Schleier v. Kaiser Foundation Health Plan of the Mid-Atlantic States, Inc.

• Decision Date: 02 August 1989
• Docket Number: No. 88-7106,MID-ATLANTIC,88-7106
• Citation: 277 U.S. App. D.C. 415,876 F.2d 174
• Parties: Ingeborg SCHLEIER, Personal Representative of the Estate of Shedd H. Smith, Deceased, Appellee, v. KAISER FOUNDATION HEALTH PLAN OF THESTATES, INC., Appellant.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 174

876 F.2d 174

277 U.S.App.D.C. 415

Ingeborg SCHLEIER, Personal Representative of the Estate of Shedd H. Smith, Deceased, Appellee, v. KAISER FOUNDATION HEALTH PLAN OF THE MID-ATLANTIC STATES INC., Appellant.

No. 88-7106.

United States Court of Appeals District of Columbia Circuit.

Argued Dec. 2, 1988.

Decided May 26, 1989.

Rehearing and Rehearing En Banc Denied Aug. 2, 1989.

Appeal from the United States District Court for the District of Columbia (Civil Action No. 86-01736).

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

Leonard Keilp, for appellee.

Before RUTH BADER GINSBURG and SILBERMAN, Circuit Judges, and FLOYD R. GIBSON, ^* Senior Circuit Judge, United States Court of Appeals for the Eighth Circuit.

Opinion PER CURIAM.

PER CURIAM:

Kaiser Foundation Health Plan of the Mid-Atlantic States, Inc. [hereinafter Kaiser] appeals from a judgment entered on a jury verdict in favor of Ingeborg Schleier [hereinafter Schleier], as Personal Representative of the Estate of Shedd H. Smith, her husband. Schleier brought this action under the District of Columbia survival statute claiming that Kaiser physicians negligently failed to diagnose and treat Smith's latent coronary artery disease which caused his death on June 20, 1983.

The case was submitted to the jury on Schleier's negligence claim and the jury returned a $825,000 lump-sum verdict in her favor. Kaiser now appeals raising several issues. For the reasons herein stated we hold that it was reversible error not to instruct the jury, as defendant requested, that any award to plaintiff would not be subject to income taxation; we therefore reverse the judgment in part and remand for a new trial on damages.

I. BACKGROUND

At the time of his death, Shedd Smith was a 48-year-old urban planner for the General Services Administration in Washington, D.C. Kaiser is a health maintenance organization that provides health care to federal government employees. Smith was a paid Kaiser subscriber.

Smith was first treated at a Kaiser Clinic for abdominal pain in March 1983. On May 6, 1983, Smith spoke with a Kaiser advice nurse and complained of continual stomach pain. Six days later Smith called Kaiser again, this time because of a forty-five minute episode of severe chest pain radiating into his left shoulder. Smith was sent to the Fairfax Hospital Emergency Room where an electrocardiogram (EKG) was performed and interpreted as having non-specific S-T wave changes. Although the tests were inconclusive as to whether Smith had suffered a heart attack, a Kaiser physician admitted Smith to Fairfax Hospital Coronary Care Unit. The next day, Dr. Sherber, a cardiologist who was an outside consultant and not a Kaiser physician, was brought in to examine Smith.

Sherber's initial conclusion, after reviewing the information then available, was that it was unlikely that Smith had suffered a heart attack. However, he scheduled additional tests. Sherber found Smith's MUGA ¹ test was normal but his stress EKG was abnormal. Nevertheless, Sherber thought it unlikely that Smith had coronary heart disease, and did not recommend further cardiac testing, nor did he restrict any of Smith's activities. The results of the stress EKG were then sent to Kaiser to be placed in Smith's medical chart.

During the four nights following his MUGA test, Smith complained to a Kaiser physician of profuse night sweats. After reviewing Smith's medical chart, which had not yet been updated to include his abnormal stress EKG, a Kaiser physician told Smith that the night sweats were not cardiac related. ² Smith did not suffer any other symptoms until June 19, 1983, when he began to sweat heavily and became exhausted after mowing his lawn and doing some housework. The next day his condition deteriorated. He began to vomit and was in a very weak and tired condition.

Schleier, concerned about her husband's state, called the Kaiser advice nurse who responded that Smith would have to sweat out his condition. After making this phone call, Schleier returned to her husband and found him gasping for air. She called the rescue squad but before it arrived Smith had stopped breathing despite her attempts to resuscitate him. Smith died in the ambulance en route to the Fairfax Hospital Emergency Room.

Kaiser raises several issues on appeal including the court's denial of Kaiser's motion to transfer the case to the Eastern District of Virginia, as well as the trial court's decision denying Kaiser's motion for a judgment notwithstanding the verdict.. Kaiser also claims that it was not adequately shown that it breached its contractual duty to provide adequate health care, nor was it shown that Kaiser was liable for Sherber's negligence. Kaiser asserts that the jury could not properly determine Smith's lost future earnings, because it was not given sufficient guidance on Smith's employment history, his life expectancy, inflation or discounting to present value. Finally, Kaiser contends that the jury was not adequately instructed that any amounts awarded as damages would not be subject to income taxation.

II. DISCUSSION

A. Motion to Transfer

We first consider the appellant's contention that the district judge abused his discretion when he refused to transfer this case to the United States District Court for the Eastern District of Virginia pursuant to 28 U.S.C. Sec. 1404(a) (1982). Kaiser notes that although Smith worked in the District of Columbia, he resided in Virginia and received all medical care rendered by Kaiser in Virginia. Kaiser is incorporated and has its principal place of business in the District of Columbia, thus the diversity jurisdiction of the district court was properly invoked. Kaiser, however, argues that the convenience of the witnesses and parties, as well as the interests of justice, compelled a transfer of this case to Virginia. Its arguments are not forceful. As the change of venue was merely from Washington, D.C. to Alexandria, Virginia, no witness or party was to be particularly convenienced by the move. Neither would the interests of justice be served, as District of Columbia law would continue to apply even if the case were moved to Virginia. See Van Dusen v. Barrack, 376 U.S. 612, 639, 84 S.Ct. 805, 11 L.Ed.2d 945 (1964) (where defendant seeks transfer, transferee court ordinarily is "obligated to apply the state law that would have been applied if there had been no change of venue").

B. Kaiser's Liability for its Independent Contractor's Negligence

Next we examine Kaiser's appeal of the court's denial of Kaiser's motions for a directed verdict. When considering the denial of a motion for a directed verdict, we must look at all the evidence in the light most favorable to the non-movant and resolve all conflicts in the evidence in the non-movant's favor. Bell v. May Dep't Stores Co., 866 F.2d 452, 455 (D.C.Cir.1989). Bearing that standard in mind, we find insubstantial Kaiser's contention that it is not vicariously liable for the negligence of Sherber, its consulting physician, because he is an independent contractor.

To determine whether the requisite "master-servant" relationship exists between an employer and an independent contractor for the purpose at hand, i.e., ascertaining whether the employer is liable for the independent contractor's negligence, the District of Columbia considers five factors: "(1) the selection and engagement of the servant, (2) the payment of wages, (3) the power to discharge, (4) the power to control the servant's conduct, (5) and whether the work is part of the regular business of the employer. Standing alone, none of these indicia, excepting (4), seem controlling...." LeGrand v. Insurance Co. of N. Am., 241 A.2d 734, 735 (D.C.1968). An application of those factors to the instant case supports the conclusion that Kaiser is liable for Sherber's negligence. Sherber was brought in as a consultant by a Kaiser physician, so it cannot be gainsaid that Kaiser selected and engaged him. The record does not reveal who paid Sherber, so that point is inconclusive. It does, however, appear as though Kaiser could discharge Sherber from the Smith case, but as Sherber is an independent physician, this factor does not carry the same weight as it might if Sherber had no other source of income. As to the fourth and most important factor, Kaiser had some ability to control Sherber's behavior in that he answered to Smith's primary care-taker, a Kaiser doctor. Finally, as Kaiser provided health care and Sherber was performing health care (albeit negligently)) we may safely conclude that Sherber's actions fell within the ambit of Kaiser's regular business. It might be said that because Kaiser had eliminated cardiology from its coverage, the actions of Sherber, a cardiologist, do not fall within Kaiser's regular business offerings, but we think such an argument circumvents the intention of this final factor--to shield an employer from liability for the actions of an employee who was acting outside his field of expertise (for example, a doctor who negligently fixes a car)--and so we consider Sherber's actions to fall within the scope of Kaiser's regular business. Under the LeGrand analysis, we thus conclude, liability for Sherber's negligence attaches to Kaiser.

Although the District of Columbia has not explicitly opined on the question of when an independent contractor is an apparent or ostensible agent, we may draw added support from Haven v. Randolph, 342 F.Supp. 538, 542 (D.D.C.1972), aff'd on other grounds, 494 F.2d 1069 (D.C.Cir.1974), which declared that a "hospital is liable for the acts of a physician only if he is employed by the hospital and/or acts as agent for the hospital." The district court held that sufficient evidence was presented to the jury to support the finding that Kaiser was liable for Sherber's acts under the theory that he was an apparent or ostensible agent. The Haven court stated that the doctrine of respondeat superior is not applied...