Adkins v. Collens

• Decision Date: 12 July 2019
• Docket Number: Supreme Court No. S-16930
• Citation: 444 P.3d 187
• Parties: Alaina ADKINS and Maxim Healthcare Services, Inc., Appellants, v. Jesse Michael COLLENS, Appellee.
• Court: Alaska Supreme Court

444 P.3d 187

Alaina ADKINS and Maxim Healthcare Services, Inc., Appellants,

v.Jesse Michael COLLENS, Appellee.

Supreme Court No. S-16930

Supreme Court of Alaska.

July 12, 2019

Rehearing Denied August 21, 2019

Gregory S. Fisher, Nicholas I. Bajwa, and Kristal L. Leonard, Davis Wright Tremaine LLP, Anchorage, for Appellants.

Susan Orlansky, Reeves Amodio LLC; Jeffrey M. Feldman, Summit Law Group; and Michael T. Stehle, Law Office of Michael Stehle, PC, Anchorage, for Appellee.

Roger F. Holmes, Biss & Holmes, Anchorage, for Amicus Curiae Alaska State Medical Association.

John J. Tiemessen, Clapp, Peterson, Tiemessen, Thorsness & Johnson, Fairbanks, for Amicus Curiae Alaska Dental Society.

Before: Bolger, Chief Justice, Winfree, Stowers, Maassen, and Carney, Justices.

OPINION

BOLGER, Chief Justice.

I. INTRODUCTION

Maxim Healthcare Services and its Alaska office manager, Alaina Adkins, made misrepresentations while discharging Jesse Collens from Maxim's care, in violation of the company's own policies and procedures. Collens sued them for breach of contract, fraudulent misrepresentation, unfair and deceptive acts and practices under Alaska's Unfair Trade Practices and Consumer Protection Act (UTPA),¹ and intentional infliction of emotional distress (IIED). The superior court ruled for Collens on all his claims and entered a $20,379,727.96 judgment against Adkins and Maxim, which included attorney's fees. Maxim and Adkins now appeal, arguing that (1) they were not liable under the UTPA; (2) the superior court erred in precluding their expert witnesses from testifying at trial; (3) the court's damages award was excessive; and (4) the court's attorney's fee award was unreasonable. We agree that the superior court's attorney's fee award was unreasonable, but on all other issues we affirm the superior court's decision.

II. FACTS AND PROCEEDINGS

In May 2009 Jesse Collens, then 21 years old, was permanently injured in a bicycle accident that left him a C-1 quadriplegic, paralyzed from the neck down, and dependent on a ventilator to breathe. Collens was living in Anchorage when the accident occurred, and he chose to remain there after recuperating to be near friends and family.

Because long-term care facilities in Anchorage are not prepared to serve a ventilator-dependent individual such as Collens, he sought in-home care. In December 2009 he contracted with Maxim, a national healthcare corporation with a home healthcare division, to provide his nursing care. At the time Collens had a prescription for in-home nursing care that was refillable for life. Maxim was licensed as a home health agency in Alaska at all relevant times.

In late 2011 issues arose between Collens and Maxim over the company's management of his care. These issues escalated, and in early March 2012, Alaina Adkins, Maxim's Alaska office manager, met with Collens to discuss his main concerns with Maxim's services.

The following business day, Adkins emailed various members of Maxim's legal and administrative staff about one of the issues Collens had raised. Internal concerns surfaced about the legal compliance of the staff working with Collens. Maxim's Compliance Department produced a report on March 21 that suggested some issues with how Collens's nurses were supplying him insulin as well as other scheduling and dosage discrepancies. In an email responding to the report, Maxim's area vice president wrote, "We are in dangerous territory right now with the liability of this case and we are going to have to seriously consider discharge."

Collens's contract with Maxim included a form that told him of his rights as a patient. In this document Maxim affirmed that Collens had the right to:

Know that the home health plan of care/treatment will be developed by the physician, in cooperation with the appropriate Maxim professional staff member, and with the patient and family to the extent possible.

The document also affirmed that Collens had the right:

Not to be transferred or discharged unless:

a. The individual's medical needs require transfer;

b. The individual's health and safety or that of another person requires transfer or discharge; or

c. The individual fails to pay for services, except as such transfer or discharge is prohibited by law.

d. The individual does not meet any criteria for continued service set forth by Maxim, federal, state, or local statute or regulation.

In accordance with state regulations, Maxim had adopted policies and procedures to govern its provision of home healthcare services.² Those policies and procedures stated that a patient could not be discharged from Maxim's home healthcare program without a physician's order.

Collens's care plan was subject to routine recertification every 60 days. Maxim's Alaska Director of Clinical Services visited Collens's house to complete the review necessary for this recertification on March 23. Three days later she submitted the recertification paperwork, noting that "discharge is not warranted."

That same day Adkins requested that Maxim's legal department provide her a draft discharge letter for Collens. This draft letter stated that the discharge had been discussed with Collens's physician and care coordinator and that they agreed with the discharge decision. But in fact neither approved the discharge.³ The draft discharge letter also included a space for names of other entities that could provide the care needed by the patient. Although Adkins emailed the legal department saying, "We already know that there are no providers in our area that provide this type of service," the discharge letter she eventually delivered to Collens filled in the blank with four agency names. Adkins delivered and read aloud the discharge letter at Collens's home on March 30.

Collens filed suit against Maxim in early 2014, alleging breach of contract and fraudulent misrepresentation.⁴ Maxim moved for summary judgment on these claims. Collens opposed and cross-moved for partial summary judgment on the contract claim. In the memorandum supporting that motion, Collens asserted claims under the UTPA for the first time. The superior court denied all motions, finding the existence of disputed facts relevant to the fraud and contract claims. Its order did not address the UTPA claims.

During a protracted pretrial period, multiple discovery disputes arose. Among other things, Collens moved to strike Maxim's expert witnesses, arguing that it had not submitted their reports before the relevant deadline. In April 2017 the superior court granted this motion and precluded Maxim's experts from testifying at trial.

After a six-day bench trial in June 2017, the superior court ruled for Collens on all counts. The court awarded him $4,315,007 in damages for his breach of contract claim. This was trebled under the UTPA's damages provision to total $12,945,021. The court also awarded Collens $400,000 in damages for IIED and $500,000 in punitive damages. The court later awarded Collens $5,676,668.17 in attorney's fees. Maxim appeals.

III. DISCUSSION

Maxim asks us to vacate the superior court's judgment and remand for a new trial on contract and tort damages, with instructions that Maxim was not liable under the UTPA. It also asks us to vacate the fee award as unreasonable. We agree that the superior court's attorney's fee award was unreasonable, but in all other respects we affirm the superior court's judgment. Maxim is liable under the UTPA; its conduct is clearly subject to sanctions under the Act. The superior court's decision to preclude Maxim from presenting expert testimony on damages was not an abuse of discretion. And the court's damages assessment was not excessive.

A. Maxim Is Liable Under The UTPA.

On appeal Maxim makes two main arguments for why the UTPA does not apply to its conduct.⁵ First Maxim argues that Collens's UTPA claim was exempt from the Act's coverage because it involved conduct already prohibited by statute or regulation.⁶ We refer to this argument as Maxim's "statutory exemption defense." Second Maxim argues that the conduct at issue was a healthcare, not business, decision that should be exempt from UTPA liability.⁷ We refer to this as Maxim's "healthcare exemption defense." In response Collens argues that these defenses have been waived as issues for appeal because Maxim failed to develop them sufficiently before the superior court. If they are preserved, he contends that neither exempts Maxim from UTPA liability.

1. Maxim preserved both UTPA defenses.

Whether a particular claim has been waived is a question of law reviewed de novo.⁸ Arguments raised for the first time on appeal are generally waived,⁹ but those explicitly raised in the trial court may be expanded or refined in appellate argument.¹⁰ Collens contends that Maxim waived the statutory exemption defense by failing to develop it at trial after mentioning it in summary judgment briefing. But Collens's complaint did not include an express claim based on the UTPA. And Maxim later raised the defense in objections to Collens's proposed findings of fact and conclusions of law on this claim. In those objections Maxim cited the statutory exemption and argued that certain statutes and regulations of the nurse licensing board prohibited its disputed conduct. This was adequate to preserve the defense.

Although it is a closer question, Maxim also preserved the healthcare exemption defense. Maxim repeatedly argued that its decision to discharge Collens had nothing to do with the sale or advertisement of goods and services and thus was not covered by the UTPA. The basic premise behind the healthcare exemption defense Maxim asserts on appeal is that the UTPA is intended to apply to a circumscribed set of commercial transactions, not disputes involving the provision of healthcare. Since this defense is fairly characterized as an "expansion or refinement" of arguments Maxim made before the superior court, we also consider it preserved for our review.

2. Collens's UTPA claim was not exempt under AS...