Parker v. City of Highland Park , 404 Mich. 183 ( 1978 )

404 Mich. 183 (1978) 273 N.W.2d 413

PARKER
v.
CITY OF HIGHLAND PARK

Docket No. 55330, (Calendar No. 15).

Supreme Court of Michigan.

Argued October 5, 1977. Decided December 27, 1978.

Lopatin, Miller, Bindes, Freedman & Bluestone (by Michael A. Gantz and Michael A. Gagleard) for plaintiffs.

Garan, Lucow, Miller, Lehman, Seward & Cooper (by Albert A. Miller) and David J. Curran, and Cozadd, Shangle & Smith (by B. Ward Smith and Daniel J. Andrews), of counsel, for defendants.

Amicus Curiae:

Roger E. Craig, Corporation Counsel, George G. Matish, Deputy Corporation Counsel, and Thomas G. Gallagher, Assistant Corporation Counsel, for the City of Detroit.

FITZGERALD, J.

Plaintiff Vincent Parker fell through a glass storm door on September 12, 1970. He was treated for serious lacerations on the back and neck at the emergency room of Highland Park General Hospital, a municipal hospital operated by the City of Highland Park. In 1972, Vincent Parker and his father, Casey Parker, filed a malpractice suit against the hospital; Physicians Emergency Service, the corporation which operated the emergency room; and the doctor who had treated Vincent Parker.

In their complaint plaintiffs alleged that the treating physician had failed to take X-rays, that Vincent Parker had continued to feel pain in his back after treatment at Highland Park General Hospital, and that in 1972 treatment at another hospital revealed that a large piece of glass had remained lodged underneath the skin of Vincent Parker's back since his accident.

The city moved for summary judgment, contending that plaintiffs had failed to state a claim upon which relief could be granted, because the city, as a governmental agency engaged in the exercise or discharge of a governmental function, was immune from tort liability under MCL 691.1407; MSA 3.996(107).^[1] The Court of Appeals denied leave to appeal. We granted leave to consider whether the day-to-day operation of a hospital^[2] is a "governmental function" as that phrase is used in the statute.

In the past this Court did hold that the operation of a hospital was a governmental function. Nicholson v Detroit, 129 Mich. 246; 88 N.W. 695 (1902), Martinson v Alpena, 328 Mich. 595; 44 NW2d 148 (1950).^[3]

We do not believe that because we once held the operation of a hospital to be a governmental function we must do so today.^[4] A comparison of the reasoning employed by this Court in Nicholson with that of Martinson shows that the meaning of the term "governmental function" has varied as the judiciary's thinking on the nature of government has evolved.^[5]

Nor do we believe that the Legislature intended that we must today hold the operation of a hospital to be a governmental function because we did so in 1902 and 1950. As was stated in the KAVANAGH-FITZGERALD dissenting opinion in Thomas v Dep't of State Highways, 398 Mich. 1, 17, fn 4; 247 NW2d 530 (1976), to read the second sentence of MCL 691.1407; MSA 3.996(107)^[6] as "preserving for all time state governmental immunity heretofore recognized by case law" would be to "assume that the Legislature failed to recognize that the evolution of case-law precedent is exclusively committed to the judicial branch of government".^[7]

Determining whether or not a certain activity is or is not a "governmental function" is a matter of statutory interpretation. In the absence of a legislative definition of the term, statutory interpretation is a function committed to the judiciary. The term "governmental function" is particularly subject to judicial interpretation because the phrase is of judicial origin.

It is time we recognize that our case-law precedent, as it attempts to distinguish between a governmental and a proprietary function, is "inherently unsound".^[8] In abrogating common-law judge-made immunity (Pittman v Taylor, 398 Mich. 41, 49; 247 NW2d 512 [1976]), we recognized the appropriateness of the analysis used to overrule a hospital's charitable immunity to the governmental immunity area of the law. By substituting "definition of governmental function" and "governmental function" for "charitable" and "charities" in Parker v Port Huron Hospital, 361 Mich. 1, 25; 105 NW2d 1 (1960), we said about charitable immunity then what we wish to say about governmental immunity today:

"The old rule of charitable immunity [definition of governmental function] was justified in its time, on its own facts. Today we have a new set of facts. It is true that the new facts are still described by the same word in our English language — "charities" [governmental function] — but that is because our language has not changed as the facts of our life have changed. We have new facts described by old nomenclature. To say that the old rule of law still applies is to reach a result on the basis of nomenclature, not of facts; it is to apply a rule, proper in its time, to completely new facts, and to justify doing so by reference to language merely without regard to the facts." (Emphasis supplied.)

Again, we reject the rigid dichotomy of the past. Because an activity is not proprietary, it does not necessarily follow that the activity is governmental. We would limit the term "governmental function" to those activities sui generis governmental — of essence to governing. This principle was recognized in Lykins v Peoples Community Hospital, 355 F Supp 52, 53 (ED Mich, 1973):

"This court does not believe the statutory scheme contemplates immunity for the day-to-day operations of a hospital. The statute speaks of immunity for ``governmental functions,' and this court is of the opinion that while it may be an appropriate goal or objective of government to establish a hospital authority, it does not follow that the daily operations of such a hospital authority constitute a governmental function. Governmental functions more properly refer to the tasks of governing. There is, for example, a governmental character to activities such as the collection of taxes or the operation of a court system. But the services of healing offered by a public hospital are not governmental functions."

The operation of a hospital is not an activity of a peculiar nature such that the activity can only be done by government. Rather, government participates alongside private enterprise, charitable and religious organizations in operating hospitals.^[9]

In adopting the "of essence to government" test for defining the term "governmental function", we reject the "common good of all" test applied in Martinson v Alpena, supra. The operation of a hospital is a noble undertaking on the part of a unit of government. But, the fact that the government-operated hospital contributes to the "common good" does not distinguish the government-operated hospital from the non-government-operated hospital.^[10] We feel safe in assuming that hospitals operated by non-government entities, who do not enjoy immunity from tort liability, also contribute to the "common good".

The modern hospital, whether operated by a city, a church, or a group of private investors, is essentially a business.^[11] As such, there is no rational ground upon which immunity for the government-operated hospital can rest.^[12]

Reversed and remanded. No costs, a public question.

KAVANAGH, C.J., and LEVIN, J., concurred with FITZGERALD, J.

BLAIR MOODY, JR., J. (concurring).

The question of law on this appeal is whether the activities conducted by a municipally owned general hospital providing the public medical service for a fee constitute a governmental function within the meaning of MCL 691.1407; MSA 3.996(107).

It is determined that the activities of such a municipally owned general hospital do not constitute a governmental function. Therefore, this opinion concurs with the result reached by Justice FITZGERALD. However, the reasons for reaching this conclusion differ to some extent from the analysis of my colleagues.

I

Governmental tort immunity in Michigan was originally created by court decision. Early in the state's history, this Court began a slow process of extending protection from tort liability to municipal and state governing units. Often, contrary to strong indications from the Legislature to allow governmental liability, this Court enlarged the scope of governmental immunity. It fashioned the present theory of protection embodied in the "governmental function" concept.^[1]

The momentum of these protective decisions continued unabated until the relatively recent case of Williams v Detroit, 364 Mich. 231; 111 NW2d 1 (1961). The Court in Williams held that "the judicial doctrine of governmental immunity" was henceforth abolished in Michigan. However, this Court later restricted the broad sweep of Williams to apply only to municipal corporations. McDowell v State Highway Commissioner, 365 Mich. 268; 112 NW2d 491 (1961).

In response to the Williams initiative, the Legislature passed 1964 PA 170. That statute, as amended by 1970 PA 155, included a general provision for immunity:

"Except as in this act otherwise provided, all governmental agencies shall be immune from tort liability in all cases wherein the government agency is engaged in the exercise and discharge of a governmental function. Except as otherwise provided herein, this act shall not be construed as modifying or restricting the immunity of the state from tort liability as it existed heretofore, which immunity is affirmed." MCL 691.1407; MSA 3.996(107).

Although not defining the term "governmental function", the Legislature did define the concept of "proprietary function":

"The immunity of the state shall not apply to actions to recover for bodily injury or property damage arising out of the performance of a proprietary function as herein defined. Proprietary function shall mean any activity which is conducted primarily for the purpose of producing a pecuniary profit for the state, excluding, however, any activity normally supported by taxes or fees." MCL 691.1413; MSA 3.996(113).

The evolution of common-law precedent is committed to the judicial branch of the government. No more striking example of judicial alteration in order to accommodate the needs and responsibilities of the times exists than the ringing pronouncement by this Court in Pittman v City of Taylor, 398 Mich. 41; 247 NW2d 512 (1976). In Pittman, this Court expressly abrogated the ancient and maligned common-law doctrine of state governmental immunity.

Likewise, the concepts of governmental and proprietary functions have evolved different meanings over the years.^[2] These terms have been judicially manipulated to fit contemporary requirements. In Thomas v Dep't of State Highways, 398 Mich. 1; 247 NW2d 530 (1976), this Court interpreted the present governmental immunity statute. It was fully recognized that the concept of governmental function was dependent for its meaning upon judicial interpretation.

Several of my colleagues hold the position that the second sentence of the immunity provision requires past precedent to bind our present response to the statute:

"Obviously this language must be construed as an ``affirmation' of case-law precedent on the subject of the state's immunity." Thomas, supra, 11.

Thus, since this Court previously held the operation of a general hospital to be a governmental function, the Court would be statutorily bound by the old law. See Martinson v Alpena, 328 Mich. 595; 44 NW2d 148 (1950).

Rather than adopt this position, particularly in the face of Pittman, supra, which erased all common-law immunity precedent, this Court should begin anew its analysis of what a governmental function means under this statute.

Although the Legislature saw fit to statutorily define the term "proprietary", significantly it did not define "governmental" function. Further, it may be discerned that there are actually three categories of activities: proprietary, governmental and an area wherein activities are neither clearly governmental nor proprietary.^[3] It is within this presently undifferentiated area that this Court must chart a modern course.

This conclusion was aptly stated by the minority in Thomas:

"We do not, however, construe this sentence [the second sentence of the statutory immunity provision] to be an ``affirmation' of case-law precedent preserving for all time state governmental immunity heretofore recognized by case law. To read it in such a manner would be to assume that the Legislature failed to recognize that the evolution of case-law precedent is exclusively committed to the judicial branch of government." 398 Mich. 17, fn 4.

II

Participation of modern government in our everyday existence is so pervasive that any presumption must rightly run to government responsibility and consequent liability rather than to immunity. Present realities dictate viewing immunity as a privilege, limited to those activities uniquely associated with governmental enterprise.

It is held today that activity conducted in a general hospital operated by a municipality is not a governmental function for immunity purposes. This conclusion is predicated on the basis that the term "governmental function" is limited to those activities sui generis governmental — of essence to governing.

In Thomas, it was suggested that this test meant that a function is not governmental unless the particular activity involved has "no common analogy in the private sector". Furthermore, it was observed that the perimeter of governmental function will most often "run along the line of distinction between decisional and planning aspects of governmental duties on the one hand, and operational aspects on the other". 398 Mich. 21, 22.

Although these concepts may have some significance in given cases when applying the "governmental essence" test, in other instances they could be misleading or inapplicable. For instance, it would be incongruous to find that the operational activities of some public agencies are other than governmental. Likewise, conceivably there could be essential governmental activity which would have some common analogy in the private sector.

To delineate a complete and balanced definition of governmental function within a simplistic format would be presumptuous. However, as a basic guideline, the crux of the governmental essence test should be founded upon the inquiry whether the purpose, planning and carrying out of the activity, due to its unique character or governmental mandate, can be effectively accomplished only by the government. Unless liability would be an unacceptable interference with government's ability to govern, activities that fall outside this perimeter, although performed by a government agency, are not governmental functions and therefore not immune.

III

The municipal ownership and operation of a general hospital clearly indicates government participation. The question is whether this participation is uniquely associated with governmental enterprise.

Although not necessarily decisive, the number of private general hospitals is far greater than the number of governmental hospitals in this state.^[4] This statistic alone would indicate that the function performed by municipal general hospitals is not uniquely served by government, however much the need for public participation remains.

Further, though the purpose of maintaining public general hospitals is to enhance the health of the citizens of Michigan, the purpose is not one which can only be effectively accomplished in society by the government. It is recognized that public general hospitals in most instances are maintained substantially by patient user charges. The fiscal involvement of government is significantly displaced by private payment.

Moreover, a significant consideration is the fact that government has little direct responsibility for placing patients in public general hospitals. Admitting and discharging patients there is usually a matter of private concern. This situation may be contrasted with public mental hospitals where patients are committed into an institution, often by court order, to fulfill the clear governmental responsibility of caring for those who cannot care for themselves or who present a danger to society. See the Mental Health Code, MCL 330.1001 et seq.; MSA 14.800(1) et seq.

The day-to-day care afforded to the substantial majority of patients in general hospitals is not of a unique character or precipitated by governmental mandate. Activities conducted by the staff of general hospitals are not such as can effectively be accomplished only through government participation. The medical practice performed in the emergency room of a municipal general hospital falls outside the scope of a governmental function contemplated by the statute. See Lykins v Peoples Community Hospital, 355 F Supp 52 (ED Mich, 1973).

Further, holding negligent activities of hospital personnel in general hospitals subject to liability is not an unacceptable interference with government's ability to govern.

It also should be noted that a full trial is still forthcoming. At trial, plaintiffs will be required to prove their allegations of malpractice by a preponderance of the evidence. Defendant will have a full day in court. Therefore, though the defense of governmental immunity for public general hospitals is removed, all the safeguards of a trial remain.

Since defendant Highland Park General Hospital was improperly granted summary judgment in this case, I concur in reversing the trial court and remanding the matter for trial.

RYAN, J. (dissenting).

The question for our consideration in this case is whether the operation of a hospital by a municipality constitutes the exercise or discharge of a governmental function thus immunizing the city from tort liability under MCL 691.1407; MSA 3.996(107). In my view it does, and I would affirm the trial court's grant of defendant city's motion for summary judgment.

MCL 691.1407; MSA 3. 996(107) states:

"Except as in this act otherwise provided, all governmental agencies shall be immune from tort liability in all cases wherein the government agency is engaged in the exercise or discharge of a governmental function. Except as otherwise provided herein, this act shall not be construed as modifying or restricting the immunity of the state from tort liability as it existed heretofore, which immunity is affirmed."

In Thomas v Dep't of State Highways, 398 Mich. 1, 10; 247 NW2d 530 (1976), the majority noted that the historical context in which the foregoing statute was enacted suggests that the Legislature intended to codify the state's existing common-law or judge-made immunity and to restore the immunity of municipalities as it existed prior to the 1961 decision of Williams v Detroit, 364 Mich. 231; 111 NW2d 1 (1961).

At common law, the expression "governmental function" was the term of art which both described the nature and defined the limits of state and municipal immunity from tort liability. By employing that same term of art in creating statutory immunity, the Legislature appears to have directed the courts to look to the common law for guidance in determining whether, in a given case, a governmental agency is exercising or discharging a "governmental function" for purposes of the immunity statute.

Reference to the pre-statutory immunity cases discloses that in Martinson v Alpena, 328 Mich. 595; 44 NW2d 148 (1950), this Court held that the operation of a public hospital to promote the general public health is indeed a governmental function. Moreover, it seems evident that the operation of a public hospital is within the frequently cited "common good of all" definition of a "governmental function". See Martinson, and Gunther v Cheboygan County Road Commissioners, 225 Mich. 619, 621; 196 N.W. 386 (1923), citing Bolster v City of Lawrence, 225 Mass 387; 114 N.E. 722 (1917).

I conclude, therefore, that the operation of a public hospital is a governmental function at common law in Michigan and is a governmental function for purposes of the statute in question.

It remains to be determined whether the plaintiffs in this case have alleged in their complaint such specific tortious activity against the City of Highland Park as is within the scope of the immunity the city enjoys.

The complaint alleges that the defendant city, through its agents, servants and employees at the Highland Park General Hospital, was negligent in the examination, diagnosis and treatment of the plaintiff, Vincent Oshee Parker, in failing to discover and remove a piece of glass which was lodged beneath the skin of his back and which remained there for several months after he was treated at the hospital.

Manifestly, the examination, diagnosis and treatment of patients at a public hospital are activities intended to promote the general public health and are exercised for "the common good of all". Consequently, the alleged tortious activity of the defendant city is within the governmental function of operating its municipal hospital. The defendant is immune, therefore, from liability for its negligence, if any, in performing that function in this case by reason of the provisions of MCL 691. 1407; MSA 3.996(107).

The trial court was correct in granting the defendant city's motion for summary judgment on the basis of governmental immunity.

I vote to affirm.

WILLIAMS and COLEMAN, JJ., concurred with RYAN, J.

NOTES

[1] "Except as in this act otherwise provided, all governmental agencies shall be immune from tort liability in all cases wherein the government agency is engaged in the exercise or discharge of a governmental function. Except as otherwise provided herein, this act shall not be construed as modifying or restricting the immunity of the state from tort liability as it existed heretofore, which immunity is affirmed."

[2] Because the case was disposed of below on the governmental immunity issue, the facts on the relationship among the defendants in this case have not been developed. Therefore, we offer no opinion on whether or not the hospital may escape liability because the emergency room was operated by a corporation of which the treating physician was a member, as Highland Park Hospital suggests. Nor do we decide the effect of Dr. Sokolowski's alleged settlement with plaintiffs.

[3] Nicholson involved a hospital for contagious disease. Plaintiff's decedent was a carpenter who contracted smallpox when employed by the City of Detroit in the construction of a new hospital on the site of an existing hospital. Plaintiff alleged that the old building and the grounds were infected with smallpox germs and the city was negligent in exposing the carpenter to the germs. Nonliability was based on the city's performing a "governmental function". To the Nicholson Court, performing a governmental function meant that the city was acting as an agent of the state rather than for its own private purposes. See Cooperrider, The Court, the Legislature, and Governmental Tort Liability in Michigan, 72 Mich. L Rev 187, 222-224 (1973).

Martinson involved a general hospital operated by the City of Alpena. Nurse Madeleine Martinson fell into the elevator shaft. She sued the city, alleging negligence because of a faulty safety catch which allowed the guard door to open when the elevator was at another floor. The Court relied on Nicholson, finding a general hospital "within the same category" as a contagious hospital. The Court also applied the "common good of all" test for distinguishing between a governmental and a proprietary function.

"``The underlying test is whether the act is for the common good of all without the element of special corporate benefit or pecuniary profit. If it is, there is no liability; if it is not, there may be liability. That it may be undertaken voluntarily and not under compulsion of statute is not of consequence.' Gunther v Cheboygan County Road Commissioners, 225 Mich. 619 [196 N.W. 386 (1923)]; Johnson v Ontonagon County Road Commissioners, 253 Mich. 465 [235 N.W. 221 (1931)]; Daszkiewicz v Detroit Board of Education, 301 Mich. 212 [3 NW2d 71 (1942)]." Martinson v Alpena, 328 Mich. 595, 598; 44 NW2d 148 (1950).

[4] "It is revolting to have no better reason for a rule of law than that so it was laid down in the time of Henry IV. It is still more revolting if the grounds upon which it was laid down have vanished long since, and the rule simply persists from blind imitation of the past." Oliver Wendell Holmes, Jr., Collected Legal Papers (New York: Harcourt, Brace & Howe, 1920), p 187.

[5] For a complete exposition on the evolution of the governmental/proprietary distinction, see Cooperrider, The Court, the Legislature, and Governmental Tort Liability in Michigan, 72 Mich. L Rev 187, 219-237 (1973).

[6] "Except as otherwise provided herein, this act shall not be construed as modifying or restricting the immunity of the state from tort liability as it existed heretofore, which immunity is affirmed."

[7] Compare the interesting California case Li v Yellow Cab Co of California, 13 Cal 3d 804; 532 P2d 1226; 119 Cal Rptr 858 (1975). The California Court adopted a comparative negligence rule in the face of a contributory negligence statute. The Court believed the Legislature's intent in enacting the 1872 statute was to "state the basic rule of negligence together with the defense of contributory negligence modified by the emerging doctrine of last clear chance". Even so, the Court believed the Legislature did not intend to "restrict the courts from further development of these concepts according to evolving standards of duty, causation, and liability".

The effect of the California Court's decision, of course, was to totally nullify the statute. We do not go so far. In defining "governmental function" more narrowly than in the past, we do limit the operation of the statute, yet preserve the doctrine of governmental immunity.

[8] The United States Supreme Court has noted that in the governmental/proprietary "quagmire" "the decisions in each of the states are disharmonious and disclose the inevitable chaos when courts try to apply a rule of law that is inherently unsound". Indian Towing Co v United States, 350 U.S. 61, 65; 76 S. Ct. 122; 100 L. Ed. 48 (1955).

Professor Davis has criticized the distinction as "probably one of the most unsatisfactory known to the law". 3 Davis, Administrative Law Treatise, § 25.07, p 460.

[9] The analysis of ownership of hospitals located in Michigan which have registered with the American Hospital Association is as follows:

State and local government                                    70
Federal government                                             9
Non-government, not for profit                               167
Investor owned, for profit                                     6
Osteopathic (non-government, not for profit)                   2

American Hospital Association, Guide to the Health Care Field, 1977 Edition, pp 108-116.

[10] Nor do we accept the contention that what distinguishes the government-operated hospital from others, hence entitling it to immunity, is that the government-operated hospital must accept all comers, regardless of ability to pay. In the usual case, it is not the hospital itself that extends "charity", but another arm of government, often a county welfare agency or the Medicare system. In Martinson, supra, p 597, although the city hospital apparently accepted indigent patients, the county welfare board paid the bill of those patients. Although government often pays for the health care services extended to indigents, many times the care is provided in non-government operated hospitals.

[11] "Hospitals today are growing into mighty edifices in brick, stone, glass and marble. Many of them maintain large staffs, they use the best equipment that science can devise, they utilize the most modern methods in devoting themselves to the noblest purpose of man, that of helping one's stricken brother. But they do all this on a business basis, submitting invoices for services rendered — and properly so.

"And if a hospital functions as a business institution, by charging and receiving money for what it offers, it must be a business establishment also in meeting obligations it incurs in running that establishment. One of those inescapable obligations is that it must exercise a proper degree of care for its patients, and, to the extent that it fails in that care, it should be liable in damages as any other commercial firm would be liable."

Flagiello v Pennsylvania Hospital, 417 Pa 486, 493-494; 208 A2d 193, 196-197 (1965) (overruling charitable immunity).

[12] As noted in Thomas, supra, to recognize governmental immunity for the day-to-day operation of a hospital would equate "governmental function" with "governmental participation". If the Legislature had intended that result, surely the first sentence of MCL 691.1407; MSA 3.996(107) would read, "Except as in this act otherwise provided, all governmental agencies shall be immune from tort liability." We do not today decide whether or not such a statute would pass constitutional muster.

[1] See, generally, Cooperrider, The Court, the Legislature, and Governmental Tort Liability in Michigan, 72 Mich. L Rev 187 (1973).

[2] See, generally, Anno: Immunity from liability for damages in tort of state or governmental unit or agency in operating hospital, 25 ALR2d 203, §§ 12-14. See, also, Cooperrider, supra, 219-237.

[3] See Thomas, supra, 18-19, fn 7.

[4] As Justice FITZGERALD noted in his opinion, the ownership of hospitals in Michigan registered with the American Hospital Association is heavily weighted toward private ownership:

State and local government                                  70
Federal government                                           9
Non-government, not for profit                             167
Investor owned, for profit                                   6
Osteopathic (non-government, not for profit)                 2

American Hospital Association, Guide to the Health Care Field, 1977 Edition, pp 108-116.