Vargo v. Sauer

• Decision Date: 21 April 1998
• Docket Number: No. 14,Docket No. 106262,14
• Citation: Vargo v. Sauer, 576 N.W.2d 656, 457 Mich. 49 (Mich. 1998)
• Parties: , 125 Ed. Law Rep. 866 Lois VARGO, Personal Representative of Estate of Janet Vargo, Deceased, Plaintiff-Appellant, v. Harold SAUER, M.D., Defendant-Appellee, and Sisters Of Mercy Health Care Corporation, doing business as St. Lawrence Hospital, James Rawlinson, M.D., C.P. Makhoul, D.O. and B. Landess, CRNA, jointly and severally, Defendants. Calendar
• Court: Michigan Supreme Court

Page 656

576 N.W.2d 656

457 Mich. 49, 125 Ed. Law Rep. 866

Lois VARGO, Personal Representative of Estate of Janet Vargo, Deceased, Plaintiff-Appellant, v.Harold SAUER, M.D., Defendant-Appellee and Sisters Of Mercy Health Care Corporation, doing business as St. Lawrence Hospital, James Rawlinson, M.D., C.P Makhoul, D.O. and B. Landess, CRNA jointly and severally, Defendants.

Docket No. 106262.

Calendar No. 14.

Supreme Court of Michigan.

Argued Jan. 8, 1998.

Decided April 21, 1998.

Thurswell, Chayet & Weiner by Tammy J. Reiss, Southfield, for plaintiff-appellant.

Fraser, Trebilcock, Davis & Foster, P.C. by Brett J. Bean and Charyn K. Hain, Lansing, for defendant-appellee.

Granzotto & Nicita, P.C. by Angela J. Nicita, Detroit, amicus curiae for Michigan Trial Lawyers Association.

Opinion

BRICKLEY, Justice.

This case arises out of an action for medical malpractice involving the death of twenty-year-old Janet Vargo after she gave birth to her son at St. Lawrence Hospital in Lansing.Plaintiff, as personal representative of the estate of Janet Vargo, asserted that defendant-appelleeDr. Harold Sauer, a Michigan State University medical professor who instructs medical residents and treats patients at St. Lawrence, negligently caused Ms. Vargo's death.Dr. Sauer moved for summary disposition, arguing that he was entitled to immunity pursuant to subsection 7(2) of the governmental tort immunity statute.¹Plaintiff responded that Dr. Sauer did not satisfy the requirements of subsection 7(2) and that, in any event, subsection 7(4) does not grant immunity to agents of government hospitals.²The trial court dismissed plaintiff's claim on the basis of governmental immunity and a divided Court of Appeals affirmed the dismissal.We accepted review to consider 1) whether the hospital exception is constitutional and, if it is, whether it governs this case, and 2) whether a question exists to submit to the jury in regard to whether Dr. Sauer is entitled to immunity under subsection 7(2).

On the first question, we find that although the hospital exception is not constitutionally infirm, it does not control our disposition of this case.On the second question, we hold that the trial court's dismissal of this action was premature because a factual issue was presented with respect to whether Dr. Sauer was acting "in the course of [his] employment" solely on behalf of MSU or whether he was simultaneously operating as an agent of St. Lawrence Hospital.We therefore reverse the trial court's grant of summary disposition, and remand this case to the circuit court for further proceedings limited to plaintiff's claim of medical malpractice arising from Dr. Sauer's relationship with St. Lawrence Hospital.

I

The material facts appearing in the record establish that on the morning of July 3, 1990, twenty-year-old Janet Vargo visited St. Lawrence Hospital complaining of difficulties associated with her pregnancy.After an electrocardiogram examination indicated an irregular heart rate, the hospital staff instructed Ms. Vargo to visit the office of her personal physician, Dr. James Rawlinson.Dr. Rawlinson examined her and, after her complaints of chest tightness and shortness of breath persisted, instructed her to return to St. Lawrence.Ms. Vargo was subsequently admitted to St. Lawrence, where she was examined by, among others, medical residents from the Michigan State University Medical School.Later that evening, Dr. Rawlinson consulted with defendant-appelleeDr. Harold Sauer, who was "on call" at St. Lawrence, in regard to Ms. Vargo's condition.Dr. Sauer examined Ms. Vargo, arranged for an immediate Cesarean section, and at 12:29 a.m., a healthy boy was delivered.Shortly after the delivery, however, Ms. Vargo developed severe bradycardia and cardiac arrest, and lapsed into a comatose state where she remained until the removal of life support approximately six weeks later.

Defendant-appelleeDr. Harold Sauer has been an associate professor in obstetrics, gynecology and reproductive biology with the Michigan State University College of Human Medicine since 1985, and in this capacity instructs medical students and residents.MSU's status is unique among the universities providing medical schools in Michigan.Unlike Wayne State University and the University of Michigan, both of which operate hospitals as an adjunct to their medical school, MSU lacks its own hospital facility and consequently operates its residency program through privately owned hospitals such as St. Lawrence.Apparently in exchange for the use of these facilities, MSU physicians provide services on a rotation or "on call" basis.MSU medical faculty receive a fixed annual salary from MSU and the affiliated hospitals pay MSU the patient fees generated by MSU faculty and residents.

The present case concerns the "Michigan State University/St. Lawrence Hospital Family Practice Residency Program" at the privately owned St. Lawrence Hospital.³Although the specifics surrounding the affiliation between MSU and St. Lawrence are unclear, the record establishes that Dr. Sauer had staff privileges at St. Lawrence and provided in-patient medical care and treatment to private patients there.

Plaintiff commenced this suit for medical malpractice in Ingham Circuit Court in January 1992 against St. Lawrence Hospital, Dr. Rawlinson, and Dr. Sauer.St. Lawrence settled the claim for $700,000, and Dr. Rawlinson was dismissed with prejudice by stipulation of the parties.Plaintiff's complaint alleged that Dr. Sauer negligently failed to diagnose Ms. Vargo's congestive heart failure, thereby resulting in massive cardio-respiratory arrest during childbirth.

During the course of litigation, Dr. Sauer filed a motion for summary disposition on the basis that, as an employee of MSU, he was entitled to immunity under subsection 7(2).Plaintiff responded that subsection 7(4), rather than subsection 7(2), controls the present case.Plaintiff contended that the arrangement between MSU and St. Lawrence makes MSU an "operator" of a government hospital, thereby triggering the hospital exception to immunity.Plaintiff also argued that notwithstanding subsection 7(4), the activity that gave rise to the claim of medical malpractice did not take place during "the course of employment" nor "on behalf of a governmental agency," pursuant to subsection 7(2)'s mandate.

In May 1993, the trial court granted Dr. Sauer's motion for summary disposition pursuant to MCR 2.116(C)(7)(immunity granted by law), and MCR 2.116(C)(10)(no genuine issue of material fact), finding:

Dr. Sauer is a governmental employee.He was acting within the scope of his employment.His sole remuneration comes from the university.He responded to a call to the Michigan State University OB/GYN clinic.

There were residents involved in this case.It is a necessary portion or part of his employment that, in addition to the teaching function, the direct and what I will term as a classroom or pedagogical type of function, he also maintained his skill level.So, I have no trouble in finding that this is within the scope of his employment.

Judge Houk expressed some reluctance with his ruling, observing that the hospital exception treated patients of MSU physicians differently than those treated by other university-employed physicians.⁴

Before the entry of final order, plaintiff moved that Dr. Sauer produce contractual and other documentary evidence relating to the relationship between St. Lawrence Hospital and MSU.Judge Houk summarily denied the request and entered the order granting summary disposition.

On appeal, plaintiff asserted that a grant of immunity under subsection 7(2) was improper because Dr. Sauer's treatment of Ms. Vargo was not undertaken on behalf of MSU nor did it involve the performance of a governmental function.Plaintiff also argued that MSU "operated" a hospital pursuant to subsection 7(4) and that, in the alternative, the hospital exception violates the Equal Protection Clause of the Michigan Constitution because it "fails to treat all university-employed physicians [in Michigan] in a like manner with regard to governmental immunity."

A divided Court of Appeals rejected plaintiff's arguments and affirmed the trial court's dismissal, ruling that Dr. Sauer was entitled to the defense of governmental immunity.215 Mich.App. 389, 547 N.W.2d 40(1996).We granted leave to appeal, and now reverse the decision of the Court of Appeals.

II

We begin with the fundamental principle that governmental agencies are statutorily immune from tort liability "[e]xcept as otherwise provided."⁵In Ross v. Consumers Power Co. (On Rehearing), 420 Mich. 567, 618, 363 N.W.2d 641(1984), we characterized § 7 as a "broad grant of immunity" subject to "narrowly drawn statutory exceptions."⁶Although the general effect of the 1986amendments to the governmental tort liability act was to preserve, and in some instances to expand, the immunity available to governmental agencies and their employees, the amendments also created a fifth exception to immunity.⁷As spelled out above, subsection 7(4) specifically allows tort liability to be imposed on a governmental agency other than the Department of Mental Health or Department of Corrections for injuries arising out of the ownership or operation of a public hospital or county medical facility.⁸Since Ross, this Court has repeatedly affirmed the proposition that statutory exceptions to governmental immunity are to be narrowly construed.⁹

A

We first consider plaintiff's argument that the hospital exception to immunity controls the present case.Plaintiff contends that the legislative purpose in enacting subsection 7(4) was to exempt the entire practice of medicine from the otherwise broad grant of governmental immunity under subsection 7(2).In furtherance of this argument, plaintiff insists that the Legislature did not intend to extend governmental immunity to a...