Atterholt v. Herbst

Decision Date10 March 2009
Docket NumberNo. 49S04-0806-CV-344.,49S04-0806-CV-344.
Citation902 N.E.2d 220
PartiesJim ATTERHOLT, Commissioner of the Indiana Department of Insurance, as Administrator of the Indiana Patient's Compensation Fund, Appellant (Defendant below), v. Geneva HERBST, Personal Representative of the Estate of Jeffry A. Herbst, Deceased, Appellee (Plaintiff below).
CourtIndiana Supreme Court

Elizabeth H. Knotts, Rori L. Goldman, Indianapolis, IN, Attorneys for Appellant.

Robert L. Thompson, Fort Wayne, IN, Richard L. Schultheis, Indianapolis, IN, Attorneys for Appellee.

Thomas J. Costakis, Libby Y. Mote, Indianapolis, IN, Attorneys for Amicus Curiae Indiana State Medical Association.

On Petition to Transfer from the Indiana Court of Appeals, No. 49A04-0702-CV-106.

BOEHM, Justice.

We hold that when a claimant seeks excess damages from the Patient's Compensation Fund after obtaining a judgment or settlement from a health care provider in a medical malpractice case, the Fund may introduce evidence of the claimant's preexisting risk of harm if it is relevant to establish the amount of damages, even if it is also relevant to liability issues that are foreclosed by the judgment or settlement.

Facts and Procedural History

On March 6, 2002, thirty-four-year-old Jeffry Herbst suffered from a fever, congestion, nausea, loss of appetite, and decreased urine output. At 10:30 a.m. that day, Herbst's primary care physician diagnosed the condition as bilateral pneumonia and sent Herbst to the hospital, where he died at 9:00 that night. An autopsy determined that Herbst died of fulminant myocarditis, an inflammation of the heart characterized by acute and severe onset.

Herbst's Estate sought to bring a wrongful death action against the primary care physician, the physician's employer, and the hospital. Both the physician and the hospital are qualified health care providers under the Medical Malpractice Act. That statute provides that before a claim for negligence may be brought against a qualified provider, the proposed complaint must be submitted to a medical review panel. The Estate's proposed complaint alleged that the health care providers failed to comply with the appropriate standard of care in assessing and treating Herbst's condition and that this failure was a factor in Herbst's death. The medical review panel determined that the primary care physician had failed to meet the appropriate standard of care, but the failure was not a factor in Herbst's death. The panel found that the hospital met the appropriate standard of care, and made no finding regarding the physician's employer.

Under the Medical Malpractice Act, the liability of each qualified health care provider is limited to $250,000. Additional damages may be recovered from the Patient's Compensation Fund under conditions explained in more detail below. Herbst's Estate settled with the primary care physician and the hospital under an agreement that permitted access to the Fund.

The Estate then brought this action, seeking the statutory maximum in additional damages from the Patient's Compensation Fund. In Cahoon v. Cummings, 734 N.E.2d 535, 541 (Ind.2000), we held that damages for negligently causing an increased risk of harm are "proportional to the increased risk attributable to the defendant's negligent act or omission." The Estate anticipated that the Fund would invoke this doctrine and contend that the damages from Herbst's death were only a fraction, if any, of the total dollar value placed on the death because Herbst's condition was likely fatal irrespective of any malpractice. Seeking to present this issue, the Estate moved for partial summary judgment, requesting a "preliminary determination of the law applicable," specifically that

(a) the Court will determine the amount of damages, if any, due to the plaintiff, not whether the health care provider defendants are liable for the compensable damages alleged; (b) the Indiana Patient's Compensation Fund (PCF) may not litigate any issues of liability or proximate causation, which are deemed established by settlement with the health care provider defendants; and (c) the question presented is the amount of the compensable damages alleged, not the liability for, or the proximate cause of, such damages.

The Fund responded that it was not seeking to relitigate whether the providers were liable for Herbst's death, but rather challenged the amount of damages attributable to the providers' conduct. The trial court granted the Estate's motion without explanation and denied the Fund's request to certify the order for interlocutory appeal.

At a bench trial, the Fund attempted to introduce expert testimony that even with proper care, Herbst had a less than ten percent chance of surviving the hospitalization, and had he survived, he would have been unable to return to work. The trial court excluded this evidence. The trial court found that the "evidence establishes that the damages of the Estate and the beneficiaries, including funeral and burial expenses, loss of earnings, loss of services, and loss of love and affection and parental guidance would exceed the sum of $2,500,000.00," and awarded the Estate the statutory maximum of $1 million.

The Fund appealed, arguing that the trial court erred in granting the partial summary judgment and also in excluding the expert testimony. The Court of Appeals affirmed the trial court in an opinion discussed below. Atterholt v. Herbst, 879 N.E.2d 1221, 1227 (Ind.Ct.App.2008). We granted transfer and reverse in part.

Standards of Review

We review a summary judgment order de novo. Lean v. Reed, 876 N.E.2d 1104, 1107 (Ind.2007). Summary judgment is appropriate when there is no genuine issue of material fact and the moving party is entitled to a judgment as a matter of law. Ind. Trial Rule 56(C). We grant relief from a trial court's erroneous exclusion of evidence only when the error affects "the substantial rights of the parties." T.R. 61.

Liability and Damages for Medical Malpractice

Under the Indiana Medical Malpractice Act, the total recovery in a medical malpractice action is limited to $1,250,000 per "injury or death." The Act caps a health care provider's malpractice liability at $250,000 per occurrence if the provider maintains sufficient insurance and pays the required surcharge to the Patient's Compensation Fund. Ind.Code §§ 34-18-3-1, -14-3(b) (2004). The Fund is financed by the surcharges collected from providers throughout the state and pays "excess damages." Recovery of excess damages from the Fund is allowed only after a health care provider or the provider's insurer has paid the first $250,000, id. § 34-18-15-3(1), or made a settlement in which the sum of the present cash payment and cost of future periodic payments exceeds $187,000. Id. § 34-18-14-4(b). Multiple providers' cash payments and contributions to a periodic payments agreement are aggregated for purposes of the $187,000 requirement. Id. § 34-18-14-4(c). If the Fund and claimant cannot agree on the amount to be paid from the Fund, the court must hold a hearing to "determine the amount for which the fund is liable." Id. § 34-18-15-3(4)-(5). In determining this amount, "the court shall consider the liability of the health care provider as admitted and established." Id. § 34-18-15-3(5).

In this case, the Estate filed a petition to access the Fund after settling with the health care providers under an agreement in which the providers contributed a total of $187,001 in cash and payments to purchase an annuity. The Estate and the Fund dispute the meaning of the statutory provision that "liability" is to be treated as "established" by the settlement. The Estate argues that "liability" includes causation and the statute therefore precludes the Fund from introducing evidence related to causation issues. We understand the Estate's contention to embrace both causation in fact and scope of liability, sometimes described as proximate cause. The Estate thus argues that any evidence of Herbst's risk of death bears on causation—whether the death results from malpractice—and is therefore precluded. The Fund responds that its evidence is admissible because it is relevant to the amount of damages for which it is liable.

The Medical Malpractice Act does not define "liability." However, the Act provides that undefined legal terms have the meaning consistent with the common law. I.C. § 34-18-2-2. According to Black's Law Dictionary (8th ed.2004), liability is the "quality or state of being legally obligated or accountable." To say that one is "liable" does not establish the amount of damages. In this case evidence of Herbst's underlying risk of death whether or not he was properly treated is relevant to both liability—whether malpractice caused his death—and to damages—the amount for which the Fund is responsible. For this reason, it is admissible and its exclusion was error.

Prior cases are consistent with our holding today. The plaintiff relies principally on Dillon v. Glover, 597 N.E.2d 971 (Ind. Ct.App.1992), trans. denied, In Glover, a physician negligently failed to diagnose the plaintiffs lung cancer from an initial x-ray, and the patient died. Id. at 972. The patient's estate brought a wrongful death claim against the physician. The patient's estate settled with the physician for the statutory maximum and then pursued excess damages from the Patient's Compensation Fund. Id. At the trial on excess damages, evidence established that had the cancer been...

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