Courtney Webster v. CDI Indiana, LLC

In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 18-3080
COURTNEY WEBSTER and BRIAN WEBSTER,
Plaintiffs-Appellees,
v.
CDI INDIANA, LLC, d/b/a CDI,
d/b/a CDI INDIANAPOLIS,
Defendant-Appellant.
____________________
Appeal from the United States District Court for the
Southern District of Indiana, Indianapolis Division.
No. 1:16-cv-02677-JMS-DML — Jane E. Magnus-Stinson, Chief Judge.
____________________
ARGUED FEBRUARY 4, 2019 — DECIDED FEBRUARY 27, 2019
____________________
Before WOOD, Chief Judge, and EASTERBROOK and ST. EVE,
Circuit Judges.
ST. EVE, Circuit Judge. This medical malpractice lawsuit
arises from a radiologist’s negligence. Courtney Webster had
a CT scan performed at CDI Indiana, LLC’s (CDI) diagnostic
imaging facility in Carmel, Indiana. The radiologist, an in-
dependent contractor hired by Medical Scanning Consult-
2 No. 18-3080
ants (MSC), missed Courtney’s cancer, which then festered
for over a year before being diagnosed.
Courtney and her husband, Brian Webster, sued CDI.
CDI, in response, insisted that the Websters could not hold it
liable because CDI did not directly employ the radiologist.
The district court rejected this argument and applied Indi-
ana’s apparent agency holding in Sword v. NKC Hosp., Inc.,
714 N.E.2d 142, 152 (Ind. 1999), which instructs that a medi-
cal provider is liable if a patient reasonably relied on its ap-
parent authority over the wrongdoer. The jury returned a
$15 million verdict in favor of the Websters. We agree with
the district court’s analysis and so we affirm.
I. Background
In 2009, Courtney had outpatient surgery for rectal can-
cer, and by 2010, her medical examinations showed no fur-
ther signs of cancer. A few years later in October 2014,
Courtney visited her gastroenterologist complaining of con-
stipation. She underwent a colonoscopy, which revealed a
large mass. The gastroenterologist then referred Courtney
for an abdominal and pelvic CT scan. Radiation technolo-
gists conducted Courtney’s CT scan on November 17, 2014
at CDI’s Carmel facility, and radiologist Dr. Brian Walker
issued his report the following day. In his report, Dr. Walker
did not identify any mass, despite the images showing a
mass in the presacral space where Courtney’s rectal cancer
had originally occurred.
Less than two years later, Courtney again complained of
constipation. A scope performed in April 2016 revealed a
tumor, and a CT scan the following week showed that the
tumor had increased in size since the November 2014 CT
No. 18-3080 3
scan. By the time the cancerous mass was diagnosed, Court-
ney’s cancer had metastasized to her lungs and liver. The
delay in diagnosing Courtney’s recurrent rectal cancer re-
sulted in a dramatic reduction of her prospects for survival.
CDI has a network of medical diagnostic imaging facili-
ties throughout the country, including Indiana. Relevant to
this appeal, CDI had entered into a services agreement with
MSC under which MSC provided independent contractor
radiologists, such as Dr. Walker, to interpret CDI’s imaging
studies at CDI’s Carmel facility.
In October 2016, the Websters filed this medical malprac-
tice lawsuit against CDI in federal court based on diversity
jurisdiction. That is not the norm for Indiana medical mal-
practice claims. Typically, such claims fall under Indiana’s
Medical Malpractice Act (the Act), which limits liability for
registered qualified health care providers and requires the
presentation of a proposed complaint to a medical review
panel before an action can be commenced in court. Thompson
v. Cope, 900 F.3d 414, 424 (7th Cir. 2018); McKeen v. Turner, 71
N.E.3d 833, 834 (Ind. 2017) (per curiam). The Act sets up a
voluntary, state-sponsored liability insurance program im-
posing statutory caps that limit a claimant’s recoverable
damages, Plank v. Cmty. Hosps. of Ind., Inc., 981 N.E.2d 49, 51
(Ind. 2013), and provides that Indiana’s Patient Compensa-
tion Fund will pay amounts in excess of the qualified health
care provider’s total liability, Robertson v. B.O., 977 N.E.2d
341, 343 (Ind. 2012). For a health care provider to be “quali-
fied” under the Act, it must register with Indiana’s Depart-
ment of Insurance by filing proof of financial responsibility
and paying an annual surcharge that funds Indiana’s Patient
Compensation Fund. Atterholt v. Herbst, 902 N.E.2d 220, 222
4 No. 18-3080
(Ind. 2009); Wisniewski v. Bennett, 716 N.E.2d 892, 895 (Ind.
1999).
Because CDI had not registered with Indiana’s Depart-
ment of Insurance as a “qualified health care provider” pur-
suant to the Act, the Websters sued CDI based on Indiana
Code § 34-18-3-1. That section states “[a] health care provid-
er who fails to qualify under this article is not covered by
this article and is subject to liability under the law without
regard to this article. If a health care provider does not quali-
fy, the patient’s remedy is not affected by this article.” Un-
like CDI, both MSC and Dr. Walker had registered as quali-
fied health care providers under the Act. The Websters,
therefore, filed a medical malpractice complaint with the In-
diana Department of Insurance against Dr. Walker and MSC.
After discovery in the CDI litigation, the Websters and
CDI filed cross-motions for summary judgment under Fed-
eral Rule of Civil Procedure 56(a). In its motion, CDI argued
that Dr. Walker was not its apparent agent under Sword be-
cause CDI did not employ or contract for Dr. Walker’s ser-
vices, rather MSC did. In a well-reasoned and thorough
opinion, the district court concluded that the Supreme Court
of Indiana’s apparent agency holding in Sword applied to the
circumstances of this case. Applying Sword’s apparent agen-
cy standard—which focuses on the principal’s manifesta-
tions and the patient’s reliance—the district court concluded,
“[g]iven the nature of health care services today, it is entirely
possible for a reasonable, prudent patient to conclude from
representations made by a medical center that the doctors
and health care professionals that service patients within the
center’s facilities are agents or servants of the center.” Web-
ster v. Ctr. for Diagnostic Imaging, Inc., No. 1:16-cv-02677-JMS-
No. 18-3080 5
DML, 2017 WL 3839377, at *8 (S.D. Ind. Aug. 31, 2017). The
district court denied the parties’ summary judgment mo-
tions because there were “genuine issues of material fact in
dispute as to whether Dr. Walker was an apparent or osten-
sible agent of the center” and whether CDI “may be held lia-
ble for any of Dr. Walker’s asserted negligent acts.” Id. at *9.
The case proceeded to a jury trial, which lasted five days.
MSC’s medical director testified that CDI was responsible
for every aspect of obtaining a patient’s radiological imaging
study except for the actual interpretation of the study itself.
Further, the parties jointly stipulated that CDI was responsi-
ble for the training, hiring, employing, supervising, disciplin-
ing, and discharging of the radiation technologists and non-
physician personnel at CDI’s Carmel location. They also stipu-
lated that MSC does business as CDI and that MSC uses the
trade name CDI and related trademarks to assist in market-
ing its services as part of a national provider network.
Courtney testified that she had no idea about the relation-
ships among MSC, CDI, and Dr. Walker and that she was
never provided information or written notice about the dif-
ferent entities. Courtney, in fact, believed CDI had provided
the health care services in relation to her November 2014 CT
scan.
The jury returned a verdict in favor of the Websters, find-
ing CDI vicariously liable for Dr. Walker’s negligent con-
duct. Further, the jury awarded the Websters a total of $15
million in damages. The district court denied CDI’s post-trial
motions, after which CDI appealed, arguing the district
court erred by applying Sword’s apparent agency holding to
this case.
6 No. 18-3080
II. Discussion
Sword is at the heart of this appeal, so we start there. In
Sword, the plaintiffs brought a medical malpractice suit
against a hospital due to the medical negligence of an inde-
pendent contractor anesthesiologist. The parties asked Indi-
ana’s highest court whether a hospital “could be held liable
for the alleged negligence of its independent contractor phy-
sician.” Sword, 714 N.E.2d at 144. The Supreme Court of In-
diana answered yes.
In doing so, the court relied on existing Indiana jurispru-
dence, as well as the law of other jurisdictions, to adopt the
doctrine of apparent agency set forth in the Restatement
(Second) of Torts § 429 (1965). Id. at 151–52. The Sword court
specifically held, “[u]nder Section 429, as we read and con-
strue it, a trier of fact must focus on the reasonableness of the
patient’s belief that the hospital or its employees were ren-
dering health care.” Id. at 152. The court explained that this
inquiry involves the “totality of circumstances” based on the
“actions or inactions of the hospital, as well as any special
knowledge the patient may have about the hospital’s ar-
rangements with its physicians.” Id. The Indiana Court of
Appeals has applied Sword’s holding beyond the hospital
setting, including in the context of a health care center or
clinic. Helms v. Rudicel, 986 N.E.2d 302, 306 (Ind. Ct. App.
2013).
On appeal, CDI argues that the district court erred in ap-
plying Sword because CDI did not hire Dr. Walker as an in-
dependent contractor. In examining CDI’s argument, “our
duty is to answer any question of state law in the same way
(as nearly as we can tell) as the state’s highest court would.”
Newman v. Metro. Life Ins. Co., 885 F.3d 992, 1000 (7th Cir.
No. 18-3080 7
2018). Accordingly, we review the district court’s interpreta-
tion of state law de novo. Salve Regina Coll. v. Russell, 499 U.S.
225, 231 (1991).
Sword applies here as the district court properly recog-
nized. Nothing in Sword’s holding indicates that a health
care facility must have a direct employment relationship
with an independent contractor physician to be held liable
for the acts of its apparent agent. This is especially true given
the nature of health care services today. See Sword v. NKC
Hosps., Inc., 661 N.E.2d 10, 14 (Ind. Ct. App. 1996), rev’d on
other grounds, 714 N.E.2d 142 (Ind. 1999). Accepting CDI’s
contrary argument would mean that health care facilities
could easily evade liability by using independent contractor
professional organizations to employ physicians. Put differ-
ently, a medical center cannot hold itself out to the public as
offering health care services—and profit from providing
those health care services—yet escape liability by creating a
complex corporate arrangement of interrelated companies.
We are hard-pressed to believe Indiana law would favor that
result.
Equally important, CDI’s position conflicts with Sword’s
explicit focus on the medical center’s manifestations and the
patient’s reliance—as opposed to employment contractual
formalities. As the district court astutely observed, “[i]f any-
thing, the complicated web of interrelated entities in this
case … illustrates the paramount importance of the Sword
factors in an increasingly complicated and opaque medical
environment.” Webster, 2017 WL 3839377, at *8. CDI’s argu-
ment that Dr. Walker was an independent contractor hired
by MSC, therefore, is of no moment unless Courtney was
aware of any such contractual relationship. See Sword, 714
8 No. 18-3080
N.E.2d at 152. She was not; Courtney testified at trial that
she had no idea about the contractual relationships among
MSC, CDI, and Dr. Walker and she was never provided in-
formation that the physician who would be interpreting her
CT scan was not subject to CDI’s control or supervision.
CDI makes other arguments on appeal. CDI asserts, for
example, that extending Sword’s vicarious liability principles
to the facts of this case violates the public policy behind the
Act because it would expose qualified health care providers,
like Dr. Walker, to common law implied indemnity claims in
excess of the Act’s statutory $1.25 million damages cap. CDI
also argues that “non-negligent” parties, such as CDI,
should not be required to pay greater damages than a negli-
gent party. We need not address these arguments. CDI
waived them by withholding them until its post-trial Rule
50(b) renewed motion for judgment as a matter of law. Andy
Mohr Truck Ctr., Inc. v. Volvo Trucks N. Am., 869 F.3d 598, 604
(7th Cir. 2017) (“If the court denies the Rule 50(a) motion,
that party may renew its earlier motion under Rule 50(b),
but it may raise only the grounds it advanced in the pre-
verdict 50(a) motion.”).
Furthermore, CDI did not address the district court’s
waiver rulings in its opening brief on appeal. So, it has also
forfeited these arguments. McCleskey v. CWG Plastering, LLC,
897 F.3d 899, 901 (7th Cir. 2018); Klein v. O’Brien, 884 F.3d
754, 757 (7th Cir. 2018). 1
1Although CDI filed a post-trial Rule 59 motion for remittitur, on
appeal, its discussion of damages is intertwined with its forfeited argu-
ments.
No. 18-3080 9
On a final note, because there is no genuine uncertainty
about the question of state law that CDI presents on appeal,
we decline to certify CDI’s proposed questions to the Su-
preme Court of Indiana pursuant to Circuit Rule 52(a). In re
Zimmer, NexGen Knee Implant Prods. Liab. Litig., 884 F.3d 746,
754 (7th Cir. 2018).
We AFFIRM the district court’s judgment.