by the seller or his agents.

Olson , 558 S.W.2d at 431. Noting that not all of these factors must be present for the exception to apply, we found that all the factors were present in Olson and held that the exculpatory agreement was unenforceable. Id. at 431–32.

After our decision in Olson , there was some confusion about whether the Olson factors applied only to exculpatory agreements involving professional services. In two cases, the Court of Appeals determined that the Olson analysis did not apply because the cases did not involve contracts for professional services. In Schratter v. Development Enterprises, Inc. , 584 S.W.2d 459, 461 (Tenn. Ct. App. 1979), the Court of Appeals upheld an exculpatory provision in a residential lease, based in part on its determination that this Court had limited application of the Olson factors to professional service contracts.⁷ Likewise, in Parton v. Mark Pirtle Oldsmobile-Cadillac-Isuzu, Inc. , 730 S.W.2d 634, 636 (Tenn. Ct. App. 1987) (citing Olson , 558 S.W.2d at 430 ), the Court of Appeals declined to apply the Olson factors to a contract for automobile repair because it concluded that this Court did not intend for the Olson analysis to apply to tradesmen in the market place.⁸ By the same token, in Petty v. Privette , 818 S.W.2d 743 (Tenn. Ct. App. 1989), the Court of Appeals applied the Olson factors to exculpatory language in a will that was intended to protect the attorney who had drafted the will. Finding only two of the Olson factors were present, the Court of Appeals held that this was insufficient to...