Ott v. Kaiser-Georgetown Community Health Plan, Inc.

• Decision Date: 01 September 1986
• Docket Number: No. 125,KAISER-GEORGETOWN,125
• Citation: Ott v. Kaiser-Georgetown Community Health Plan, Inc., 309 Md. 641, 526 A.2d 46 (Md. 1986)
• Parties: Michael OTT et al. v.COMMUNITY HEALTH PLAN, INC. ,
• Court: Maryland Court of Appeals

Page 641

309 Md. 641

526 A.2d 46

Michael OTT et al. v. KAISER-GEORGETOWN COMMUNITY HEALTH PLAN, INC.

No. 125, Sept. Term, 1986.

Court of Appeals of Maryland.

June 4, 1987.

Gerard E. Mitchell (Patrick A. Malone, Stein, Mitchell & Mezines, on the brief), Rockville, for appellant.

Richard W. Boone, Arlington, Va., for appellee.

Argued before MURPHY, C.J., and ELDRIDGE, COLE, RODOWSKY, COUCH, ^* McAULIFFE and ADKINS, JJ.

ADKINS, Judge.

In this case we are called upon to interpret certain provisions of the Maryland Health Care Malpractice Claims Act, codified at Cts. & Jud.Proc.Art., Title 3, Subtitle 2A, (the Act), and of the BY Rules promulgated to establish the procedure for bringing an action under the Act. We shall hold that appellants' compliance with the provisions relating to notice of rejection of an award and filing an action to nullify was sufficient to preclude dismissal of their malpractice action against appellee in the Circuit Court for Montgomery County.

Appellants Michael Ott and his parents, James and Charlotte Ott, (the Otts) filed a claim under the Act against six defendants, including Dr. Robert M. Levitt and appellee, Kaiser-Georgetown Community Health Plan, Inc. (Kaiser). The claim charged that Dr. Levitt's negligence caused delay in Michael's birth and that the child suffered cerebral palsy as a result. Kaiser, a health care plan in which Mr. and Mrs. Ott were enrolled, was alleged to be Dr. Levitt's principal, and liable on a respondeat superior theory. Before arbitration four of the defendants were dropped from the case. On 15 October 1985 an arbitration panel rendered a decision in favor of the two remaining defendants, Dr. Levitt and Kaiser. The Otts filed a timely notice of rejection of the arbitration award with the Health Claims Arbitration Board, pursuant to § 3-2A-06(a). ¹ Then, on 29 November 1985, they filed an "Action to Nullify Award" in the Circuit Court for Montgomery County, naming both Dr. Levitt and Kaiser as defendants. This was followed by a complaint in the same court, filed 30 December 1985, naming Dr. Levitt as the sole defendant. On the same day the Otts filed a pleading encaptioned "Line" and reading:

Mr. Clerk:

Plaintiffs herewith file a Complaint pursuant to Maryland Rule BY4 against defendant Robert H. Levitt, M.D. only. There is federal court jurisdiction over defendant Kaiser-Georgetown Community Health Plan, Inc., and plaintiffs have chosen to invoke federal court jurisdiction for the adjudication of their claim against Kaiser-Georgetown Community Health Plan, Inc.

Also on 30 December 1985 the Otts filed a complaint against Kaiser in the U.S. District Court for the District of Columbia.

Kaiser moved for dismissal of the circuit court action and confirmation of the arbitration award, citing Rule BY4, which requires that the complaint (or "declaration," as it is called in the Rules) ² be filed within 30 days in the same court where the "notice of action" was filed. The Circuit Court for Montgomery County (Mitchell, J.) granted the motion and entered final judgment as to defendant Kaiser. The Otts appealed following denial of their motion for reconsideration. We granted certiorari on our own motion.

I

In 1976 the General Assembly enacted the Health Care Malpractice Claims Act, which requires the submission of medical malpractice claims to an arbitration panel prior to the bringing of an action in court. The Act specifies procedures for arbitration of a claim and for seeking judicial relief when a party is unsatisfied with an award. If a claimant wishes to reject an award and proceed with the cause of action, the special procedures prescribed by the Act must be followed. Tranen v. Aziz, 304 Md. 605, 612, 500 A.2d 636, 639 (1985).

The mandatory arbitration requirement does not divest courts of subject matter jurisdiction over health claims, but rather " 'creates a condition precedent to the institution of a court action.' " Tranen, 304 Md. at 612, 500 A.2d at 639 (quoting Oxtoby v. McGowan, 294 Md. 83, 91, 447 A.2d 860, 865 (1982)). Upon fulfillment of the condition precedent, malpractice claims may be heard in court.

The final step in the arbitration process, an essential prerequisite to institution of judicial proceedings, is the filing of a notice of rejection with the director of the Arbitration Office. Tranen, 304 Md. at 612, 500 A.2d at 639; § 3-2A-06(a). Failure to file notice of rejection permits the arbitration award to become final and binding. Tranen, 304 Md. at 613, 500 A.2d at 640; § 3-2A-05(h).

The "exclusive step by which the aggrieved party may initiate proceedings in court," Tranen, 304 Md. at 612, 500 A.2d at 639, is the action to nullify the award. Section 3-2A-06(b). Although called an action to nullify, the proceeding is not analogous to an appeal from an administrative decision. Rather, the action is essentially a separate common law tort action with the added element that the arbitration process must be complete. See Attorney General v. Johnson, 282 Md. 274, 385 A.2d 57, appeal dismissed, 439 U.S. 805, 99 S.Ct. 60, 58 L.Ed.2d 97 (1978).

This Court promulgated rules to establish the procedures unique to the action to nullify. These rules are found at Subtitle BY of Chapter 1100 of the Maryland Rules. Rule BY2 provides that the action to nullify "shall be commenced by filing notice of the action with the clerk of a court...." Rule BY4 requires the plaintiff, that is, the party making the claim against the health care provider, to file a complaint within 30 days after the filing of the notice of action, no matter which party rejects the award. Thus the Rules divide the action to nullify into a two-step process: a "notice of action" followed by a complaint. Cherry v. Brothers, 306 Md. 84, 507 A.2d 613 (1986); Tranen. Rule BY 4 a 2 states in pertinent part:

If the plaintiff filed the notice of action, the [complaint] shall be filed in the court where the notice of action was filed. If the defendant filed the notice of action, the plaintiff may file the [complaint] in any court having venue.

The Otts acknowledge they did not comply strictly with this rule, but they claim they were confused by the distinctions among the notice of rejection, the notice of action, and the complaint. The confusion was compounded, they say, by the definitional section of the Act, which defines "court" as "a circuit court for a county." Section 3-2A-01(c). When the tactical decision was made to sue Kaiser in federal court, the Otts read Rule BY2 to require the filing of the notice of action in a circuit court. They indicate they thought this was a requirement to perfect the matter for judicial action, much like the notice of rejection.

Because either party may reject an award, the obvious purpose of the two-step process is to address the situation where the defendant is unsatisfied by the decision of the arbitration panel. In such a case the defendant need only reject the award and file the notice of action in court. The plaintiff must then file a complaint. ³ Indeed, we have acknowledged that, where the plaintiff is rejecting the award, he or she may file a single pleading in court constituting both the notice of action and the complaint. See Cherry, 306 Md. at 90 n. 5, 507 A.2d at 616.

The Otts indicate they also considered the definition of "court" as a circuit court to be a vain attempt by the legislature to limit actions to nullify to state courts and thereby to divest the federal courts of jurisdiction. Section 3-2A-09 of the Act declares that the provisions of the Act shall be deemed procedural in nature. The U.S. District Court in Davison v. Sinai Hospital of Baltimore, 462 F.Supp. 778 (D.Md.1978), aff'd, 617 F.2d 361 (4th Cir.1980), interpreted this section as an indication that the legislature was not attempting to create a new cause of action in enacting the Act. ⁴ That court further declared that there was nothing in the legislative history to indicate that the legislature even considered the matter of federal jurisdiction. Davison, 462 F.Supp. at 779. Necessarily, the legislature could not have intended the Act to divest the federal courts of jurisdiction over malpractice claims where diversity requirements were met. See Group Health Ass'n, Inc. v. Blumenthal, 295 Md. 104, 453 A.2d 1198 (1983) (acknowledging federal diversity jurisdiction over malpractice claims). Presumably the legislature is aware that it cannot deprive federal courts of jurisdiction. See Chicago & Northwestern Rwy. Co. v. Whitton, 80 U.S. (13 Wall.) 270, 20 L.Ed. 571 (1872); Beach v. Owens-Corning Fiberglas Corp., 728 F.2d 407 (7th Cir.), cert. denied, 469 U.S. 825, 105 S.Ct. 104, 83 L.Ed.2d 48 (1984); Duchek v. Jacobi, 646 F.2d 415 (9th Cir.1981).

In Duchek the U.S. Court of Appeals for the Ninth Circuit examined the effect upon a federal court's jurisdiction of a state statute facially requiring that proceedings be held before a state tribunal, where the federal rules required the federal court to follow state procedure. The proceeding was one to enforce a judgment. The applicable statute required that " '[t]he petition must be filed with the clerk of the superior court.' " 646 F.2d at 417 [emphasis from Ninth Circuit]. In upholding the jurisdiction of the District Court, the Ninth Circuit noted that the statutes in question were essentially state venue provisions not to be elevated to the status of substantive abridgements of the federal court's jurisdiction to enforce its judgments. Id. at 418. "[S]tate rules are to be applied in a common sense manner and those which make sense only where applied to state courts need not be imported into federal practice." Anderson v. Tucker, 68 F.R.D. 461, 462-63 (D.Conn.1975) (quoted in Duchek, 646 F.2d at 418).

The federal District Court in Davison v. Sinai Hospital took a similar view of the statutes and rules we consider today. We agree with the Davison court that the legislature did not intend to limit the ...