Muse v. Charter Hosp. of Winston-Salem, Inc.

• Decision Date: 03 January 1995
• Docket Number: INC,WINSTON-SALE,No. 9318SC265,9318SC265
• Citation: 117 N.C.App. 468,452 S.E.2d 589
• Parties: , 63 USLW 2476 Delbert Joseph MUSE, Jr., Administrator of the Estate of Delbert Joseph Muse, III, and Jane K. Muse, Plaintiffs, v. CHARTER HOSPITAL OFand Charter Medical Corporation, Defendants.
• Court: North Carolina Court of Appeals

Page 589

452 S.E.2d 589

117 N.C.App. 468, 63 USLW 2476

Delbert Joseph MUSE, Jr., Administrator of the Estate of Delbert Joseph Muse, III, and Jane K. Muse, Plaintiffs, v. CHARTER HOSPITAL OF WINSTON-SALEM, INC. and Charter Medical

Corporation, Defendants.

No. 9318SC265.

Court of Appeals of North Carolina.

Jan. 3, 1995.

Berry & Byrd, by Wade E. Byrd, Fayetteville, for plaintiffs-appellees.

Smith Helms Mulliss & Moore, by Bynum M. Hunter and Alan W. Duncan, Greensboro, and Law Office of James R. Hubbard, by James R. Hubbard, Winston-Salem, for defendants-appellants.

Ferguson, Stein, Wallas, Adkins, Gresham & Sumter, P.A., by Adam Stein; and Elizabeth F. Kuniholm, Chapel Hill, for North Carolina Academy of Trial Lawyers, amicus curiae.

Poyner & Spruill, by John R. Jolly, Jr., Samuel O. Southern, Robert O. Crawford, III, and Benjamin P. Dean, Raleigh, for North Carolina Ass'n of Defense Attys., amicus curiae.

Weissburg and Aronson, Inc., by Mark E. Reagan, and Clark C. Havighurst, Los Angeles, CA, for Federation of American Health Systems, amicus curiae.

LEWIS, Judge.

This appeal arises from a judgment in favor of plaintiffs in an action for the wrongful death of Delbert Joseph Muse, III (hereinafter "Joe"). Joe was the son of Delbert Joseph Muse, Jr. (hereinafter "Mr. Muse") and Jane K. Muse (hereinafter "Mrs. Muse"), plaintiffs. The jury found that defendant Charter Hospital of Winston-Salem, Inc. (hereinafter "Charter Hospital" or "the hospital") was negligent in that, inter alia, it had a policy or practice which required physicians to discharge patients when their insurance expired and that this policy interfered with the exercise of the medical judgment of Joe's treating physician, Dr. L. Jarrett Barnhill, Jr. The jury awarded plaintiffs compensatory damages of approximately $1,000,000. The jury found that Mr. and Mrs. Muse were contributorily negligent, but that Charter Hospital's conduct was willful or wanton, and awarded punitive damages of $2,000,000 against Charter Hospital. Further, the jury found that Charter Hospital was an instrumentality of defendant Charter Medical Corporation (hereinafter "Charter Medical") and awarded punitive damages of $4,000,000 against Charter Medical.

The facts on which this case arose may be summarized as follows. On 12 June 1986, Joe, who was sixteen years old at the time, was admitted to Charter Hospital for treatment related to his depression and suicidal thoughts. Joe's treatment team consisted of Dr. Barnhill, as treating physician, Fernando Garzon, as nursing therapist, and Betsey Willard, as social worker. During his hospitalization, Joe experienced auditory hallucinations, suicidal and homicidal thoughts, and major depression. Joe's insurance coverage was set to expire on 12 July 1986. As that date neared, Dr. Barnhill decided that a blood test was needed to determine the proper dosage of a drug he was administering to Joe. The blood test was scheduled for 13 July, the day after Joe's insurance was to expire. Dr. Barnhill requested that the hospital administrator allow Joe to stay at Charter Hospital two more days, until 14 July, with Mr. and Mrs. Muse signing a promissory note to pay for the two extra days. The test results did not come back from the lab until 15 July. Nevertheless, Joe was discharged on 14 July and was referred by Dr. Barnhill to the Guilford County Area Mental Health, Mental Retardation and Substance Abuse Authority (hereinafter "Mental Health Authority") for outpatient treatment. Plaintiffs' evidence tended to show that Joe's condition upon discharge was worse than when he entered the hospital. Defendants' evidence, however, tended to show that while his prognosis remained guarded, Joe's condition at discharge was improved. Upon his discharge, Joe went on a one-week family vacation. On 22 July he began outpatient treatment at the Mental Health Authority, where he was seen by Dr. David Slonaker, a clinical psychologist. Two days later, Joe again met with Dr. Slonaker. Joe failed to show up at his 30 July appointment, and the next day he took a fatal overdose of Desipramine, one of his prescribed drugs.

On appeal, defendants present numerous assignments of error. We find merit in one of defendants' arguments.

I.

Defendants contend that the separate awards of punitive damages against Charter Hospital and Charter Medical were improper. Charter Medical's liability was based solely on the jury's finding that Charter Hospital was an instrumentality of Charter Medical. The trial court submitted to the jury two separate issues:

9) What amount of punitive damages, if any, does the jury, in its discretion, award against the Defendant, Charter Hospital of Winston-Salem, Inc., to the Plaintiff, Administrator?

10) What amount of punitive damages, if any, does the jury, in its discretion, award against the Defendant, Charter Medical Corporation, to the Plaintiff, Administrator?

The court instructed the jury that it could award punitive damages "against the defendant Charter Hospital of Winston-Salem in Issue 9 and/or against the defendant Charter Medical Corporation in Issue 10." We believe that the jury instructions and the issues submitted were error.

The instrumentality theory, upon which Charter Medical's liability was based, holds: " 'A corporation which exercises actual control over another, operating the latter as a mere instrumentality or tool, is liable for the torts of the corporation thus controlled. In such instances, the separate identities of parent and subsidiary ... may be disregarded.' " B-W Acceptance Corp. v. Spencer, 268 N.C. 1, 8, 149 S.E.2d 570, 575 (1966) (quoting 19 Am.Jur.2d Corporations § 717). That is, the parent and the subsidiary are treated as "one and the same person." Henderson v. Security Mort. & Fin. Co., 273 N.C. 253, 260, 160 S.E.2d 39, 44 (1968). Our research has disclosed no case in which more than one sum has been awarded against two defendants under the instrumentality theory. Cf. Postell v. B & D Constr. Co., 105 N.C.App. 1, 411 S.E.2d 413 (holding that the controlling individual was jointly and severally liable with the controlled corporation), disc. review denied, 331 N.C. 286, 417 S.E.2d 253 (1992). We conclude that the result of finding a corporation to be a mere instrumentality of another is that the two are treated as one for purposes of assessing liability for the alleged wrong, and are jointly and severally liable. Accordingly, submitting separate issues of punitive damages as to each defendant was error.

II.

Defendants next argue that the trial court submitted the case to the jury on an erroneous theory of hospital liability that does not exist under the law of North Carolina. As to the theory in question, the trial court instructed: "[A] hospital is under a duty not to have policies or practices which operate in a way that interferes with the ability of a physician to exercise his medical judgment. A violation of this duty would be negligence." The jury found that there existed "a policy or practice which required physicians to discharge patients when their insurance benefits expire and which interfered with the exercise of Dr. Barnhill's medical judgment." Defendants contend that this theory of liability does not fall within any theories previously accepted by our courts.

In Blanton v. Moses H. Cone Memorial Hospital, Inc., 319 N.C. 372, 354 S.E.2d 455 (1987), our Supreme Court held that the appropriate standard for determining whether a valid claim exists against a hospital is the standard of the ordinary, reasonable, and prudent person. Id. at 375, 354 S.E.2d at 457. The Court further stated:

' 'Actionable negligence is the failure of one owing a duty to another to do what a reasonable and prudent man would ordinarily have done, or doing what such a person would not have done, which omission or commission is the proximate cause of injury to another.'

Id. (quoting S. Speiser, et al., The American Law of Torts § 9.1, at 995 (1983)).

Our Supreme Court has recognized that hospitals in this state owe a duty of care to their patients. Id. In Burns v. Forsyth County Hospital Authority, Inc., 81 N.C.App. 556, 563, 344 S.E.2d 839, 845 (1986), this Court held that a hospital has a duty to the patient to obey the instructions of a doctor, absent the instructions being obviously negligent or dangerous. Another recognized duty is the duty to make a reasonable effort to monitor and oversee the treatment prescribed and administered by doctors practicing at the hospital. Bost v. Riley, 44 N.C.App. 638, 647, 262 S.E.2d 391, 396, disc. review denied, 300 N.C. 194, 269 S.E.2d 621 (1980). In light of these holdings, it seems axiomatic that the hospital has the duty not to institute policies or practices which interfere with the doctor's medical judgment. We hold that pursuant to the reasonable person standard, Charter Hospital had a duty not to institute a policy or practice which required that patients be discharged when their insurance expired and which interfered with the medical judgment of Dr. Barnhill.

III.

Defendants next argue that even if the theory of negligence submitted to the jury was proper, the jury's finding that Charter Hospital had such a practice was not supported by sufficient evidence. The issue before us is whether the trial court erred in denying defendants' motion for judgment notwithstanding the verdict. In reviewing the denial of a defendant's motion for judgment notwithstanding the verdict, the question is whether the evidence, when viewed in the light most favorable to the plaintiff, giving the plaintiff the benefit of every reasonable inference, was sufficient to go to the jury. Schwartzbach v. Apple Baking Co., 109 N.C.App. 216, 218, 426 S.E.2d 438, 439 (1993). We conclude that in the case at hand, the evidence was sufficient to go to the jury.

Plaintiffs' evidence included the testimony of Charter Hospital employees and outside experts. Fernando Garzon, Joe's...