APPEAL FROM LAUREL CIRCUIT COURT
HONORABLE GREGORY A. LAY, JUDGE
ACTION NO. 12-CI-00090
OPINION
REVERSING AND REMANDING AS TO APPEAL NO. 2016-CA-001919-MR; AFFIRMING IN PART AND VACATING IN PART AS TO CROSS-APPEAL NO. 2017-CA-000081-MR
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BEFORE: ACREE, KRAMER, AND TAYLOR, JUDGES.
KRAMER, JUDGE: Kevin Wells, Sr., asserted various civil claims in Laurel Circuit Court against Catholic Health Initiatives, Inc., and its subsidiary, Saint Joseph Health System, Inc., (collectively, the "Hospital Defendants") stemming from what he alleged was the wrongful implantation of a pacemaker device in his chest. In the first of the two appeals before this Court (Appeal No. 2016-CA-001919-MR), the Hospital Defendants contest the judgment that was ultimately entered in conformity with a jury verdict in Wells's favor regarding his claims. Specifically, they argue two of Wells's claims -- respectively based upon theories of conspiracy and joint venture -- should have been dismissed at the directed verdict phase; and, that the trial court abused its discretion and substantially prejudiced their defense of this matter by allowing Wells to utilize two documents (a "Clinical Necessity Report" and "OIG Report") as substantive evidence. Upon review, we reverse and remand for a new trial.
In the second of these two appeals (Cross-Appeal No. 2017-CA-000081-MR), Wells argues the trial court erred by reducing his award of punitive damages to conform with a pre-trial itemization of damages he filed in this matter pursuant to Kentucky Rule of Civil Procedure (CR) 8.01(2). To the extent that the trial court held that any amount of punitive damages Wells could have been awarded was required to conform with his pre-trial itemization of damages, we affirm. However, considering our disposition of the Hospital Defendants' appeal and our conclusion that a new trial is warranted, we vacate the remainder of the trial court's judgment to the extent that it awarded Wells any amount.
With that said, the overarching history of this litigation is as follows. On September 22, 2010, at Saint Joseph London Hospital, Dr. Anis Chalhoub implanted a pacemaker in Wells. Thereafter, Wells filed suit in Laurel Circuit Court against Dr. Chalhoub, arguing the pacemaker implantation had been medically unnecessary; it had become a detriment to his health; and that Dr. Chalhoub, prior to implanting the pacemaker, had failed to secure his informed consent to do so.
Wells also filed suit against the Hospital Defendants, arguing Dr. Chalhoub never would have had the opportunity to implant the pacemaker absent the Hospital Defendants' failure to properly supervise physicians at their facility. As to why Wells believed the Hospital Defendants had failed to properly supervisetheir physicians, he based his claim upon a series of the Hospital Defendants' contractual arrangements that were in effect at the time of his pacemaker implantation -- contractual arrangements through which, in his view (and as he repeated throughout trial), the Hospital Defendants had "allowed the foxes to guard the henhouse." In his brief, he explains in relevant part as follows:
While this case involves the unnecessary implantation of a pacemaker by settling defendant Dr. Anis Chalhoub, the facts and claims are rooted in the Hospital Defendants' pattern and practice of incentivizing and profiting from such conduct. Wells's injury was caused by the Hospital Defendants' failure to implement any mechanism to monitor the performance of these cardiac procedures. Instead, the Hospital Defendants worked with local cardiologists to develop a joint venture affiliation model that improperly incentivized physicians to perform large volumes of unnecessary cardiac procedures.
. . .
[O]n August 1, 2008, the Hospital Defendants along with Dr. Satyabrata Chatterjee, Dr. Ashwini Anand, and Cumberland Clinic, the practice group co-owned by Chatterjee and Anand, executed an Affiliation Agreement to effectuate this co-management model.[1] The complicated Affiliation Agreement involved several contracts and entities with overlapping ownership and interests.
. . .
Under this arrangement, affiliated physicians were compensated based on the number of work relative value units ("WRVUs") performed. The more WRVUs they performed, the more each WRVU was worth -- it was anaccelerated and graduated compensation system. As another source of income, ICS contracted with Cumberland Clinic physicians to pay them as medical directors. As part of the medical director duties, the Hospital Defendants tasked the physicians with developing their own well-defined criteria for cardiovascular services. Essentially, through these medical director contracts, the Hospital Defendants put the physicians in charge of supervising the quality, safety, and appropriateness of the very procedures that they had a financial incentive to perform.
In short, Wells pointed out that hospitals have a duty to maintain procedures appropriate and adequate to determine whether the physicians on the staff of the hospital are carrying out their duties in a manner consistent with good medical practices. See, e.g., Rogers v. Kasdan, 612 S.W.2d 133, 135-36 (Ky. 1981) (observing this constitutes one facet of a hospital's duty of ordinary care relative to claims of negligence). But, he argued, the Hospital Defendants had breached their duty by (1) providing cardiologists with financial incentives to perform high volumes of surgical procedures, and then (2) allowing those same cardiologists to function as medical directors, effectively trusting them to objectively assess whether the surgical procedures they were being paid to perform on a volume basis were consistent with good medical practices.
Following extensive litigation and a trial, Wells submitted a total of six claims for the jury to consider. The first three of those claims are, for the most part, implied by what is set forth above: First, negligence (relating to whether Dr.Chalhoub violated medical standards of care by implanting Wells's pacemaker). Second, informed consent (also relating to Dr. Chalhoub). And third, negligent supervision (relating to the Hospital Defendants).
Wells's final three claims were more abstract. In Wells's fourth claim, he asked the jury to assess whether the Hospital Defendants had engaged in a "conspiracy." Fifth, he asked for a determination of whether the Hospital Defendants had participated in a "joint venture." And sixth, he tasked the jury with deciding whether the Hospital Defendants had violated the Kentucky Consumer Protection Act (KCPA), codified in Kentucky Revised Statutes (KRS) 367.110 et seq. Ultimately, the jury found in Wells's favor with respect to all six of Wells's claims.
This leads to the first category of arguments raised by the Hospital Defendants on appeal. The Hospital Defendants assert the trial court erred in denying their motions for directed verdicts with respect to Wells's "conspiracy" and "joint venture" claims. We address each of these points in turn. As to the standard for reviewing a trial court's decision to grant or deny a directed verdict,
[it] consists of two prongs. The prongs are: "a trial judge cannot enter a directed verdict unless there is a complete absence of proof on a material issue or if no disputed issues of fact exist upon which reasonable minds could differ." Bierman v. Klapheke, 967 S.W.2d 16, 18-19 (Ky. 1998). "A motion for directed verdict admits thetruth of all evidence which is favorable to the party against whom the motion is made." National Collegiate Athletic Ass'n By and Through Bellarmine College v. Hornung, 754 S.W.2d 855, 860 (Ky. 1988), citing Kentucky & Indiana Terminal R. Co. v. Cantrell, 298 Ky. 743, 184 S.W.2d 111 (1944).
Clearly, if there is conflicting evidence, it is the responsibility of the jury, the trier of fact, to resolve such conflicts. Therefore, when a directed verdict motion is made, the court may not consider the credibility or weight of the proffered evidence because this function is reserved for the trier of fact. National, 754 S.W.2d at 860 (citing Cochran v. Downing, 247 S.W.2d 228 (Ky. 1952)).
Daniels v. CDB Bell, LLC, 300 S.W.3d 204, 215 (Ky. App. 2009). When reviewing the propriety of either a summary judgment or a directed verdict, however, questions of law are always reviewed de novo by this Court. Hardin Cty. Schools v. Foster, 40 S.W.3d 865, 868 (Ky. 2001).
The concept of civil conspiracy was explained in Peoples Bank of N. Ky., Inc. v. Crowe Chizek and Co. LLC, 277 S.W.3d 255, 260-61 (Ky. App. 2008):
[C]ivil conspiracy ... has been defined as "a corrupt or unlawful combination or agreement between two or more persons to do by concert of action an unlawful act, or to do a lawful act by unlawful means." Smith v. Board of Education of Ludlow, 264 Ky. 150, 94 S.W.2d 321, 325 (1936). In order to prevail on a claim of civil conspiracy, the proponent must show an unlawful/corrupt combination or agreement between the alleged conspirators to do by some concerted action an unlawfulact. Montgomery v. Milam, 910 S.W.2d 237, 239 (Ky. 1995).
Importantly, civil conspiracy is not a free-standing claim; rather, it merely provides a theory under which a plaintiff may recover on an apportioned basis from multiple defendants for an underlying tort. See Davenport's Adm'x v. Crummies Creek Coal Co.,...
