Harrell v. Total Health Care, Inc.

• Decision Date: 12 December 1989
• Docket Number: No. 71610,71610
• Parties: Sara Westbrook HARRELL, Appellant, v. TOTAL HEALTH CARE, INC., Respondent.
• Court: Missouri Supreme Court

Page 58

781 S.W.2d 58

Sara Westbrook HARRELL, Appellant, v. TOTAL HEALTH CARE, INC., Respondent.

No. 71610.

Supreme Court of Missouri,

En Banc.

Dec. 12, 1989.

J. Michael Vaughan, Michael D. Strohbehn, J. Bret Armatas, Kansas City, for appellant.

William Lee Yocum, Mark A. Lynch, Kansas City, for respondent.

Ronald R. McMillin, Lori J. Levine, Gerald M. Sill, Missouri Hosp. Ass'n, Jefferson City, for amici curiae Missouri Hosp. Ass'n and Missouri Hosp. Plan.

BLACKMAR, Chief Justice.

The plaintiff filed an action alleging damages originating in malpractice during surgery performed upon her on March 23, 1983. She advises that the case has been disposed of as to all of the defendants except Total Health Care, Inc.

Total was incorporated December 1, 1982, as a not-for-profit corporation under chapter 354, RSMo, which provided for the incorporation of "Health Service Corporations." We consider the case on the basis of the statutes in effect at the time of the injury and have no need to inquire into the effect of the extensive amendments to chapter 354, which did not become effective until September 28, 1983.

Total derives its resources from dues paid by members, of which the plaintiff was one. It maintains a list of primary care physicians who have agreed by contract with it that they will provide service to Total's members at specified rates, to be paid by Total and not by the members seeking treatment. A member must select a primary care physician from this list and must first consult that physician about medical problems. If the primary care physician determines that the services of a specialist are required, the physician may refer the member to the specialist. We will assume for present purposes that Total will pay the cost of specialist services only if the specialist is on Total's approved list of specialists.

The plaintiff consulted a primary care physician, who referred her to an osteopathic urological surgeon on Total's approved list of specialists. She seeks to impose liability on Total, first, on a claim of "corporate liability" and, second, on the assertion that Total was negligent in the selection of the specialist who performed surgery upon her. We find it unnecessary for present purposes to discuss the merits of either of these claims.

The trial court entered summary judgment for Total and took the steps necessary to make that judgment final for purposes of appeal. ¹ The court of appeals initially affirmed but then granted a rehearing and handed down a carefully considered and helpful opinion, expressing its conclusions on most of the issues involved but concluding that it could not resolve the case because of the appellant's constitutional challenge to § 354.125, RSMo 1978 (Mo.Const. Art. V, § 3). We take the case as on initial appeal (Art. V, § 10), and affirm, concluding that § 354.125 operates to exempt Total from liability of the kind sought to be asserted and that the statute is not constitutionally infirm.

I. Exemption

Section 354.125, RSMo 1978, reads as follows:

A health services corporation shall not be liable for injuries resulting from neglect, misfeasance, malfeasance or malpractice on the part of any person, organization, agency or corporation rendering health services to the health services corporation's members and beneficiaries.

The nature of a "Health Services Corporation" is explicated in § 354.010(4) and § 354.025, RSMo 1978. To incorporate under those statutes, a Health Services Corporation had to be a not-for-profit corporation. It could either provide health care services or make reimbursement for services provided by others. It is agreed that Total did not provide services itself but simply reimbursed physicians on its approved list for services furnished to its members.

The plaintiff argues that Total has at all times been a "Health Maintenance Organization" (HMO) rather than a "Health Services Corporation" and that there was no statutory purpose of granting any kind of an exemption from liability to HMO's. Missouri law did not recognize the Health Maintenance Organization as a form of business organization until after the plaintiff's claim had accrued. The HMO, initially, was a conception of federal law. Even though Total's certificate of authority, issued by the Division of Insurance, uses the phrase "Health Maintenance Organization," the certificate expressly refers to compliance with chapter 354 and states in the body that Total is established as a "Health Service Corporation." We see no reason why an HMO may not also be a Health Services Corporation under chapter 354. We repeat, out of an abundance of caution, that we do not consider the effect of the 1983 statutory amendments on Total's status or on this plaintiff's claim.

The plaintiff suggests that the Division of Insurance considered Total to be simply an HMO and did not intend to "grant" it immunity as provided in § 354.125. Such immunity as a Health Service Corporation has is conferred by law and not by administrative fiat. The Division of Insurance has no authority to add to or to subtract from the law emanating from the general assembly and no authority to express a legally significant opinion as to how the law is to be construed or applied in civil litigation. State ex rel. Neese v. IGF Insurance Co., 706 S.W.2d 856 (Mo. banc 1986); Metro Auto Auction v. Director of Revenue, 707 S.W.2d 397 (Mo. banc 1986).

It is next contended that this action is not one for "neglect, misfeasance, malfeasance or malpractice on the part of any person ... rendering health services to the health services corporation's members and beneficiaries." The action, it is said, is an action against Total grounded on its negligence in the selection of the surgeon who treated the plaintiff, and who is alleged to be demonstrably incompetent. The plaintiff suggests that Total had a duty to use due care in the selection of physicians, including specialists, and also that Total warranted the competence of the physicians it contracted with.

This argument, if accepted, would render the immunity of § 354.125 of little use to Health Services Corporations that operate as Total does by reimbursing the physician providers, in contrast to those that provide services through their own employees. Nothing in the statute supports the distinction the plaintiff would draw. We do not believe that the legislature had any purpose of effecting a substantial discrimination between the different kinds of Health Services Corporations.

The purpose of the statutes authorizing this kind of corporation is to sanction one method of combatting the cost of health care. Just as the ancient Chinese are reputed to have paid their doctors while they remained well, a person may elect to pay fixed dues in advance so that medical services may be available without additional cost when they are needed. The legislature well might feel that these arrangements were in the public interest and that those organizations that do not operate for profit should not be burdened by the additional cost of malpractice litigation.

The plaintiff points to § 354.115, RSMo 1978, which provides internal review procedures for grievances against health service corporations. She argues, that by recognizing the availability of other actions, the legislature did not intend to confer immunity for claims such as her present one. Section 354.125, however, is specific as to claims originating in malpractice and prevails over the general language of § 354.115.

The plaintiff's claim necessarily requires a showing of medical malpractice. We do not believe that the exemption is lost simply because the plaintiff must establish additional elements. The legislature well might have considered that one in the position of this plaintiff has an adequate remedy against the persons actually guilty of malpractice, who are licensed physicians, and does not need an additional source of recompense from a not-for-profit corporation. It is not our office to raise any question about the wisdom of their choice.

II. The Constitutional Issue

The plaintiff argues that she cannot be denied a right of action against Total for the damage she claims and that § 354.125 is in violation of several federal and state constitutional provisions to the extent that it does this.

In judging constitutional challenges it is important for us to expound the purpose the legislature might have had in enacting § 354.125. People are concerned both about the cost and the unpredictability of medical expenses. A plan such as Total offered would allow a person to fix the cost of physicians' services. The legislature might easily perceive that the costs of a plan would be substantially increased if the Health Services Organization were to be subject to claims originating in malpractice, that the cost of these claims would necessarily be shared by other plan members, and that malpractice liability might threaten the solvency of the plan. These considerations demonstrate a proper public purpose in the legislation that must be taken into account in considering the several constitutional challenges.

a. Open Courts

Article I, § 14 of the Missouri Constitution reads as follows:

That the courts of justice shall be open to every person, and certain remedy afforded for every injury to person, property or character, and that right and justice shall be administered without sale, denial or delay.

The plaintiff argues that she has been denied a remedy for a right, citing Strahler v. St. Luke's Hospital, 706 S.W.2d 7 (Mo. banc 1986) and State ex rel. Cardinal Glennon Memorial Hospital v. Gaertner, 583 S.W.2d 107 (Mo. banc 1979).

The cited cases do not support the claim. Both deal solely with procedures. In Strahler the Court held that the legislature could not impose a limitation on the pursuit of a legal right by a minor who presumably was incapable of pursuing that right. In Cardinal Glennon the Court struck down a procedure for...