Villazon v. Prudential Health Care Plan, Inc.

• Decision Date: 27 March 2003
• Docket Number: No. SC01-1397.,SC01-1397.
• Citation: 843 So.2d 842
• Parties: Rolando VILLAZON, etc., Petitioner, v. PRUDENTIAL HEALTH CARE PLAN, INC., Respondent.
• Court: Florida Supreme Court

843 So.2d 842

Rolando VILLAZON, etc., Petitioner, v. PRUDENTIAL HEALTH CARE PLAN, INC., Respondent.

No. SC01-1397.

Supreme Court of Florida.

March 27, 2003.

James C. Blecke of Deutsch & Blumberg, P.A., Miami, FL, for Petitioner.

Steven M. Ziegler and Andres Gonzalez of the Law Offices of Steven M. Ziegler, P.A., Hollywood, FL, for Respondent.

David J. Sales and Searcy Denney Scarola of Barnhart & Shipley, West Palm Beach, FL, for the Academy of Florida Trial Lawyers, Amicus Curiae.

Louise H. McMurray of McIntosh, Sawran, Peltz & Cartaya, P.A., Miami, FL, for the Florida Association of Health Plans, Amicus Curiae.

Joel L. Michaels, Barbara W. Mayers, and Robin J. Bowen of McDermott, Will & Emery, Washington, DC, for the American Association of Health Plans, Amicus Curiae.

LEWIS, J.

We have for review Villazon v. Prudential Health Care Plan, Inc., 794 So.2d 625 (Fla. 3d DCA 2001), which expressly and directly conflicts with the decision in In re Estate of Frappier, 678 So.2d 884 (Fla. 4th DCA 1996). We have jurisdiction. See art. V, § 3(b)(3), Fla. Const.

MATERIAL FACTS AND PROCEEDINGS BELOW

Petitioner Rolando Villazon, personal representative of the estate of his deceased wife, Susan Villazon, seeks review of the decision of the Third District Court of Appeal affirming the trial court's summary judgment in favor of Prudential Health Care Plan, Inc., (PruCare) in Petitioner's action against PruCare for the wrongful death of his wife. Through her employer, Susan Villazon became a member of PruCare, a health maintenance organization. After having a mouth ailment allegedly misdiagnosed or mistreated, Mrs. Villazon died as a result of an untreated cancerous tongue condition.

Villazon filed an action for wrongful death based on negligence against Mrs. Villazon's primary care physician, Dr. Melvyn Sarnow,¹ and against her health care provider, respondent PruCare. In Count VI of his amended complaint, Villazon alleged the basis for PruCare's vicarious liability and breach of a nondelegable duty to be:

94. The Defendant, PRUDENTIAL HEALTH CARE PLAN, INC. is a health maintenance organization doing business in Dade County Florida as defined by and governed by Section 641.17 et seq., Florida Statutes; Chapter 4-31, Florida Administrative Code; 42 U.S.C. Section 300(e); and 42 C.F.R. Part 417.

95. SUSAN COHEN VILLAZON was a PRUDENTIAL HEALTH CARE PLAN, INC. subscriber under a health maintenance contract by which PRUDENTIAL HEALTH CARE PLAN, INC. agreed to provide SUSAN COHEN VILLAZON with comprehensive health care services.

96. By statute, rule, and contract, the Defendant, PRUDENTIAL HEALTH CARE PLAN, INC., had the non-delegable duty to provide SUSAN COHEN VILLAZON with quality health care including without limitation, in-patient hospital services, and medical, surgical, diagnostic, x-ray, laboratory, nursing, physical therapy, and pharmaceutical services.

97. The Defendant, PRUDENTIAL HEALTH CARE PLAN, INC., contracted with Melvyn Sarnow, D.O., Basilio Garcia-Sellek, D.O. and Harvey S. Satz, D.M.D., to provide SUSAN COHEN VILLAZON with health care services, and PRUDENTIAL HEALTH CARE PLAN, INC. is responsible for any and all negligence of Melvyn Sarnow, D.O., Basilio Garcia-Sellek, D.O. and Harvey S. Satz, D.M.D. in the rendering [or] failure to render health care to SUSAN COHEN VILLAZON, as more specifically set forth herein.

98. The Defendant, PRUDENTIAL HEALTH CARE PLAN, INC. as set forth herein breached its duty to provide quality health care to SUSAN COHEN VILLAZON, resulting in her death.

99. As a result of the acts and conduct of the Defendant, PRUDENTIAL HEALTH CARE PLAN, INC., by and through its agents, apparent agents, employees, SUSAN COHEN VILLAZON sustained injury and ultimately died on February 9, 1997.

(Emphasis supplied.) As set forth in the Third District's opinion:

Villazon argues that Prudential Health care controlled the referral process and required that authorization be obtained prior to the performance of diagnostic and therapeutic procedures. Prudential Health also required that the contracted physicians adhere to rules and seek approval for diagnostic tests. Physicians had to provide and arrange health care services through Prudential Health and refer subscribers to contracted providers. Villazon, however, does not allege that his wife was denied proper medical testing and referrals to specialists.

Villazon, 794 So.2d at 626.

PruCare filed a motion for summary judgment, asserting that the claims filed against it were preempted by section 514(a) of the Employee Retirement Income Security Act (ERISA),² and that Villazon could not prevail on those claims as a matter of state law. The trial court entered summary final judgment in favor of PruCare, holding that "ERISA governed the claims filed against [PruCare] because they related to the manner in which [PruCare] administered its health care plans, and further, that there were no issues of fact as to the theory of vicarious liability or any recognizable cause of action for breach of a non-delegable duty against [PruCare] under state law." Villazon, 794 So.2d at 626-27. On appeal, the district court agreed. Id. at 627.

In addressing the state law issues, the Third District rejected Villazon's position and reasoned that the medical providers were independent contractors because as an independent practice associated health maintenance organization (IPA HMO), PruCare entered into contracts with physicians who had their own independent practices and who agreed to provide covered services for a contracted rate. The district court highlighted that Dr. Sarnow was an independent contractor who had his own private practice and agreed to render services to PruCare subscribers pursuant to a Primary Care Physician Agreement, continuing his own independent practice after he entered into this agreement.

In rejecting Villazon's argument that PruCare had assumed a nondelegable duty to render medical care to his wife in a nonnegligent manner when she purchased health care coverage from PruCare, the court noted that Villazon had not cited any support for this proposition. The court looked only to the contract between PruCare and the physicians and reasoned that it was the best evidence of the intent of the parties, and its meaning and legal effect were questions of law for determination by the court. It was important to the court below that the contractual provisions designated physicians as independent contractors, and the court found no evidence of control upon which to justify imposing responsibility on PruCare. Villazon, 794 So.2d at 627-28. In focusing solely on the one contract that attempted to designate physicians as independent contractors and also limiting its vision to the issue of actual control, the Third District's decision is also in conflict with Nazworth v. Swire Florida, Inc., 486 So.2d 637 (Fla. 1st DCA 1986), which demonstrates that it is the right to control, not the actual control, that may be determinative.

ERISA PREEMPTION

As did the district courts in Villazon and Frappier, we begin our legal analysis by determining the threshold issue of ERISA preemption. Villazon correctly cites Frappier for the proposition that "[i]f a claim relates to the manner in which the ERISA plan is administered, ERISA preempts the claim." Villazon, 794 So.2d at 627; see also Frappier, 678 So.2d at 887 ("Concerning the direct negligence, corporate liability and implied contract claims, we concur with the lower court's decision that these allegations would be completely preempted because they present issues unequivocally related to the administration of the plan and are within the scope of section 502(a)(1)(B).") (emphasis supplied).

However, Villazon directly conflicts with Frappier in its determination of whether a state law wrongful death claim by a deceased patient member's estate against a health maintenance organization (HMO) based upon vicarious liability for asserted medical malpractice of its member physicians "relates to" administration of the ERISA plan and is therefore preempted.³ In Villazon, the district court below incorrectly concluded that it did. See Villazon, 794 So.2d at 627 (determining that Villazon's claims "directly relate to the health plan as they arise from the denial of medical care and treatment benefits"). In Frappier, in contrast, the district court correctly determined that ERISA does not preempt such vicarious liability claims.⁴ In Frappier, the decedent's estate filed an action against Health Options, Inc., an HMO, and the two Health Options physicians who had provided medical care to Frappier, asserting that medical malpractice had occurred. The trial court had dismissed Frappier's complaint with prejudice. Frappier,678 So.2d at 885.

The appellate court remanded the case to the trial court to determine whether an ERISA plan ever existed, agreeing that "this threshold question must be resolved prior to addressing the issue of whether the dismissed counts are preemptable." Id. Nevertheless, the district court was "compelled to address the merits of the trial court's determination that the estate's claims against Health Options are preempted by the federal ERISA statute." Id. at 886. Nor was this exercise simply gratuitous, as reflected in the district court's directive to the trial court, in remanding the case: "Upon an appropriate finding, the trial court may dismiss the estate's direct negligence, corporate liability and implied contract claims for a lack of subject matter jurisdiction. However, in no event may the vicarious liability count be dismissed as the same does not `relate to' an employee benefit plan." Id. at 888 (emphasis supplied).

Because no Florida case had yet addressed whether direct negligence or vicarious liability claims against an entity involved in an ERISA plan are preempted, the Fourth District found guidance from decisions rendered by federal courts. It first framed the inquiry...