Carter v. US (Veterans Administration), S90-448 (RLM).

Decision Date24 June 1991
Docket NumberNo. S90-448 (RLM).,S90-448 (RLM).
Citation768 F. Supp. 670
PartiesThomas CARTER, et al., Plaintiffs, v. UNITED STATES of America (VETERANS ADMINISTRATION), Defendant.
CourtU.S. District Court — Northern District of Indiana

Barry Rooth, Merrillville, Ind., for plaintiffs.

Clifford D. Johnson, Asst. U.S. Atty, South Bend, Ind., for defendant.


Miller, District Judge.

This case presents an issue not addressed by any previously reported case: whether the United States, when sued under the Federal Tort Claims Act ("FTCA"), 28 U.S.C. §§ 2671 et seq., for an act of alleged medical malpractice, is entitled to the protection of the $500,000.00 limitation on medical malpractice awards that Indiana law provides to "qualified health care providers", notwithstanding that the United States is not a "qualified health care provider" under Indiana law. For the reasons that follow, the court concludes that the United States is entitled to the protection of that statutory "cap" on recovery.

Thomas and Colleen Carter claim that Thomas Carter received negligent medical care in 1987 at the Richard Roudebush Veterans Administration ("VA") Hospital in Indianapolis. They fulfilled the administrative prerequisite to bringing this action and now seek damages for Mr. Carter's injuries in the amount of $3,000,000.00 and for Mrs. Carter's loss of consortium in the amount of $757,500.00. This court has jurisdiction pursuant to 28 U.S.C. § 1346(b). The government's amended answer asserts the following affirmative defense:

Plaintiffs may not recover, in any judgment entered by this court, any sums in excess of the amount authorized and/or permitted under Indiana Code § 16-9.5-2-2.

The Carters seek summary judgment as to this affirmative defense and ask the court to find as a matter of law that the federal government is not entitled to the limitation of damages provided by IND. CODE 16-9.5-2-2.

The Indiana Medical Malpractice Act, IND. CODE 16-9.5-1-1 et seq., was enacted to alleviate the rising cost, and dwindling availability, of medical malpractice insurance, which, in turn, resulted in the decline of medical services in Indiana. To provide some protection to health care providers and ensure the availability of health care services within the state, the Indiana legislature created a patient compensation fund, to which health care providers contribute, and established limits for liability and patient remedies. Sue Yee Lee v. Lafayette Home Hospital, Inc., 410 N.E.2d 1319, 1323-24 (Ind.1980); Johnson v. St. Vincent Hospital, Inc., 273 Ind. 374, 404 N.E.2d 585, 589-90 (1980).

The Act defines a "health care provider" as:

... an individual, partnership, corporation, professional corporation, facility or institution licensed or legally authorized by this state to provide health care or professional services as a physician ... or hospital....

IND. CODE 16-9.5-1-1(a)(1). A "physician" is an individual licensed to practice medicine under state law, IND. CODE 16-9.5-1-1(b), and a "hospital" is a public or private institution licensed under state law, IND. CODE 16-9.5-1-1(d).

To be qualified for the Act's protection, a health care provider must file proof of financial responsibility and pay a surcharge to the patient compensation fund. IND. CODE 16-9.5-2-1(a). The United States does not claim to have done so. For health care providers so qualified, the Act limits a provider's liability to $100,000 per occurrence of malpractice. IND. CODE 16-9.5-2-2(b). Any amount due from a judgment or settlement in excess of $100,000 is paid from the patient compensation fund. IND. CODE 16-9.5-2-2(b), (c). The total amount recoverable for injury or death of a patient due to an act of malpractice occurring before January 1, 1990 is $500,000. IND. CODE 16-9.5-2-2(a).

A "patient" is:

... an individual who receives or should have received health care from a health care provider ... and includes a person having a claim of any kind, whether derivative or otherwise, as a result of alleged malpractice on the part of a health care provider. Derivative claims include, but are not limited to, the claim of a ... relative ... including claims for loss of services, loss of consortium, expenses, and other similar claims.

IND. CODE 16-9.5-1-1(c). Thus, a claim against a state licensed physician or hospital based on malpractice that occurred in 1987 can result in recovery of no more than $500,000 for the patient and the patient's spouse.

The Carters claim that because the VA hospital and its physician-employees are not licensed by the state, and because the VA hospital did not comply with the requirements of the Indiana Act, the United States is not a qualified health care provider entitled to protection of the Act's damages cap. The United States does not dispute that its health care facilities and physician-employees are not licensed by the state and that it does not comply with the Act's requirements. The United States cannot be required to pay into the state-created patient compensation fund. The United States does not contend that any malpractice settlement or judgment against it would be paid from this fund or that its liability should be limited to $100,000. It does contend, however, that the Carters' recovery is limited to $500,000, notwithstanding its noncompliance with the Act.

The source of the United States' liability is found in its waiver of sovereign immunity as expressed in the FTCA:

The United States shall be liable, respecting the provisions of this title relating to tort claims, in the same manner and to the same extent as a private individual under like circumstances....

28 U.S.C. § 2674. Because Mr. Carter alleges that he received negligent treatment in Indiana, the law of Indiana applies.

The district courts ... shall have exclusive jurisdiction of civil actions on claims against the United States, for money damages, accruing on or after January 1, 1945, for injury or loss of property, or personal injury or death caused by the negligent or wrongful act or omission of any employee of the Government while acting within the scope of his office or employment, under circumstances where the United States, if a private person, would be liable to the claimant in accordance with the law of the place where the act or omission occurred.

28 U.S.C. § 1346(b).

The Carters claim that a private individual (in this case, a private health care provider) under like circumstances would be denied the benefit of the damages cap in IND. CODE 16-9.5-2-2 if the individual had not been state licensed, had not paid contributions to the patient compensation fund, or otherwise had failed to comply with the state's malpractice act. Therefore, they argue, the United States should be denied benefit of the cap. The Carters urge the court to consider the "whole law" of the state in which the alleged negligence occurred in determining the manner and extent of the government's liability, citing Richards v. United States, 369 U.S. 1, 11, 82 S.Ct. 585, 591, 7 L.Ed.2d 492 (1962), in which the Supreme Court determined that choice of law rules, as well as substantive law of the state where the alleged negligence occurred, governed the action. The Carters also cite Dalehite v. United States, 346 U.S. 15, 30-31, 73 S.Ct. 956, 965-966, 97 L.Ed. 1427 (1953), which states that the purpose of the FTCA was to allow suits against the government for negligence. However, the Dalehite Court went on to state that FTCA plaintiffs "obtain their `right to sue from Congress and they necessarily must take that right subject to such restrictions as have been imposed.'" Dalehite, 346 U.S. at 31, 73 S.Ct. at 965 (quoting Federal Housing Administration v. Burr, 309 U.S. 242, 251, 60 S.Ct. 488, 493, 84 L.Ed. 724 (1940)). For this reason, the Court determined that the plaintiffs had no cause of action for government officials' negligence in carrying out discretionary duties.

The Carters rely on Taylor v. United States, 233 F.Supp. 1008 (D.N.J.1964), in which a plaintiff brought suit against a VA clinic under the New Jersey wrongful death act. A state statute limited damages against not-for-profit hospitals to $10,000. The district court found that neither the United States nor the VA was such an organization and, therefore, the damages limitation did not apply.

The Carters also cite Gallea v. United States, 779 F.2d 1403 (9th Cir.1986), in which the federal government was immune from suit for serving an inebriated person alcohol at an enlisted men's club. The state imposed liability only on businesses licensed to serve alcohol, and because the federal government was not licensed by the state to serve alcohol, the court concluded that:

Since California courts narrowly construe the exception to the general liquor-provider immunity and since the legislature obviously intended the immunity exception to be limited to liquor providers licensed under California law, we cannot say that a private person in circumstances similar to the Club would be liable.

Gallea, 779 F.2d at 1406. This holding, however, was not extended to medical malpractice cases against the federal government. In Fetter v. United States, 649 F.Supp. 1097 (S.D.Cal.1986), the court stated:

Plaintiff interprets Gallea to hold that an entity may not benefit from a protective statute unless it is likewise subject to the burden of licensing restrictions. This court, however, reads Gallea differently. The court's concern in Gallea, as in other challenges under the FTCA, was the identification of "a private person in a similar situation." Gallea 779 F.2d at 1406. In certain frameworks, the private person analogy may depend on licensing; in other instances, licensing will not be the predominant factor.
The situation of the military medical officers treating plaintiff is most similar to private doctors. They are both "health care providers" within the meaning of Cal.Civ.Code § 3333.2. Accordingly, the United States may claim the

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