Laurie Gardner v. Anonymous Physician ( 2023 )

FILED
Nov 09 2023, 8:34 am
CLERK
Indiana Supreme Court
Court of Appeals
and Tax Court
ATTORNEYS FOR APPELLANT ATTORNEY FOR APPELLEE
Colby A. Barkes Michael A. Sarafin
Jeffrey S. Wrage Crown Point, Indiana
Valparaiso, Indiana
IN THE
COURT OF APPEALS OF INDIANA
Laurie Gardner, November 9, 2023
Appellant-Plaintiff, Court of Appeals Case No.
23A-CT-345
v. Appeal from the Lake Superior
Court
Anonymous Physician, The Honorable Calvin Delee
Appellee-Defendant Hawkins, Judge
Trial Court Cause No.
45D02-2004-CT-417
Opinion by Chief Judge Altice
Judges May and Foley concur.
Altice, Chief Judge.
Case Summary
[1] Laurie Gardner, a nurse at St. Mary Medical Center, Inc. (the Hospital), filed a
proposed complaint against Anonymous Physician for medical malpractice.
Anonymous Physician sought dismissal, arguing that because he and Gardner
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were in the same employ and she sustained a workplace injury, her exclusive
remedy was under the Worker’s Compensation Act (WCA). The trial court
dismissed the medical malpractice action based on Ind. Trial Rule 12(B)(1) for
lack of subject matter jurisdiction.
[2] On appeal, Gardner argues that physicians are third parties under the WCA
and thus are not shielded from claims of medical negligence brought by an
employee of the same company. We agree that the exclusivity provision of the
WCA does not immunize a physician from claims for medical negligence
arising from a doctor-patient relationship with the injured party, who is in the same
employ as the physician. The exclusivity provision, however, does apply to
claims brought against a physician that are unrelated to the physician’s medical
treatment of a fellow employee.
[3] Reading the proposed complaint in a light most favorable to Gardner, we
conclude that some of her allegations of malpractice appear to have arisen out
of a doctor-patient relationship between her and Anonymous Physician and not
simply from their common employment at the Hospital. While Gardner may
not proceed against Anonymous Physician based on his treatment of another
patient or his actions as a medical director at the Hospital, she may pursue a
medical malpractice action related to any treatment she received from
Anonymous Physician for her workplace injury. Accordingly, the trial court
erred in dismissing the proposed complaint.
[4] We reverse and remand.
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Facts & Procedural History
[5] On September 1, 2016, Gardner was exposed to crusted (Norwegian) scabies in
the course and scope of her employment as a nurse at the Hospital. She
contracted scabies from contact with a patient and then unknowingly exposed
her family, resulting in family members contracting the skin infection.
[6] Gardner filed a worker’s compensation claim against the Hospital in March
2018, which was settled by a compromise agreement in October 2019. In the
meantime, on May 23, 2018, she filed a proposed complaint against
Anonymous Physician with the Indiana Department of Insurance (the DOI).
Gardner asserted the following negligence allegations:
7. [Anonymous Physician] failed to protect Plaintiff from
exposure to and failed to diagnose the scabies which led to a
delay in appropriate treatment. Said failure to diagnose caused
Plaintiff to unknowingly expose her family to scabies which
resulted in her family members also contracting scabies.
8. [Anonymous Physician] negligently directed Plaintiff’s care by
failing to provide appropriate and timely treatment and for his
failure to refer Plaintiff to medical care providers specializing in
the treatment of the scabies condition which Plaintiff contracted
at her place of employment.
Appendix at 27.
[7] On September 15, 2022, while the matter still pended before the DOI,
Anonymous Physician sought a preliminary determination of law by the trial
court that the proposed complaint should be dismissed pursuant to T.R.
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12(B)(1) for lack of subject matter jurisdiction. Anonymous Physician argued
that dismissal was warranted because Gardner “exhausted her sole remedy, a
worker’s compensation claim, upon a workplace accident and subsequent
medical care which occurred when she and [Anonymous Physician] were
employed by subsidiaries of the same corporate parent(s).” Appendix at 13.
[8] Among the limited exhibits provided by Anonymous Physician in support of
his motion to dismiss was the affidavit of Nancy Moser, Vice President for
Corporate Compliance and Quality/Risk Management for Community
Healthcare System, which includes, among others, Community Foundation of
Northwest Indiana, Inc. (CFNI), the Hospital, St. Catherine Hospital, Inc.
(SCH), Munster Medical Research Foundation, Inc. (MMRF), and Community
Care Network, Inc (CCNI). The corporate organizational structure of these
entities is summarized by the following flow chart:
CFNI
THE HOSPITAL, MMRF & SCH
Each 100% held by CFNI
CCNI
Equally held (1/3) by the Hospital, MMRF & SCH
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According to Moser, Anonymous Physician was at all relevant times an
employee of CCNI 1 and contracted as the Medical Director of the Hospital’s
Infection Control and Wound Care Department.
[9] Following briefing and oral argument on the T.R. 12(B)(1) motion, the trial
court issued an order on January 30, 2023, dismissing Gardner’s proposed
complaint. Gardner now appeals.
Discussion & Decision
[10] Where a party defends against a negligence claim based on the exclusivity
provision of the WCA, the defense is properly advanced through a T.R.
12(B)(1) motion to dismiss for lack of subject matter jurisdiction. See GKN Co.
v. Magness, 744 N.E.2d 397, 401 (Ind. 2001). “In ruling on a motion to dismiss
for lack of subject matter jurisdiction, the trial court may consider not only the
complaint and motion but also any affidavits or evidence submitted in support.”
Id. Ultimately, the opponent of subject matter jurisdiction has the burden of
proving the lack of jurisdiction. Curry v. D.A.L.L. Anointed, Inc., 966 N.E.2d 91,
95 (Ind. Ct. App. 2012), trans. denied.
[11] Where jurisdictional facts are not in dispute or where they are disputed but the
trial court ruled on a paper record without conducting an evidentiary hearing,
we afford no deference to the trial court on appeal. GKN Co., 744 N.E.2d at
1
CCNI is a multi-specialty medical practice group and a subsidiary of the Hospital, MMRF, and SCH.
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401. In other words, our review is de novo in these circumstances because we
are in as good a position as the trial court to determine the existence of subject
matter jurisdiction, and we will affirm on any legal theory the evidence of
record supports. Id.
[12] The WCA provides compensation to employees for accidental injuries that arise
out of, and in the course of, employment, and its exclusive remedies provision –
Ind. Code § 22-3-2-6 – precludes a trial court from hearing a common law
action brought by the employee for the same injuries. “It is the employer-
employee relationship that defines the parameters of the immunity granted by
the WCA’s exclusive remedy provision.” Brenner v. All Steel Carports, Inc., 122
N.E.3d 872, 877 (Ind. Ct. App. 2019) (citing Ross v. Schubert, 388 N.E.2d 623,
627 (Inc. Ct. App. 1979), trans. denied). Thus, the WCA does not reach beyond
the employment relationship to benefit a third party. Id.[13] I.C. § 22-3-2-13 specifically addresses the right of an injured employee to pursue
remedies in tort against a third party (as well as an employer’s rights to
subrogation) and provides in relevant part:
Whenever an injury or death, for which compensation is payable
under chapters 2 through 6 of this article shall have been
sustained under circumstances creating in some other person
than the employer and not in the same employ a legal liability to
pay damages in respect thereto, the injured employee, or the
injured employee’s dependents, in case of death, may commence
legal proceedings against the other person to recover damages
notwithstanding the employer’s or the employer’s compensation
insurance carrier’s payment of or liability to pay compensation
under chapters 2 through 6 of this article.
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I.C. § 22-3-2-13(a) (emphasis supplied). “With this provision the WCA creates
an exception to the exclusive remedy provision for actions to be brought against
third parties, namely someone other than the employer or a fellow employee, in
which legal liability was created by a WCA-compensable injury.” Brenner, 122
N.E.3d at 877; see also Walls v. Markley Enterprises, Inc., 116 N.E.3d 479, 483
(Ind. Ct. App. 2018) (“Although the [WCA] bars a court from hearing any
common law claim brought against an employer for an on-the-job injury, it
does permit an action for injury against a third-party tortfeasor provided the
third-party is neither the plaintiff’s employer nor a fellow employee.”), trans.
denied.
[14] There is no dispute in this case that Gardner’s injuries arose out of and in the
course of her employment as a nurse at the Hospital. Indeed, she contracted
scabies from a patient at the Hospital where both she and Anonymous
Physician worked. Gardner, however, contends that Anonymous Physician
was an independent contractor at the Hospital by virtue of his status as a
physician and that, therefore, he is a third party against whom she can pursue a
medical malpractice action.
[15] Gardner acknowledges that at all relevant times Anonymous Physician was an
employee of CCNI, a multi-specialty medical practice group, and that he
worked at the Hospital as Medical Director of Infection Control and Wound
Care. Further, the undisputed evidence establishes that Anonymous
Physician’s employer, CCNI, was a subsidiary of the Hospital and two other
hospitals with the three hospitals all being wholly owned subsidiaries of CFNI.
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[16] Relevant here, the WCA’s definition of “employer” provides:
A corporation, limited liability company, or limited liability
partnership that controls the activities of another corporation,
limited liability company, or limited liability partnership, or a
corporation and a limited liability company or a corporation and
a limited liability partnership that are commonly owned entities,
or the controlled corporation, limited liability company, limited
liability partnership, or commonly owned entities, and a parent
corporation and its subsidiaries shall each be considered joint
employers of the corporation’s, the controlled corporation’s, the
limited liability company’s, the limited liability partnership’s, the
commonly owned entities’, the parent’s, or the subsidiaries’
employees for purposes of IC 22-3-2-6 and IC 22-3-3-31.
I.C. § 22-3-6-1(a); see also Hall v. Dallman Contractors, LLC, 51 N.E.3d 261, 264-
66 (Ind. Ct. App. 2016) (addressing this statutory provision in the context of
“multiple tiers of subsidiaries” and holding that the parent corporation and its
subsidiaries – one a direct subsidiary and the other a third-tier subsidiary – were
all joint employers under the WCA). Thus, the Hospital and CCNI were joint
employers of Anonymous Physician for purposes of the exclusivity provision of
the WCA.
[17] Nonetheless, Gardner argues that Anonymous Physician cannot be considered
to have been in the same employ as her because “as a matter of law physicians
are independent contractors and not ‘fellow employees.’” Appellant’s Brief at 16.
She relies on Ross v. Schubert, 388 N.E.2d 623 (Ind. Ct. App. 1979), for this
proposition.
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[18] Ross involved a factory worker, Ross, who received medical treatment from
physicians employed in a clinic located inside International Harvester’s plant.
The physicians were salaried employees at the plant. Ross sued the physicians
for damages based on alleged medical negligence that occurred during their
treatment of him for a nonindustrial accident. At trial, the jury was instructed,
over Ross’s objection, that if the defendant doctors were employees of
International Harvester, then they were immune from a claim of damages based
on malpractice. Ross appealed after receiving an adverse jury verdict.
[19] On appeal, this court held that the “fellow employee immunity provisions” of
the WCA do not protect a company physician from a claim of medical
negligence brought by an employee of the same company. Id. at 625 (internal
quotations omitted). The Ross court explained:
After carefully studying the history of the [WCA] and examining
its provisions, we are unable to discern from the Act any
legislative design to immunize physicians from medical
malpractice claims or to interfere with the customary physician-
patient relationship. It is our opinion that it would torture the
Indiana legislature’s intent, as evidenced by its objectives in
enacting the [WCA], to let the simple rubric of “in the same
employ” insulate physicians from liability arising out of the
performance of professional medical services.
Id. at 626.
[20] Anonymous Physician recognizes the holding in Ross but argues that it has been
eroded over time and should no longer be followed. This requires a close look
at the underpinnings of Ross.
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[21] The Ross court observed that prior to the language “in the same employ” being
added to the WCA, the Indiana Supreme Court had adopted the rule that “the
physician, whether hired by the employer or not, is a third party within the
contemplation of the [WCA].” Id. at 627 (quoting Seaton v. U.S. Rubber Co., 61
N.E.2d 177, 181 (Ind. 1945)). The Ross court “d[id] not believe the legislature’s
subsequent insertion of the words, ‘and not in the same employ’ was intended
to abrogate the [Supreme] Court’s interpretation that the Act failed to
immunize physicians.” Id. at 628.
[22] Additionally, the Ross court looked to cases outside the area of worker’s
compensation law that had “consistently held that a doctor, even though
employed by an entity, is personally liable as an independent contractor when
he engages in the practice of medicine.” Id. at 629. Of particular note here, the
court relied on Iterman v. Baker, 15 N.E.2d 365 (Ind. 1938), which held that
physicians employed by a professional medical corporation were independent
contractors and that because the corporation could not legally engage in the
practice of medicine, it could not be held vicariously liable for the medical
negligence of its physicians. Id. at 369-71.
[23] The holding of Iterman eroded over time with the enactment of the Professional
Corporation Act of 1983, 2 which “stands as a pronouncement of public policy
concerning a corporation’s vicarious liability for the acts of its employee-
2
Ind. Code §§ 23-1.5-1-1 to -5-2.
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physician.” Sloan v. Metro. Health Council of Indianapolis, Inc., 516 N.E.2d 1104,
1107 (Ind. Ct. App. 1987). In Sword v. NKC Hosps., Inc., the Supreme Court
acknowledged the demise of Iterman and that “courts no longer allow hospitals
to use their inability to practice medicine as a shield to protect themselves from
liability.” 714 N.E.2d 142, 149 (Ind. 1999). The Court recognized, however,
that physicians can be either employees of a hospital or independent contractors
and held that hospitals may be subject to vicarious liability for the negligence of
its independent contractor physicians under the theory of apparent or ostensible
agency. Id. at 149-52; see also Sloan, 516 N.E.2d at 1109 (“We hold that where
the usual requisites of agency or an employer-employee relationship exist, a
corporation may be held vicariously liable for malpractice for the acts of its
employee-physicians.).
[24] It is evident that Ross’s independent contractor rationale and reliance on Iterman
no longer has sound footing. But this was not the entire basis for the holding in
Ross. On the contrary, the court emphasized the Supreme Court’s distinct
holding in Seaton (that is, treating physicians are third parties under the WCA,
whether hired by the employer or not). The court then noted that when
amending I.C. § 22-3-2-23 to include “and not in the same employ,” the
legislature “must be deemed to have been cognizant of the court’s
determination that physicians employed by corporations were liable as third
parties, and in light of this knowledge, they retained the employee’s right to
proceed against a third party” and “did not expressly or by necessary inference
curtail[] or den[y this common law right].” Ross, 388 N.E.2d at 628. The court
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continued: “The suggestion that the legislature intended, by this amendment, to
include the company physician as a fellow employee of the injured industrial
worker is a startlingly illogical concept.” 3 Id.[25] After noting that International Harvester had no control over the manner in
which the physicians rendered treatment to Ross, the court stated:
The liability of these physicians arose from their independent exercise of
medical judgment, that is, it arose from their doctor-patient relationship
with Ross and not from the employer-employee relationship which the
Act was designed to regulate. We have not permitted physicians to
escape liability by working for hospitals or forming medical
corporations, and it is our opinion that the [WCA] was, likewise, never
intended to abrogate the rights of an employee who stands in the shoes of
a patient, from suing a doctor who treats him.
This court is not persuaded that we should sanction protection of
company physicians while at the same time hold liable
independent physicians who provide identical services. In either
circumstance, the liability arises because of the individual
doctor’s exercise of medical judgment. Where that judgment is
exercised, i.e., upon the company’s premises as opposed to the
physician’s private office, should not be the determinative factor
as to whether or not an individual may bring an action for
3
The Ross court observed in a footnote:
The amended statute was drafted with the objective of insuring that a particular class of
industrial accidents was covered – that at least for that class of accidents, industry owed its
workers an obligation; therefore, if in the course of the employment relationship an employee is
injured due to the actions of a fellow employee, IC 22-3-2-13 immunizes that fellow employee
from liability, but the immunization is because of the type of accident involved, not because of a direct
objective to immunize particular persons…. An injury sustained due to the malpractice of a
physician does not come within the class of industrial accidents which the [WCA] was designed
to encompass.
Id. at n.6 (emphasis supplied).
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medical malpractice since in both instances, the physician
controls the manner of medical treatment. To hold otherwise
would encourage the company physician to be less assiduous….
Clearly, forcing the wrongdoer to bear the cost of his wrong,
rather than the industry, will have a salutary effect in that it will
operate as an incentive for careful conduct.
We find nothing in [the WCA] which indicates the Act was
intended to shield a physician from the legal obligations entailed
by the doctor-patient relationship. We, therefore, hold that these
physicians were not immune from liability by virtue of IC 22-3-2-
when they engaged in the practice of medicine.
Id. at 629-30 (emphases supplied and footnotes omitted).4
[26] We do not believe that Anonymous Physician has made a good case for
abandoning the holding of Ross, which, though battered, has remained standing
since 1979 and has not been altered by any of the multiple amendments to I.C.
§ 22-3-2-13 since that time. Its holding, however, does not extend so far as
Gardner attempts to employ it. Ross does not hold that a physician can never
benefit from the WCA’s fellow employee immunity provision. It holds only
that immunity does not apply to claims of medical negligence arising out of a
doctor-patient relationship between the claimant and the physician.
4
In Tarr v. Jablonski, this court declined to extend the Ross exception to paramedics, observing that the
essence of the exception was “the independent professional judgment which a physician must necessarily
exercise.” 569 N.E.2d 378, 380 (Ind. Ct. App. 1991), trans. denied.
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[27] Here, Gardner’s proposed complaint plainly shows that she is seeking, at least
in part, to impose liability on Anonymous Physician for actions unrelated to
any doctor-patient relationship between the two of them. Gardner was exposed
to and contracted scabies from a patient while working as a nurse at the
Hospital. This injury was directly related to her employment relationship, and
Anonymous Physician was not a third party while working alongside her; he
was her coworker. Gardner’s exclusive remedy for this workplace injury was
through the WCA, and she cannot sue Anonymous Physician for negligence
based on him allegedly failing to timely diagnose the patient and protect
Gardner from exposure to scabies or for his general handling of the scabies
outbreak in his role as medical director.
[28] That said, to the extent Anonymous Physician directly engaged in a doctor-
patient relationship with Gardner after her exposure and exercised independent
medical judgment to treat her, his status then changed to that of a third party,
making him subject to liability for any aggravation of her workplace injury
resulting from his negligent treatment of her. While Gardner’s proposed
complaint does not contain a positive assertion that an actual doctor-patient
relationship existed between her and Anonymous Physician, the allegations
suggest – sufficiently to withstand dismissal – that such a relationship existed
(namely, Gardner alleged that Anonymous Physician negligently directed her
care, failed to provide appropriate and timely treatment, and failed to refer her
to appropriate specialists for treatment). This matter may be fleshed out more
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on remand, but at this early stage and on this limited record, 5 Anonymous
Physician has failed to establish that the trial court lacked jurisdiction to hear
this medical malpractice action.
[29] We reverse and remand for further proceedings consistent with this opinion.
May, J. and Foley, J., concur.
5
Anonymous Physician did not present any affidavits or other evidence to show the absence of a doctor-
patient relationship with Garnder related to her diagnosis and treatment for scabies.
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