Hines v. Elkhart General Hospital

• Decision Date: 15 January 1979
• Docket Number: No. S 78-133.,S 78-133.
• Citation: 465 F. Supp. 421
• Parties: Carl W. HINES and Andrew J. Fetsch, as Special Administrators of the Estate of Paul J. Hines, Carl W. Hines, Individually and Karen Kay Hines, Sandra Carol Hines and William Walter Hines by Carl W. Hines, their natural guardian and best friend, Plaintiffs, v. ELKHART GENERAL HOSPITAL and Dr. E. L. Fosbring, Defendants.
• Court: U.S. District Court — Northern District of Indiana

465 F. Supp. 421

Carl W. HINES and Andrew J. Fetsch, as Special Administrators of the Estate of Paul J. Hines, Carl W. Hines, Individually and Karen Kay Hines, Sandra Carol Hines and William Walter Hines by Carl W. Hines, their natural guardian and best friend, Plaintiffs, v. ELKHART GENERAL HOSPITAL and Dr. E. L. Fosbring, Defendants.

No. S 78-133.

United States District Court, N. D. Indiana, South Bend Division.

January 15, 1979.

COPYRIGHT MATERIAL OMITTED

J. B. Smith, Timothy F. Kelly, and Randall J. Nye, Beckman, Kelly & Smith, Hammond, Ind., for plaintiffs.

Arthur A. May and Thomas J. Hall, South Bend, Ind., for defendants.

MEMORANDUM AND ORDER

ALLEN SHARP, District Judge.

This action presently pends before this Court for consideration of the defendants' Motion to Dismiss the Plaintiffs' complaint. That complaint, filed in this Court and with the Indiana Insurance Commissioner on July 3, 1978, purports to state a claim against the defendants for a medical malpractice based upon the defendants' alleged negligent care and treatment of the plaintiffs' decedent on or about July 11, 1976. The defendants' Motion to Dismiss relies upon the express provision of the Indiana Medical Malpractice Act of 1975 (hereinafter referred to as the Act and codified as I.C. 16-9.5-9-1 et seq.) which requires that:

"No action against a health care provider may be commenced in any court of this state before the claimant's proposed complaint has been presented to a medical review panel established pursuant to this chapter and an opinion is rendered by the panel."

I.C. 16-9.5-9-2.

In reply to the defendants' Motion to Dismiss, the plaintiffs have raised issue with the applicability of the Act to cases filed in Federal District Courts in Indiana pursuant to diversity jurisdiction and challenge the constitutionality of portions of the Act on various grounds. The plaintiffs have not, however, challenged either the defendants' status as a qualified health care provider under the Act or the obvious applicability of the prohibitory provisions of I.C. 16-9.5-9-2, supra, to this litigation.

The Act generally provides for the voluntary participation by renderers of medical care, as "health care providers," in a legislative mechanism which assures them of obtaining malpractice liability insurance coverage at a reasonable cost and assures the people of Indiana a guaranteed source of recovery if a qualified health care provider commits an act with malpractice for which compensation is deemed appropriate or necessary as a result of settlement or trial by jury. A Patient's Compensation Fund is established by the Act (I.C. 16-9.5-4-1) to assure complete funding of any compensation granted by settlement or jury verdict to the full extent of the limitation imposed by the Act and creates the Residual Malpractice Insurance Authority to provide malpractice liability coverage for health care providers who are otherwise acceptable risks (I.C. 16-9.5-8-1).

The Act further provides pre-litigation procedures to be followed in pursuit of claims such as that posed by the plaintiffs in this litigation. Upon the filing of a proposed complaint with the Indiana Insurance Commissioner, the applicable statute of limitations is tolled pending the appointment of a medical review panel composed of an advisory-attorney member and three health care providers, and the issuance of a pre-litigation liability determination by that body. After that written decision has been issued, the plaintiff may then proceed with litigation on his claim, including the right to trial by jury. The report of the medical review panel is admissible in any subsequent litigation but it shall not be conclusive, and either party may call any member of the panel as a witness at trial. Lastly, a claimant asserting the right to compensation for medical malpractice limited by a health care provider may not receive more than Five Hundred Thousand Dollars ($500,000.00) as compensation for his claim by way of either settlement or litigation.

The plaintiffs contend that the Act does not apply to actions filed in this court pursuant to its diversity jurisdiction. This argument is based upon the alternative grounds that the Act, by its own terms, does not apply in Federal Court and that state legislatures may not regulate procedure in the Federal District Courts.

A. APPLICABILITY OF THE ACT TO FEDERAL DIVERSITY MALPRACTICE CLAIMS

Plaintiffs strongly argue that the Act does not apply to claims filed in the Federal District Courts of this State under diversity jurisdiction. To support this assertion, the plaintiffs first argue that the terms of the act itself exclude its applicability and support this argument by reciting fundamental rules of statutory construction and comparing the phrases "any court of this State" found in I.C. 16-9.5-9-2, quoted in its entirety above, and language found in I.C. 16-9.5-1-6 which provides that a claimant for medical malpractice may file a complaint: "in any court of law having requisite jurisdiction . . .." This argument is totally devoid of merit.

When presented with a claim in diversity jurisdiction based upon substantive rights created by State law, a Federal District Court clearly qualifies as "any court of this State" (I.C. 16-9.5-9-2). In Guaranty Trust Co. v. York, 326 U.S. 99, 65 S.Ct. 1464, 89 L.Ed. 2079 (1945), Mr. Justice Frankfurter clearly enunciated that under such circumstances, a United States District Court is:

". . . in effect, only another court of the State, it cannot afford recovery if the right to recover is made unavailable by the State nor can it substantially affect the enforcement of the right as given by the State." 326 U.S. at 108-9, 65 S.Ct. at 1469-70.

Although the "outcome-determinative" test announced by the court in Guaranty Trust has since been replaced, this observation regarding the role of Federal District Courts in diversity jurisdiction remains valid. More recently, in a decision which, in light of the circumstances surrounding this claim and the pendency of similar claims in Indiana trial and appellate courts is particularly applicable, the Supreme Court observed:

"The underlying substantive rule involved is based on State law and the State's highest court is the best authority on its own law. If there be no decision by that court then federal authorities must apply what they find to be the state law after giving `proper regard' to relevant rulings of other courts of the State. In this respect, it may be said to be, in effect, sitting as a state court." Commissioner v. Estate of Bosch, 387 U.S. 456 at 465, 87 S.Ct. 1776 at 1783, 18 L.Ed.2d 886 (1967).

It cannot be logically argued that the Act does not, by its own terms, apply to diversity claims pending before this Court. It should be noted that in Wheeler v. Shoemaker, 78 F.R.D. 218 (D.R.I.1978), the decision relied upon heavily by the plaintiffs and discussed further below, that court went to great lengths to interpret the intent of the Rhode Island Legislature to the effect that the procedures established by the Rhode Island Medical Malpractice Statute were to be applicable to diversity claims before it. See, 78 F.R.D. at 220.21, n. 4.

The Plaintiffs rely upon Wheeler v. Shoemaker, supra; and Byrd v. Blue Ridge Rural Electric Co-op., 356 U.S. 525, 78 S.Ct. 893, 2 L.Ed.2d 953 (1958), to argue that the act improperly infringes upon the federal diversity jurisdiction of this Court. Upon even a cursory review of the Rhode Island District Court's decision in Wheeler v. Shoemaker, supra, this Court observes a drastic variation between the Rhode Island Medical Malpractice Statute and the Indiana Act applicable to the plaintiffs' claim. See, Wheeler v. Shoemaker, 78 F.R.D. at 219-23. The portions of the Rhode Island Act found objectionable by the Rhode Island District Court and relied upon by it to conclude that under the balancing test enunciated by the Supreme Court in Byrd v. Blue Ridge Electric Co-op., supra, included the following:

1. The malpractice panel contemplated by the Rhode Island Statute is clearly an adjunct of the State court, being appointed by the presiding justice of the local Rhode Island Superior Court, paid for out of State funds, conducting its procedures in accordance with the rules of evidence and civil procedure governing the Rhode Island Superior Courts and making its determination after conducting a full-scale evidentiary hearing; and

2. The Rhode Island procedure contemplates that, unless rejected, the review panel's findings constitute a judgment and that, even if the panel's findings are contested and the claim goes to trial, panel members may not be called as witnesses to facilitate the challenge of the bases for their conclusion on liability.

In reaching its conclusion, the Rhode Island District Court relies heavily upon the Supreme Court's decision in Byrd v. Blue Ridge Electric Co-op., supra. The Byrd decision is only one of many decisions interpreting and expanding upon the landmark decision of Erie v. Thompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938). As correctly related by the plaintiffs in their brief, in Byrd the Supreme Court of the United States adopted a balancing test as a methodology for the resolution of conflicts between State and Federal law in diversity litigation. The decision in Byrd was to the effect that since a State rule of procedure which provided that a determination of whether a claimant qualified as an employee for purposes of Workman's Compensation law was to be made by the judge rather than a jury was not "bound up" in State substantive law, since it was only based upon the decisions of a State court, and Federal procedure determining the rules of judge and jury should prevail. This conclusion was not based upon a constitutional determination regarding the Seventh Amendment but rather a "strong Federal policy" against permitting State rules to disrupt the relationship between a judge and...