Curry v. Hillcrest Clinic, Inc.

• Decision Date: 01 September 1994
• Docket Number: No. 52,52
• Citation: Curry v. Hillcrest Clinic, Inc., 653 A.2d 934, 337 Md. 412 (Md. 1994)
• Parties: Lydia CURRY v. HILLCREST CLINIC, INC. ,
• Court: Maryland Court of Appeals

Page 412

337 Md. 412

653 A.2d 934

Lydia CURRY v. HILLCREST CLINIC, INC.

No. 52, Sept. Term, 1994.

Court of Appeals of Maryland.

Feb. 10, 1995.

John Amato, IV (John T. Enoch; Goodman, Meagher & Enoch, all on brief), Baltimore, MD, for petitioner.

R. Wayne Pierce (Niles, Barton & Wilmer, all on brief), Baltimore, MD, for respondent.

Argued before MURPHY, C.J., and ELDRIDGE, RODOWSKY, CHASANOW, KARWACKI, BELL and RAKER, JJ.

RODOWSKY, Judge.

Before us are cross-petitions in an action initiated under the Health Care Malpractice Claims Act (the Act), Maryland Code (1974, 1989 Repl.Vol., 1994 Cum.Supp.), §§ 3-2A-01 through 3-2A-09 of the Courts and Judicial Proceedings Article (CJ). The principal issue presented by the claimant's petition concerns default procedures in arbitration when malpractice claims are asserted against multiple defendants. We shall hold that, where a common basis of liability had been alleged against two defendants, one of whom failed to answer, a finding in favor of the non-defaulting defendant that the common basis of liability is not proven inures to the benefit of the defaulting defendant. On the health care provider's petition the principal issue concerns possible prematurity in the filing of the claimant's notice of rejection of an adverse award. We shall hold that the claimant's notice was effective.

The claimant is Lydia T. Curry (Curry). The defaulting health care provider is Hillcrest Clinic, Inc. (Hillcrest). The co-defendant health care provider who timely answered is Dr. Sheo P. Sharma (Sharma). We distill from Curry's arbitration complaint that Hillcrest operated an abortion clinic in the Baltimore Metropolitan area where Sharma directed and controlled the staff. In March 1988 Curry, then approximately seventeen weeks pregnant, presented at the clinic for the purpose of obtaining an abortion. In the course of an attempted abortion Sharma allegedly perforated Curry's uterus and colon. The abortion was successfully completed the next day at Johns Hopkins Hospital where the physicians "repaired the uterine defect, fashioned a Hartman's Pouch, and completed a rectosigmoid colostomy."

Curry filed a complaint with the Health Claims Arbitration Office (HCAO) against Sharma and Hillcrest. Each count of her complaint alleged that "[t]he clinic is liable under the doctrine of respondeat superior for the actions of Dr. Sharma." Sharma was served, appeared, and answered. ¹ Hillcrest was served on March 5, 1990, but it did not answer.

Section 3-2A-02(d) of the Act provides that "[e]xcept as otherwise provided, the Maryland Rules of Procedure shall apply to all practice and procedure issues arising under this subtitle." The procedure upon default for failure to answer the complaint is not prescribed in the Act or in the rules adopted by the HCAO Director under CJ § 3-2A-03(b)(3). Consequently, Maryland Rule 2-613 governs such defaults. That rule provides for an order of default, notice of the entry of the order of default, a motion to vacate the order of default, entry of judgment, and "finality" of the default judgment. ² Following Hillcrest's failure to answer, the next step in the procedural overview of this action was the entry by HCAO, at Curry's request, of an order of default. HCAO sent notice of the order of default to Hillcrest, which Hillcrest received, but Hillcrest filed no motion to vacate the order of default. Curry then prepared, and the HCAO Director signed, a paper writing titled "Order Entering Award by Default." This document "ORDERED that an award of default is entered in favor of [Curry against Hillcrest] in an amount to be determined by the [arbitration] panel on the issue of [Curry's] damages."

More than two weeks after the "award by default" Hillcrest moved to "set aside entry of default judgment." The motion was denied by the chairwoman of the panel. Hillcrest's motion did not contend that Sharma's answer operated as a denial of liability for Hillcrest as well.

The contention that Hillcrest benefited from Sharma's defenses was first raised in a motion in limine filed with the arbitration panel three days before the hearing on the merits. The panel deferred ruling on the motion in limine until the conclusion of the hearing. Hillcrest was permitted to participate in the hearing only with respect to possible damages. At the end of the arbitration the panel decided that Sharma was not negligent as to certain alleged conduct and that, although he was "negligent in failing to carefully and fully inform the subsequent treating physicians," that "negligence was not the proximate cause of Ms. Curry's injuries." Under the panel's findings, there was no liability on Sharma's part.

With respect to Hillcrest, the panel further concluded as follows:

"Given that Defendant Hillcrest's Motion in Limine to Benefit from Sharma's Defenses and to Limit Damages were orally granted at the hearing and that the panel found that Ms. Curry's injuries were not the proximate [result] of negligence caused by Defendants, FINAL JUDGMENT OF NO LIABILITY IS ENTERED FOR DEFENDANT HILLCREST."

Curry filed with HCAO a notice of rejection of the award, and she brought an action to nullify the award in the Circuit Court for Baltimore County. Her complaint in court consisted of three counts. Count I, claiming against both Hillcrest and Sharma, repeated the allegations contained in Curry's health claims arbitration complaint. Indeed, Curry alleged that she was entitled to a default judgment against Hillcrest in the circuit court on Count I because those allegations were verbatim the allegations of the arbitration claim. Count II of the circuit court complaint claimed only against Sharma. Count III made allegations against Hillcrest, in addition to those set forth in Count I, for the purpose of asserting a negligence claim against Hillcrest that would be independent of, and distinct from, any negligence of Sharma.

In the circuit court Curry preliminarily petitioned to vacate the panel's award in favor of Hillcrest on the ground that the panel had exceeded its authority. See CJ §§ 3-2A-06(c) and 3-224(b)(3). Curry contended that Sharma's having prevailed on the merits in arbitration did not relieve Hillcrest of its default. Curry also moved for a default judgment based on Hillcrest's default in arbitration.

The circuit court vacated the award, stating that the defense established by a non-defaulting defendant inures to the benefit of a defendant in default "only when the answering defense extinguishes the Plaintiff's/Claimant's entire right of action, such as a statute of limitations defense." The circuit court would not rule, however, that Hillcrest was precluded from defending the malpractice action in the circuit court. That court also rejected the defendants' motion to dismiss Curry's "appeal" from health claims arbitration.

At trial on the merits before a jury in the circuit court the verdict was in favor of both Sharma and Hillcrest on all counts. Judgment was entered accordingly.

Curry appealed to the Court of Special Appeals, and Hillcrest cross-appealed from the vacating of its award. Hillcrest also sought to dismiss Curry's appeal. Curry v. Hillcrest Clinic, Inc., 99 Md.App. 477, 638 A.2d 115 (1994). That court held that Curry's "appeal" to the circuit court was not to be dismissed as premature because Curry had substantially complied with the Act's provisions for proceedings in a circuit court following an adverse award in health claims arbitration. Id. at 488-95, 638 A.2d at 120-24. The intermediate appellate court, although finding it unnecessary to decide whether Sharma's defense inured to the benefit of Hillcrest, additionally stated that the force of that doctrine, relied upon by the panel's chairwoman, was "questionable" in this State. Id. at 496, 638 A.2d at 124. The Court of Special Appeals, by distinguishing Bailey v. Woel, 302 Md. 38, 485 A.2d 265 (1984), rejected Curry's contention that she was entitled to a default judgment against Hillcrest in the circuit court. Bailey held that a claimant who put on no case in arbitration, based on a tactical decision, had failed to comply with the Act's condition precedent for instituting a medical malpractice action in the circuit court. The Court of Special Appeals noted that in Curry's matter there had been a "full hearing, and, based on the evidence adduced, the panel made a determination of no liability with respect to Sharma, and the Chairperson made a determination of no liability with respect to Hillcrest." 99 Md.App. at 501, 638 A.2d at 126.

Thereafter this Court granted cross-petitions for certiorari that raise basically the same issues presented to the Court of Special Appeals. Because that court in a reported opinion had cast doubt on the viability in this State of the common law doctrine under which certain defenses by a non-defaulting defendant can inure to the benefit of a defaulting defendant, we considered the status of the doctrine to be a matter of public importance.

In Part I, infra, of this opinion we shall address two issues that logically precede analysis of the default issues, which we address in Part II. Additional facts will be stated hereinafter, as required for an understanding of the particular arguments.

I

A

Hillcrest contends that the circuit court erred in denying the defendants' motion to dismiss Curry's circuit court complaint. The argument rests on CJ § 3-2A-06(a), the relevant portion of which reads:

"A notice of rejection must be filed with the Director and the arbitration panel and served on the other parties or their counsel within 30 days after the award is served upon the rejecting party...."

Hillcrest contends that Curry filed its notice of rejection with the Director before Curry had been served officially with the award, and that the sanction for this deviation from the ordained procedure is dismissal.

What transpired in the matter at hand is not entirely clear from the...