Henry v. Cont'l Cas. Co.

• Decision Date: 27 July 2011
• Docket Number: No. 10–1255.,10–1255.
• Citation: 2011 Ark. 224,381 S.W.3d 802
• Parties: Jane M. HENRY, as Personal Representative of the Estate of Ernest L. Henry, Deceased, Appellant, v. CONTINENTAL CASUALTY COMPANY, as the liability insurance carrier for Washington Regional Medical Center; Jon Berry, M.D., F.A.C.S.; Anthony R. Burton, M.D., F.A.C.S.; Jeffrey Bell, M.D., F.A.C.S.; Fayetteville Surgical Associates, P.A.; Kyle G. Hardy, M.D., F.C.C.P.; Michael A. Eckles, M.D.; Fayetteville Diagnostic Clinic, Ltd.; Mana Medical Associates d/b/a a/k/a Medical Associates of Northwest Arkansas (Mana), Appellees.
• Court: Arkansas Supreme Court

2011 Ark. 224

381 S.W.3d 802

Jane M. HENRY, as Personal Representative of the Estate of Ernest L. Henry, Deceased, Appellant,

v.CONTINENTAL CASUALTY COMPANY, as the liability insurance carrier for Washington Regional Medical Center; Jon Berry, M.D., F.A.C.S.; Anthony R. Burton, M.D., F.A.C.S.; Jeffrey Bell, M.D., F.A.C.S.; Fayetteville Surgical Associates, P.A.; Kyle G. Hardy, M.D., F.C.C.P.; Michael A. Eckles, M.D.; Fayetteville Diagnostic Clinic, Ltd.; Mana Medical Associates d/b/a a/k/a Medical Associates of Northwest Arkansas (Mana), Appellees.

No. 10–1255.

Supreme Court of Arkansas.

May 19, 2011.

Rehearing Denied July 27, 2011.

Keith, Miller, Butler, Schneider & Pawlik, PLLC, Rogers, by: Sean T. Keith; and Watson & Dameron, LLP, by: Russell Dameron, for appellant.

Davis, Clark, Butt, Carithers & Taylor, PLLC, by: Constance G. Clark, Kelly Carithers, and Colin M. Johnson, Fayetteville, for appellees.

KAREN R. BAKER, Justice.

This appeal from the circuit court's dismissal of a medical-malpractice action involves whether vicarious-liability principlesare applicable to a negligence action against the insurer of a hospital that enjoys charitable immunity under the direct-action statute, Ark.Code Ann. § 23–79–210(Repl.2009).AppellantJane M. Henry, as the personal representative of the estate of her deceased husband, Ernest L. Henry, brought an action in the Washington County Circuit Court against multiple parties, including Continental Casualty Company“Continental”), Washington Regional Medical Center (“Washington Regional”), Irma De La Cruz, R.N., and Amber Hefner, R.N. (sometimes referred to collectively herein as “Defendants”).Among other things, the complaint broadly asserted that Washington Regional was vicariously liable for the conduct of its employees, including nurses De La Cruz and Hefner.Appellant moved to voluntarily dismiss Washington Regional, De La Cruz, and Hefner, stating that she was proceeding only against the hospital's insurer, Continental, under the direct-action statute.Defendants also moved to dismiss, asserting that appellant failed to obtain service of process on De La Cruz and Hefner and that the statute of limitations had expired with respect to any claims against the nurses.The circuit court granted Defendants' motion to dismiss the claims against De La Cruz and Hefner with prejudice, finding that appellant acknowledged that she failed to obtain service on the nurses prior to the expiration of the statute of limitations.Additionally, the circuit court found that because Washington Regional's alleged negligence arose from its vicarious liability based on the actions of the dismissed nurses, all claims against Washington Regional and Continental must likewise be dismissed with prejudice.The circuit court certified the judgment pursuant to Rule 54(b) of the Arkansas Rules of Civil Procedure.After the circuit court denied appellant's motion to reconsider, appellant timely filed a notice of appeal.We reverse and remand.

The underlying facts in this case are not in dispute.Ernest Henry suffered severe injuries in an automobile accident that occurred on October 29, 2007, in Eureka Springs, Arkansas.Mr. Henry was transported to Washington Regional where he was treated for his injuries and subsequent complications until his death on November 11, 2007.Appellant, as the court-appointed personal representative and surviving spouse of Mr. Henry, filed a medical-malpractice suit on October 9, 2009, against Defendants, as well as the five treating physicians and three independent medical clinics with which the physicians were associated.

On November 17, 2009, an answer was filed on behalf of Defendants.In their answer, Defendants admitted certain critical issues: (1) De La Cruz and Hefner were at all times relevant to this action employed by Washington Regional and were acting within the course and scope of their employment; (2) Washington Regional is a nonprofit corporation organized under the laws of the State of Arkansas, and enjoys charitable immunity; and (3) Continental was the primary liability carrier for Washington Regional at all relevant times.In their original answer, Defendants stated as follows:

[T]o the extent that Arkansas vicarious liability law is applicable to the facts of this case, these separate Defendants admit that any proved negligent actions of Washington Regional's agents or employees, occurring within the scope of their employment and which are proved to be the proximate cause of Plaintiff's alleged injuries or damages, may be imputed to Continental, as the liability insurance carrier providing coverage for Washington Regional at the time of the events alleged in Plaintiff's Complaint and First Amended Complaint, pursuant to the direct action statute, Ark.Code Ann. § 23–79–210.

The answer preserved the nurses' defenses under Rule 12(b) of the Arkansas Rules of Civil Procedure, including insufficiency of process and insufficiency of service of process.On May 19, 2010, Defendants moved to dismiss the complaint.Defendants alleged that because the nurses were not served within 120 days of filing the complaint,¹ the claims against the nurses must be dismissed under Ark. R. Civ. P. 4(i), and that the dismissal must be with prejudice because the two-year statute of limitations for medical-negligence actions set forth at Ark.Code Ann. § 16–114–203 had expired.

On June 3, 2010, appellant responded to the motion to dismiss by simultaneously filing a motion to dismiss her claims against Washington Regional and the nurses without prejudice and a second amended complaint.Appellant stated in her motion to dismiss that based on Defendants' admissions that Washington Regional was immune and that the direct-action statute applied, Washington Regional and the nurses were not proper parties to the action.Appellant moved to dismiss these parties and proceed solely against Continental under the direct-action statute.

On June 16, 2010, Defendants filed an answer to the second amended complaint and a motion to dismiss.Defendants denied that Continental could be held liable for the alleged negligence of Washington Regional's employees, including the alleged negligence of De La Cruz and Hefner, and asserted that appellant's failure to timely serve the nurses, or any other allegedly negligent agent or employee of Washington Regional, extinguished any vicarious-liability claims against Continental.In its motion to dismiss, Defendants argued that under principles of vicarious liability, once an employee has been released or dismissed, the employer's liability is likewise extinguished, and that because Continental stands in the shoes of the employer, no cause of action can be maintained against it.

After a July 13, 2010 hearing on both motions to dismiss, the circuit court entered an order on July 22, 2010, granting Defendants' motion to dismiss with prejudice.The circuit court specifically found (1) that service of process against De La Cruz and Hefner was not obtained and the statute of limitations had expired with respect to appellant's claims against the nurses, requiring the court to dismiss the complaint with prejudice as to these nurses, and (2) that “[u]nder Arkansas law, an employer's vicarious liability arises directly from the alleged negligence of the employee, and where the allegedly negligent employee has been released or dismissed, any vicarious liability that could be imputed to the employer is likewise eliminated,” requiring the court to dismiss appellant's claims against Washington Regional and Continental.

In reviewing a court's decision on a motion to dismiss, we treat the facts alleged in the complaint as true and view them in the light most favorable to the plaintiff.Downing v. Lawrence Hall Nursing Ctr.,2010 Ark. 175, 369 S.W.3d 8.In testing the sufficiency of a complaint on a motion to dismiss, all reasonable inferences must be resolved in favor of the complaint, and all pleadings are to be liberally construed.Id.However, when a complaint is dismissed on a question of law, this court conducts a de novo review.Id.

In addition, the circuit court's grant of Defendants' motion to dismiss was based on its interpretation of the relationship between the direct-action statute and common-law negligence principles of vicarious liability.We review issues of statutory construction de novo.Couch v. Farmers Ins. Co.,375 Ark. 255, 289 S.W.3d 909(2008).It is for this court to decide what a statute means, and we are not bound by the circuit court's interpretation.Id.The basic rule of statutory construction to which all other interpretive guides must yield is to give effect to the intent of the General Assembly.Dachs v. Hendrix,2009 Ark. 542, 354 S.W.3d 95.Where the language of a statute is plain and unambiguous, we determine legislative intent from the ordinary meaning of the language used.Id.In considering the meaning of a statute, we construe it just as it reads, giving the words their ordinary and usually accepted meaning in common language.Id.We construe the statute so that no word is left void, superfluous or insignificant, and we give meaning and effect to every word in the statute, if possible.Id.In ascertaining legislative intent, we look to the statutory language, subject matter, object to be accomplished, purpose to be served, remedy provided, legislative history, and other appropriate matters.Rogers v. Tudor Ins. Co.,325 Ark. 226, 925 S.W.2d 395(1996).

We must first examine the direct-action statute, codified at Ark.Code Ann. § 23–79–210, which states as follows:

(a)(1) When liability insurance is carried by any cooperative nonprofit corporation, association, or organization, ... or by any other organization or association of any kind or character and not subject to suit for tort, and if any person, firm, or corporation suffers injury or damage to person or property on account of the negligence or wrongful...