ABC Radiology, P.C., Jane Doe, John Doe, Anonymous Medical Associates, Inc., Sherry Patrick v. Cathy Gearhart , 69 N.E.3d 545 ( 2017 )

FILED
Feb 07 2017, 9:24 am
CLERK
Indiana Supreme Court
Court of Appeals
and Tax Court
ATTORNEYS FOR APPELLANTS ATTORNEY FOR APPELLEE
Danny E. Glass Nicholas C. Deets
Andrew E. Skinner Indianapolis, Indiana
Evansville, Indiana
Clay A. Edwards
Chad J. Bradford
Louisville, Kentucky
Lonnie D. Johnson
Michelle R. Adams
Stacy F. Thompson
Bloomington, Indiana
Rick L. Weil
Indianapolis, Indiana
IN THE
COURT OF APPEALS OF INDIANA
ABC Radiology, P.C., Jane Doe, February 7, 2017
John Doe, Anonymous Medical Court of Appeals Case No.
Associates, Inc., Sherry Patrick, 49A05-1602-CT-446
Appellants-Defendants, Appeal from the Marion Superior
Court
v. The Honorable Michael D. Keele,
Judge
Cathy Gearhart, Trial Court Cause No.
Appellee-Plaintiff 49D07-1509-CT-30343
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Altice, Judge.
Case Summary
[1] Cathy Gearhart’s husband, Kent, died from renal cell cancer on January 14,
2015. After filing her proposed complaint for damages with the Indiana
Department of Insurance, Gearhart, individually and as personal representative
of Kent’s estate, filed the instant action against various defendants. As
amended, the complaint alleges two counts based on claims of negligence and
one count seeking declaratory judgment. Count I is a medical malpractice
claim against ABC Radiology, P.C. (ABC), John Doe, M.D. (Dr. Doe),
Anonymous Medical Associates, Inc. (AMA), and Jane Doe, ACNP (Nurse
Doe). Count II is a common-law negligence claim against Sherry Patrick and
her employer, AMA. Count III (incorrectly denominated as a second Count II
in the amended complaint) is a claim for declaratory judgment against the
Indiana Patients Compensation Fund/Indiana Department of Insurance (the
Fund), AMA, Patrick, and AMA’s medical malpractice and general liability
insurers.1 Count III seeks a determination of whether the claim in Count II is
subject to the Indiana Medical Malpractice Act (the Act), which insurance
1
There appears to be some disagreement regarding which parties were named as defendants in Count III.
The parties agree, however, that the Fund is a proper party to the declaratory judgment claim, as well as the
various insurers. We find that AMA and Patrick were incorporated by reference as defendants in paragraph
32 of the complaint.
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policies provide coverage for this claim, and whether the Fund has a duty to
make payments for any damages awarded for Count II.
[2] Gearhart filed the complaint in the Marion Superior Court. Thereafter, the
defendants named in Counts I and II (Defendants) jointly filed a motion
requesting that the trial court sever Counts I and II from Count III and transfer
venue of Counts I and II to Vanderburgh County, where the alleged negligence
occurred and Defendants are located.2 Defendants argued further that Count
III was improperly joined.
[3] Gearhart responded that Marion County was a county of preferred venue
because a necessary defendant to the action – the Fund – is a governmental
organization with its principal office located there. See Ind. Trial Rule 75(A)(5).
Gearhart argued also that all three counts were properly joined pursuant to Ind.
Trial Rule 20 because they arise out of the same transaction or occurrence and
have common questions of law and fact. Following a hearing, the trial court
denied the motion. Defendants bring this interlocutory appeal, arguing that
Gearhart’s joinder of the underlying negligence claims with the declaratory
judgment claim was improper and deprived Defendants of their right to trial in
a preferred venue county. Thus, we are asked to determine whether the trial
court abused its discretion in denying Defendants’ motion to sever Counts I and
II from Count III and transfer venue for those counts to Vanderburgh County.
2
Gearhart resides in Warrick County, which is adjacent to Vanderburgh County.
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[4] We affirm.3
Facts & Procedural History
[5] When Kent was diagnosed with renal cell cancer in July 2009, Dr. Doe – a
urologist associated with AMA – became his treating physician. Dr. Doe
removed Kent’s right kidney shortly after the diagnosis. Thereafter, Kent
continued to see Dr. Doe or another member of the practice for routine follow-
up about every six months.
[6] On September 13, 2013, Dr. Doe ordered a routine CT scan of Kent’s chest,
abdomen, and pelvis. A radiologist employed by ABC interpreted the scans
and reported that there was a 2.6 cm mass in the left kidney. The radiologist
recommended further evaluation of the mass. There was no follow-up by Dr.
Doe or AMA regarding this report, and Kent was not made aware of the
results. Kent saw Nurse Doe, a nurse practitioner with AMA, in March 2014
for another routine follow-up with no mention of the abnormalities seen in the
September 2013 scans.
[7] On September 23, 2014, Kent saw another nurse practitioner with AMA for
complaints of bright red urine. This nurse noted the findings from the
September 2013 scans and immediately ordered follow-up CT scans. These
scans revealed that the mass on Kent’s left kidney had grown. The cancer had
3
We held oral argument in this matter in Indianapolis on January 19, 2017, and we extend our appreciation
to counsel for their presentations.
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also spread to several lymph nodes and his liver. Following a PET/CT scan on
October 1, 2014, Kent was diagnosed with terminal renal cell cancer to which
he succumbed on January 16, 2015.
[8] Gearhart filed her proposed complaint for damages with the Indiana
Department of Insurance, alleging the medical malpractice of Dr. Doe, Nurse
Doe, AMA, and ABC. Thereafter, on August 5, 2015, Dr. Doe was deposed by
Gearhart’s counsel. Dr. Doe testified that he did not follow-up on the
September 2013 radiology report because Sherry Patrick, an administrative staff
member, made a data entry error upon receiving the report. As a result, the
report was not forwarded to Dr. Doe or put on his list of items that needed
follow-up. Dr. Doe testified that the error was purely clerical/administrative
and did not involve the exercise of medical skill or judgment.
[9] On September 11, 2015, Gearhart filed her complaint for damages and for
declaratory judgment in the Marion Superior Court. The complaint was
amended the following month and alleged three counts as set out above.
Counts I and II were for damages resulting from the negligence of Defendants –
medical malpractice and common law negligence, respectively alleged. Count
III sought a declaratory judgment determining whether the claim in Count II,
involving the data entry error, was subject to the Act. In this regard, Gearhart
pointed to Preferred Prof’s Ins. Co. v. West, 23 N.E.3d 716 (Ind. Ct. App. 2014),
trans. denied, for the proposition that clerical or administrative errors that do not
involve the exercise of medical judgment or skill by the medical provider are
matters of common-law negligence not subject to the Act.
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[10] On November 19, 2015, Defendants filed their joint motion in which they asked
the trial court to either dismiss Counts I and II or sever them from Count III
and transfer venue of Counts I and II to Vanderburgh County. After Gearhart
filed a response to the motion, the trial court scheduled the matter for oral
argument on January 27, 2016. The trial court denied the motion on February
4, 2016, and Defendants now appeal. This is an interlocutory appeal as of
right. Ind. Appellate Rule 14(A)(8).
Standard of Review
[11] This case boils down to a determination of whether the declaratory judgment
claim involving the Fund in Count III was properly joined with the tort claims
in Counts I and II against Defendants. Determinations regarding joinder rest
within the trial court’s discretion and will be reversed on appeal only for an
abuse of that discretion. United of Omaha v. Hieber, 653 N.E.2d 83, 87 (Ind. Ct.
App. 1995), trans. denied.
Discussion & Decision
[12] Defendants argue that misjoinder of the tort counts with the declaratory
judgment count impermissibly deprived Defendants of their right to trial in a
preferred venue county. They ask that we order the tort claims severed from
the declaratory judgment claim and transferred to Vanderburgh County, leaving
only the declaratory judgment action in Marion County.
[13] T.R. 20(A)(2) provides for permissive joinder of defendants as follows:
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All persons may be joined in one [1] action as defendants if there
is asserted against them jointly, severally, or in the alternative,
any right to relief in respect of, or arising out of, the same
transaction, occurrence, or series of transactions or occurrences
and if any question of law or fact common to all defendants will
arise in the action.
T.R. 20(A) also provides:
A … defendant need not be interested in … defending against all
the relief demanded. Judgment may be given … against one or
more defendants according to their respective liabilities.
Unwilling plaintiffs who could join under this rule may be joined
by a plaintiff as defendants, and the defendant may make any
persons who could be joined under this rule parties by alleging
their interest therein with a prayer that their rights in the
controversy be determined, along with any counterclaim or cross-
claim against them, if any, as if they had been originally joined as
parties.
The purpose of T.R. 20(A) is to promote trial convenience, expedite claims, and
avoid multiple lawsuits. Hieber, 653 N.E.2d at 87 (citing McCoy v. Like, 511
N.E.2d 501, 503 (Ind. Ct. App. 1987), trans. denied). To accomplish these goals,
Indiana courts give T.R. 20(A) the broadest possible reading. Id. This is
especially true in light of the fact that T.R. 20(B) and Ind. Trial Rule 42(B)
allow for separate trials after all parties have been joined. Hieber, 653 N.E.2d at
87.
[14] To join defendants under T.R. 20(A), three requisites must be met. First, a
right of relief must be asserted against the defendants jointly, severally, or in the
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alternative. Russell v. Bowman, Heintz, Boscia & Vician, P.C., 744 N.E.2d 467, 472
(Ind. Ct. App. 2001), trans. denied.
[15] Second, and most importantly, the claims must have arisen out of the same
transaction, occurrence, or series of transactions or occurrences. Id. In this
regard, we apply the logical relationship test (also applied in the context of
compulsory counterclaims under Trial Rule 13(A)): “all logically related events
entitling a person to institute a legal action against another generally are
regarded as comprising a transaction or occurrence.” Russell, 744 N.E.2d at
472. In the related context of T.R. 13(A) we have explained:
The phrase “transaction or occurrence” should be broadly
defined so as to effectuate the rule’s intended purpose of avoiding
multiple lawsuits between the same parties arising from the same
event or events. Two causes of action arise from the same
transaction or occurrence if there is a logical relationship between
them, meaning that the counterclaim arises from the same
aggregate set of operative facts as the opposing party’s claim.
Ratcliff v. Citizens Bank of W. Indiana, 768 N.E.2d 964, 967 (Ind. Ct. App. 2002),
trans. denied.
[16] The third and final requirement for T.R. 20(A) joinder is that there is at least
one common question of law or fact among the parties. Id. In other words, the
rule does not require that every question of law or fact in the action be common
among the parties. Id.Court of Appeals of Indiana | Opinion 49A05-1602-CT-446 | February 7, 2017 Page 8 of 14
[17] Defendants focus their appellate argument on the second requirement and
provide no analysis regarding the other two. Accordingly, we confine our
analysis to a determination of whether the tort claims and the declaratory
judgment claim arise out of the same transaction or occurrence.
[18] In this regard, Defendants assert that federal and state courts throughout the
country have routinely held that a declaratory judgment action does not arise
out of the same transaction or occurrence as the underlying tort action for
purposes of permissive joinder. See Cramer v. Walley, 2015 WL 3968155, at *4
(D.S.C. June 30, 2015) (“The weight of authority holds that claims for negligent
operation of an automobile do not arise from the same transaction or
occurrence as a subsequent claim against an insurer or a declaratory judgment
action involving coverage questions, and therefore cannot be joined under
Fed.R.Civ.P. 20.”); St. Paul Fire & Marine Ins. Co. v. Mannie, 91 F.R.D. 219, 221
(D.C.N.D. 1981) (“The terms of the policy and their application to a given set
of facts is a question entirely separate from the question of Larry Mannie’s
alleged negligence”); Colonial Penn Ins. Co. v. Hart, 291 S.E.2d 410, 414 (Ga.
App. 1982) (injured party’s claim against tortfeasor’s insurer could not be
maintained as a compulsory counterclaim in insurer’s declaratory judgment
action because “the insurer’s contractual liability under a given set of facts and
the insured’s tort liability are fundamentally distinct issues” and the tort claim
“did not arise out of the transaction or question presented by the action for
declaratory judgment”). Defendants also provide a string cite on pages 12 and
13 of their appellate brief that was obtained from footnote 3 in Mannie, 91
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F.R.D. at 221. These cases were cited in Mannie for the proposition (a narrower
proposition than argued by Defendants here) that “the emerging majority
rule…disallows joinder of a negligence claim against the insurer in a
declaratory judgment action where the forum state does not allow direct actions
against insurers.” Id.
[19] None of the cases cited by Defendants involve a situation like the one presented
here where the injured party filed a declaratory judgment action against the
alleged tortfeasors’ insurers within the same complaint as the tort claims. 4
More importantly, the declaratory judgment in those cases involved typical
insurance coverage issues and not a determination of whether a medical
malpractice act applied. Accordingly, we do not find these cases from other
jurisdictions particularly helpful.
[20] Defendants also observe that it is the policy in Indiana to keep the issue of
insurance out of personal injury litigation. Allstate Ins. Co. v. Keltner, 842
N.E.2d 879, 884 (Ind. Ct. App. 2006). Thus, the general practice of insurance
companies is to file separate declaratory judgment actions to determine
coverage outside of the principal tort cases. Cromer v. Sefton, 471 N.E.2d 700,
704 (Ind. Ct. App. 1984). Again, however, we observe that while this general
4
The vast majority of the cases cited by Defendants involve a declaratory judgment action filed by the insurer
and the injured party’s subsequent attempt to file a counterclaim based in tort. Although Cramer involved a
complaint asserting both a tort claim and a declaratory judgment claim, the declaratory judgment claim was
filed against the plaintiff’s insurer for bad faith, not the tortfeasor’s insurer.
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policy is applicable to traditional insurance coverage disputes, it is not
necessarily applicable to determinations of whether the Act applies.
[21] Though not presented in precisely the same procedural context, we find West,
23 N.E.3d 716, helpful to our consideration of the issue presented. There are
factual complexities in West which are not necessary to address for our
purposes. It suffices to say that the plaintiffs filed a complaint for negligence in
the St. Joseph Circuit Court against various healthcare defendants and, at the
same time, filed a proposed complaint for damages with the Indiana
Department of Insurance. While the case was pending before the medical
review panel, the plaintiffs filed a motion for a preliminary determination of
law, asking the St. Joseph court to determine whether their claims were covered
by the Act. The Fund requested and was granted permission to intervene. The
Fund sided with the plaintiffs in arguing that the Act did not apply, and the
defendant opposed a preliminary determination of law. The St. Joseph court
declined to exercise its statutory authority to make a preliminary determination
on the issue of law.5
[22] About a month later, the plaintiffs filed a separate complaint for declaratory
judgment in the Marion Superior Court, naming as defendants the Fund and
the insurers of the healthcare defendants in the St. Joseph action. This action
5
The Act, specifically Ind. Code § 34-18-11-1, provides a trial court, under certain circumstances and before
the medical review panel issues its opinion, with authority to “preliminarily determine an affirmative defense
or issue of law or fact that may be preliminarily determined under the Indiana Rules of Procedure”.
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sought a determination of whether the plaintiffs’ allegations in the St. Joseph
action fell within the provisions of the Act or instead stated a common-law
action outside of the Act. The insurance defendants filed a motion to dismiss
the declaratory judgment complaint under Ind. Trial Rule 12(B)(8), arguing that
the same action was pending in the St. Joseph court. The Marion Superior
Court denied the motion to dismiss and thereafter issued its declaratory
judgment. The court determined, based on the plaintiffs’ allegations, that the
claims constituted claims of common-law negligence and not medical
malpractice as a matter of law.
[23] On appeal, we discussed Indiana’s Uniform Declaratory Judgments Act and
noted that its stated purpose is “to settle and to afford relief from uncertainty
and insecurity with respect to rights, status and other legal relations”. I.C. § 34-
14-1-12. Accordingly, it is to be liberally construed and administered. Id. “The
test to determine the propriety of declaratory relief is whether the issuance of
declaratory judgment will effectively solve the problem involved, whether it will
serve a useful purpose, and whether another remedy is more effective or
efficient.” West, 23 N.E.3d at 724.
[24] Under the facts of the case, we found that a declaratory judgment was
permissible and appropriate. We explained:
In this case, the [Act] affects the rights, status, and legal relations
of the parties. The issue of the applicability of the [Act] to the
claims alleged by the Wests is a question for which an early
determination is necessary in order to avoid the delay and
expense of proceeding under inapplicable procedural and
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substantive rules, whether that be the [Act] or a common law
negligence case. Such a determination in the context of this case
is useful to narrow the issues and determine the path of the case;
it determines when the case can be tried, the applicable theories
and defenses, including expert testimony, and available limits of
liability. Furthermore, as noted by the Marion County trial court,
a resolution of the applicability of the [Act] by declaratory
judgment is necessary in order for any possible resolution by
settlement to occur.
Id. at 724-25. We continued, “it would not be expeditious or efficient, judicially
or otherwise, for the Wests to wait for the conclusion of the medical review
panel process to determine if the [Act] applies.” Id.
[25] West highlights the importance of a preliminary determination of the Act’s
application to the underlying claims of negligence. 6 We find that this
determination is uniquely bound up with the underlying claims in a way that
traditional insurance coverage disputes are not. Accordingly, we hold that a
declaratory judgment action addressing the application of the Act arises out of
the same transaction or occurrence (i.e. the alleged negligent act(s)) as the tort
claims. In other words, the two are logically related and allowing permissive
6
The court in West determined that the separate declaratory judgment action filed in Marion County was not
subject to dismissal under T.R. 12(B)(8) because the “same action” was not pending in St. Joseph County.
Id. at 725. This holding, however, does not mean that such actions could not be joined in the same court.
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joinder in this context effectuates T.R. 20’s intended purpose of promoting trial
convenience, expediting claims, and avoiding multiple lawsuits. 7
[26] Defendants have not established that the trial court abused its discretion by
finding that Counts I, II, and III were properly joined. Thus, as the Fund is a
necessary party to Count III, Marion County is a county of preferred venue for
the entire action. See T.R. 75(A)(5).8
[27] Judgment affirmed.
[28] Riley, J. and Crone, J., concur.
7
Although Count III will be tried earlier than Counts I and II, there are still obvious economies to be
achieved by keeping the counts within the same lawsuit (that is, before the same court).
8
T.R. 75 provides for numerous preferred venues, and there is no priority among the subsections establishing
preferred venue. See Salsbery Pork Producers, Inc. v. Booth, 967 N.E.2d 1, 5 (Ind. Ct. App. 2012). As
Defendants conceded at oral argument, this may result in multiple preferred venues for a given case, and a
motion to transfer venue under T.R. 12(B)(3) cannot be granted if the plaintiff filed the action in one of the
preferred venues. Salsbery Pork Producers, Inc., 967 N.E.2d at 5. This is true even if another county of
preferred venue is a more convenient forum. See Am. Family Ins. Co. v. Ford Motor Co., 857 N.E.2d 971, 976
(Ind. 2006) (“Trial Rule 75(A) does not always produce preferred venue at the most convenient location”);
Garrison v. Ford, 53 N.E.3d 454, 456 (Ind. Ct. App. 2016).
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