September 2010

Supreme Court of Indiana Declines Invitation to Expand “Emotional Distress” Damages in Medical Malpractice/Adult Wrongful Death Case

By Stephanie F. Holtzlander

This summer, Indiana medical malpractice attorneys from the Plaintiff and Defense Bar alike, anxiously awaited an Indiana Supreme Court decision that had the potential to significantly extend damages recoverable by the parent of an adult person in a medical malpractice/wrongful death case. In November of 2009, oral arguments were presented in a case where the trial court granted and the Court of Appeals affirmed an award for emotional distress which dramatically exceeded the capped damage amount defined by Indiana Code § 34-23-1-2 also known as the Adult Wrongful Death Statute (“AWDS”).  On June 23, 2010, the Indiana Supreme Court issued an opinion refusing to award emotional distress damages to the parent claimant finding that such damages are not available under the ADWS. The Court further held that a parent cannot bring a derivative claim seeking such damages under the Medical Malpractice Act (“MMA”).

In Indiana Patient’s Compensation Fund v. Patrick, 929 N.E.2d 190, (see http://www.in.gov/judiciary/opinions/pdf/06231001fsj.pdf ) 31-year-old Christopher Patrick (“Son”) was badly injured in a car accident. He was admitted to the hospital for his injuries, and was discharged the next day. Son’s father, Gary Patrick (“Father”), questioned the discharge order due to Son’s continuing pain and swelling, but the hospital staff discharged Son pursuant to his doctor’s orders.

Father took Son to their home where they lived together. Later that evening, Son began vomiting blood. Father called an ambulance, but by the time the paramedics arrived, Son had blood coming out of his nose and mouth, and had collapsed. The emergency technicians attempted to resuscitate him, but Son never regained consciousness and was pronounced dead at the hospital. The cause of death was a ruptured colon due to seatbelt trauma, which the medical providers allegedly failed to diagnose.

Son was single, had no dependent survivors, and was the only child of Father. Father, individually, and as personal representative of Son’s estate, brought a medical malpractice action against both the hospital and the treating physician. Father also asserted a claim for his own emotional distress. Father settled his claims against the health care providers and petitioned the Indiana Patient’s Compensation Fund (“Fund”) for payment of the excess damages.

The Fund moved for summary judgment on Father’s claim for emotional distress damages arguing that damages for “negligent infliction of emotional distress” are not recoverable under the AWDS. Following a hearing, the trial court found that the AWDS applied to Father’s claim as personal representative of Son’s estate and assessed his damages at $300,000 for the loss of Son’s love and companionship (increased by $16,531.66 for medical, hospital, funeral, and burial expenses). The trial court also awarded Father an additional $600,000 for his emotional distress claim. The Fund appealed, and the Court of Appeals affirmed. The Indiana Supreme Court granted transfer. Amici Curiae, the Indiana Hospital Association and the Defense Trial Counsel of Indiana, also participated in the appeal.

Wrongful death actions can be pursued when the death is caused by the wrongful act or omission of another. Ind. Code § 34-23-1-1. The AWDS governs actions for the wrongful death of unmarried adult persons with no dependents. Id. § 2. Damages under this section may include, but are not limited to, reasonable medical, hospital, funeral, and burial expenses necessitated by the wrongful act or omission that caused the adult person’s death, and loss of the adult person’s love and companionship. Ind. Code § 34 23-1-2(c)(3)(A)-(B). The loss of the adult person’s love and companionship is capped at $300,000. Id. § 2(e).

The MMA permits a “patient or the representative of a patient” to bring a malpractice claim “for bodily injury or death.” Ind. Code § 34-18-8-1. The total amount recoverable for an injury or death of a patient resulting from an act of malpractice occurring after June 30, 1999, is limited to $1,250,000. Ind. Code § 34-18-14-3-(a)(3). A healthcare provider qualified under the MMA is not liable for an amount in excess of $250,000 for an occurrence of malpractice. Ind. Code § 34-18-14-3(b). Any amount due from a judgment or settlement which is in excess of the total liability of all liable healthcare providers must be paid from the Fund.

The Fund acknowledged that the AWDS entitles Father to recover actual pecuniary damages and $300,000 in non-pecuniary damages. Although Father recognized that he did not have a claim for emotional distress under the AWDS, he argued that he was entitled to bring a claim for his own emotional distress under the MMA.

The Indiana Supreme Court disagreed and held that Father was not entitled to seek emotional distress damages. The Court reasoned that the MMA only allows a claimant to use the procedures provided in the MMA to pursue a claim directly that would be pursued under the AWDS. Thus, the MMA is merely procedural and does not enlarge the scope of damages that can be sought against a healthcare provider. Recognizing that the MMA was designed to curtail liability for medical malpractice, not expand it, the Court found that the MMA is procedural and does not create new causes of action that otherwise do not exist. Thus, whether Father has a claim for emotional distress depends not upon the MMA, but on the AWDS. Because claims for emotional distress are not allowed under the AWDS, Father may not bring this type of derivative claim under the MMA.

In conclusion, the Patrick court emphasized one point of clarity: if the claim underlying the MMA action was one for which emotional distress damages were available, the MMA does not preclude derivative claims of emotional distress, such as those available to “bystanders.” Indeed, several cases have made explicit reference to the availability of damages for emotional distress in MMA cases. See, Bader v. Johnson, 732 N.E.2d 1212 (Ind. 2000) (negligence related to continued pregnancy would entitle mother to emotional distress damages); Baumgart v. DeFries , 888 N.E.2d 199 (Ind. App. Ct. 2008) (parents’ negligent infliction of emotional distress claim is derivative of their child’s claim relating to birth trauma); and Ryan v. Brown , 827 N.E.2d 112 (Ind. Ct. App. 2005) (mother who alleged that she suffered emotional damages as result of miscarriage could pursue claim for negligent infliction of emotional distress and father could pursue similar claims under the “bystander rule”).

Ultimately, the Supreme Court of Indiana declined the invitation to create a cause of action under the MMA which would expand the damages available against a healthcare provider. In that respect, this case represents an important victory for Indiana healthcare providers. On the other hand; however, the Court recognized the evolution of the expanded availability of emotional distress damages. This erosion of limitations on emotional distress damages has affected medical negligence awards, and will continue to impact the value of medical malpractice cases in the future.

For more information about Cantrell, Strenski & Mehringer, LLP’s Medical Malpractice Defense Team, please contact Stephanie at Sholtzlander@csmlawfirm.com.
 

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Indiana Supreme Court Accepts Transfer on Pollution Exclusion/Choice of Law Insurance Coverage Issue

By Barbara Jones

For the first time in eight years, the Indiana Supreme Court may re-examine the enforceability of the pollution exclusion in commercial general liability (CGL) policies. The Court accepted transfer in National Union Fire Insurance Company of Pittsburgh, PA, et al. v. Standard Fusee Corporation, 917 N.E.2d 170 (Ind. Ct. App. 2009) (vacated upon transfer). The last time the Indiana Supreme Court discussed the enforceability of pollution exclusion was in Friedline v. Shelby Ins. Co., 774 N.E.2d 37 (Ind. 2002), which involved allegations of bodily injuries from exposure to fumes and vapors from carpet or carpet glue, a non-traditional environmental claim. Standard Fusee involves remediation of soil and groundwater, conditions which are considered to be traditional environmental pollution claims, and therefore, this case presents an opportunity for the Court to clarify the status of Indiana law on the applicability of a standard CGL policy to substances and conditions that most people consider to be traditional environmental contamination and pollution. Other issues in the case include what state’s law to apply and whether entering into Indiana Department of Environmental Management’s (IDEM) Voluntary Remediation Program (VRP) without a government order, demand or direction to do so, constitutes a “suit” requiring a defense by a CGL insurer. The Indiana Supreme Court heard oral argument on the issues in the case on July 29, 2010, and we are now waiting for the decision.

Standard Fusee, a manufacturer of highway, marine and railroad flares, a Delaware corporation with its headquarters in eastern Maryland, sued several of its CGL, umbrella and excess insurers in Indiana. The lawsuit concerns two sites, one in California and the other in Peru, Indiana. In 2002, the former owner and operator of the California site informed Standard Fusee that perchlorate, a chemical used in the production of flares, had been discovered in ground water samples. Eventually more than 250 private lawsuits were filed against Standard Fusee in California. The insurers denied coverage and did not defend the California claims and lawsuits. Eventually, Standard Fusee was successful in having the California trial court determine that the company had never discharged perchlorate at the site and the lawsuits against Standard Fusee were dismissed. Standard Fusee incurred substantial costs in defense. In 2004, Standard Fusee performed a voluntary screening inspection at its Indiana site and the results suggested that there was potential perchlorate contamination at the site. Standard Fusee applied for the VRP program and then filed a lawsuit against its insurers seeking a declaratory judgment that the insurers owed a defense and have a duty to indemnify Standard Fusee for the lawsuits and claims in California and for the costs of the site investigation and remediation of the VRP in Indiana. In the trial court, the insurers and Standard Fusee filed cross-motions for summary judgment on the issues of whether Standard Fusee’s testing and entry into the VRP constituted a suit requiring a defense and whether the claims were covered because the litigation should be governed under Maryland law (the insured’s headquarters) where the pollution exclusion is enforced for traditional environmental contamination and pollution claims.

The trial court agreed with Standard Fusee that Indiana law should apply to both the California and the Indiana actions and that the pollution exclusions were not effective or enforceable under Indiana law. The insurers petitioned for an interlocutory appeal, which was accepted by both the trial court and the Indiana Court of Appeals.

The Court of Appeals issued its opinion on December 3, 2009, finding that the trial court was correct in determining that Indiana law applied to the Indiana site. However, the Court decided that California law should apply to the California site. Essentially, the Court made its decision based upon an argument that none of the parties briefed. The Court analyzed the “uniform contract interpretation approach” under which the law of a single state or forum would govern the interpretation of coverage under insurance policies for multi-state claims arising from environmental damage in multiple jurisdictions. Under that approach, the Court of Appeals has previously held that where there are sites in multiple states, the state with the most sites is the principal location of the insured risk and that state’s law would govern claims in all of the states. However, the Court went on to conclude a better approach favoring certainty, predictability, uniformity of result and ease of determination in application of the law should be applied for environmental property damage claims and the state where the remediation is to be done is the appropriate law to apply. In this case, the Court found that Indiana law should apply to the Indiana site and California law should apply to the California litigation.

The Court of Appeals rejected the insurers’ argument that the pollution exclusion should be applied in this case because the facts are distinguishable from American States Insurance Company v. Kiger, 662 N.E.2d 945 (Ind. 1996) (gasoline was not a “pollutant” in a garage policy issued to a “mom and pop” gas station owner/operator) and Friedline. The Court also rejected the insurers’ contention that Standard Fusee’s entry into the VRP did not constitute a suit because its participation was voluntary and not adversarial.

The insurers filed a Petition for Transfer on the issues of choice of law, the application of pollution exclusion, and whether voluntarily entering into a VRP constitutes a “suit” triggering the insurers’ defense obligation. Standard Fusee opposed the insurers’ Petition but also filed its own Petition on the issue of choice of law, requesting that the Indiana Supreme Court find that Indiana law applies to both the Indiana and California sites.

When the Indiana Supreme Court issues its opinion, it could affirm the trial court finding that Indiana law applies to all of the claims, affirm the Court of Appeals’ law of the site approach, or the Court could determine that Maryland law (the insured’s headquarters) applies to all of the claims. Along the way, in determining what states’ law to apply, the Supreme Court Justices may clarify whether Indiana follows the majority of states that enforce the pollution exclusion to traditional environmental claims, but not to non-traditional pollution claims (such as in Friedline).

Our firm represents one of the umbrella insurers in the lawsuit. The oral argument is available on the Indiana Supreme Court’s website (mycourts.in.gov/arguments/default.aspx ). We will provide a newsletter update when the Court issues its opinion. In the meantime, if you have any questions about the status of environmental coverage law in Indiana, please contact Barb, bjones@csmlawfirm.com or Dennis, dcantrell@csmlawfirm.com.
 

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Veterinary Seminar

On May 20, 2010, Tara Lutes presented a legal seminar at an Indiana Veterinary Medical Association’s district meeting in Lafayette, IN, discussing recent changes to the veterinary statutes, the veterinary-client relationship, confidentiality of veterinary records, emergency services, abandoned animals, and internet pharmacy issues. For additional information, contact Tara, tlutes@csmlawfirm.com.

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Hospital Risk Management Presentation

On June 18, 2010, Stephanie Holtzlander presented a legal seminar at a Quarterly Hospital Risk Management Meeting entitled "Agency Issues and Hospital Liability: Physicians' Relationship with Hospital and Consent Form Update".  Her presentation focused on prevailing Indiana law and the national trend toward holding hospitals liable for the acts of independent contractor physicians.

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Seminar on Insurance Coverage Litigation

Jim Strenski and Anna Mallon are faculty at a National Business Institute Seminar on Insurance Coverage Litigation on Wednesday, December 15, 2010 in Indianapolis, Indiana. Their topics include a discussion of Bad Faith Litigation, Litigating the Insurance Claim, and Common Ethical Issues and How to Respond. For further information, contact Jim or Anna.

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Tatum's Bags of Fun

CSM is a proud sponsor of the Inaugural White Party to Benefit Tatum's Bags of Fun. Tatum's Bags of Fun is a 501(c)(3) nonprofit organization that distributes backpacks filled with $300 worth of age-appropriate games, toys and activities to every newly diagnosed pediatric cancer patient at Riley Hospital for Children and Peyton Manning Children's Hospital at St. Vincent. Since August 1, 2008, Tatums Bag's of Fun has distributed over 500 Bags of Fun to well-deserving pediatric cancer patients. The White Party, featuring live music, dancing, hors d'oeuvres, cocktails, a silent auction and a "diamond drop" was held Saturday, September 11, 2010 at The Robert Irsay Pavilion in Carmel, Indiana. Please visit   tatums.bagsoffun.org/  for more information.

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Mutt Strut 2010

CSM, for the 2nd year in a row, was proud to participate as a Gasoline Alley Partner sponsor of the Humane Society of Indianapolis’ largest fundraiser, Mutt Strut 2010.  The event took place at the Indianapolis Motor Speedway on April 25, 2010. In addition to the financial sponsorship, CSM also had a team with over 25 members (not including dogs!) and raised a significant amount of money for a great cause.

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Paralegal News

CSM’s paralegals continue to give back to the legal community with participation in the Indiana Paralegal Association and the Indianapolis Bar Association. Angela White was recently elected to her second term as Job Bank Director by the Indiana Paralegal Association (IPA) membership. Angela will also serve as a secondary representative from Indiana to the National Federation of Paralegal Associations.  Angela and Joanne Alexovich also serve on the Executive Council of the Indianapolis Bar Association’s Paralegal Committee.  Both paralegals have served as chairs of the Committee in the past and Joanne currently serves as Secretary.

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