Hollingsworth v. Thompson

IN THE SUPREME COURT OF THE STATE OF IDAHO
Docket No. 47488
ROCKNE LEE HOLLINGSWORTH and )
DEBORAH HOLLINGSWORTH, )
) Boise, September 2020 Term
Plaintiffs-Appellants, )
) Opinion filed: December 23, 2020
v.
)
HAROLD K. THOMPSON, M.D., and ) Melanie Gagnepain, Clerk
WALTER KNOX COMMUNITY HOSPITAL, )
INC., dba VALOR HEALTH, )
)
Defendants-Respondents. )
Appeal from the District Court of the Third Judicial District of the State of Idaho,
Gem County. George A. Southworth, District Judge.
The order of the district court granting summary judgment to Respondents is
reversed and remanded.
Hepworth Holzer, LLP, Boise, for Appellants. Kurt Holzer argued.
Tolman Brizee & Cannon, PC, Twin Falls, for Respondents. Nicole Cannon
argued.
_______________________________________________
MOELLER, Justice.
This is an appeal from a summary judgment ruling in a medical malpractice case. Rockne
Lee Hollingsworth1 brought a malpractice claim against a local hospital and doctor in Gem
County district court. The district court found Hollingsworth lacked due diligence in failing to
determine the hospital was a political subdivision, subject to the notice requirements of the Idaho
Tort Claims Act (“ITCA”), and granted summary judgment for Respondents. Hollingsworth
appealed, arguing the corporate filings made by the county-owned hospital created the false
impression the hospital was a private corporation. Respondents contend the hospital and
corporate entity, both owned by Gem County, are both subject to the ITCA because they are
1
Although both Mr. and Mrs. Hollingsworth brought the lawsuit, we will refer to Appellants in the singular for ease
of reference.
1
actually one and the same. For the reasons set forth below, we reverse the district court’s ruling
and remand this matter for further proceedings.
I. FACTUAL AND PROCEDURAL BACKGROUND
On September 29, 2017, Rockne Lee Hollingsworth sought medical help for persistent
chest pain at the Valor Health emergency room in Emmett, Gem County, Idaho. Harold K.
Thompson, M.D., a Valor Health employee, conducted tests and discharged Hollingsworth
several hours later. Id. On October 5, Hollingsworth returned to the emergency room again with
chest pain; however, this time he was transported to St. Alphonsus Regional Medical Center in
Nampa where another physician diagnosed Hollingsworth with significant heart damage from “a
delayed evaluation for what appears to have been an acute anterior wall myocardial infarction
sustained more than a week [earlier]”.
On February 21, 2018, Hollingsworth submitted an “Idaho State Board of Medicine
Application and Claim for Medical Malpractice Prelitigation Hearing” (“prelitigation hearing
application”) to the Idaho State Board of Medicine, contending Dr. Thompson breached the
standard of care for failing to recognize the heart damage during the examination on September
29, 2017. The prelitigation hearing application was forwarded to Valor Health’s CEO and its
counsel. After obtaining a positive decision from the prelitigation screening panel,2
Hollingsworth filed a complaint in district court against Dr. Thompson, and Walter Knox
Memorial Hospital, Inc., d/b/a Valor Health on August 14, 2018. On April 23, 2019, he amended
the complaint to change the hospital’s name to Walter Knox Community Hospital, Inc., d/b/a
Valor Health (“Respondents”). It is undisputed Hollingsworth did not present and file a notice of
tort claim with the Gem County clerk within 180 days of his medical visit, as required under
Section 6-906 of the ITCA to bring a claim against a political subdivision or its employee.
This appeal focuses on the governmental status of the corporate entity created by the
hospital and whether Respondents should have determined that it fell under the ITCA’s notice
requirements. Walter Knox Memorial Hospital was built after Gem County voters approved a
special bond in 1961 for the construction of a county hospital. In 2006, the Idaho Supreme Court
ruled that Article VIII, Section 3 of the Idaho Constitution bars a public entity from borrowing
money in excess of its income and revenue for that year without first obtaining public approval
2
Respondents dispute this. They argue that the panel concluded the treatment provided by Dr. Thompson was within
the standard of care and that it faulted Hollingsworth for not following discharge instructions to follow up with his
physician. Unfortunately, the panel’s advisory decision is not in the record.
2
by a supermajority vote, unless the expenditure was for an “ordinary and necessary” expense.
City of Boise v. Frazier, 143 Idaho 1, 2-3, 137 P.3d 388, 389-90 (2006). This ruling negatively
impacted the hospital’s ability to fund itself. In order to avoid the requirements of the Frazier
decision, the hospital created a separate, nonprofit corporation named Walter Knox Community
Hospital, Inc., with the intention that the existing Walter Knox Memorial Hospital would sell or
lease its assets to the newly created nonprofit corporation, thereby allowing it, as a nonpublic
entity, to obtain a loan without having to pass a bond.
Walter Knox Community Hospital, Inc., filed articles of incorporation as a nonprofit
corporation with the Idaho Secretary of State in 2009. The corporation’s purposes listed in the
articles include providing care for those in Gem County and enhancing the quality and
availability of medical care in Gem County. That same year, the corporation filed a Certificate of
Assumed Business Name indicating Walter Knox Community Hospital, Inc., was doing business
as Walter Knox Memorial Hospital, which was then the hospital’s public name.
In 2010, the Idaho Legislature adopted an amendment to Article VIII, Section 3C of the
Idaho Constitution, which Idaho citizens ratified that same year, to allow public hospitals to
incur long-term indebtedness to meet health care needs, thereby exempting such hospitals from
the ruling in Frazier. Except for a brief lapse in 2015, Walter Knox Community Hospital, Inc.,
kept its filings current with the Secretary of State. In 2015, after the hospital changed its name to
Valor Health, Walter Knox Community Hospital, Inc., filed a Certificate of Assumed Business
Name with the Idaho Secretary of State, indicating Valor Health was a d/b/a of the corporation.
Hollingsworth’s medical records show Valor Health as his medical care provider. Today, Walter
Knox Community Hospital, Inc.’s corporate status with the Secretary of State is listed as
“Inactive-Dissolved (Administrative).”
Respondents filed a Motion for Summary Judgment on May 21, 2019, arguing
Hollingsworth’s claim was time-barred because he failed to comply with the notice requirements
of the ITCA. The district court granted Respondents’ summary judgment motion without
discussing the corporate entity’s filings or their legal effect. It found that there was no genuine
issue of material fact concerning Valor Health’s status as a political subdivision under the ITCA
and Dr. Thompson’s status as a public employee. Further, the district court found
Hollingsworth’s attempt to ascertain Valor Health’s governmental status did not satisfy due
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diligence because he only searched the associated business filings with the Idaho Secretary of
State and did not inquire further about the hospital.
Notably, Respondents asserted before the district court that Walter Knox Community
Hospital, Inc., the corporate entity, had never been the hospital in Gem County nor had anything
to do with patient care. Respondents maintained Hollingsworth had named the wrong defendant
when he relied on the Secretary of State filings to identify the corporate entity as the party to the
suit. However, on appeal, Respondents have attempted to “clarify” their position, stating:
Defendants understand that certain aspects of the record are conflicting and regret
any inconvenience caused to the Court. In order to clarify any confusion,
Defendants hereby confirm the facts clearly established by the record, that Walter
Knox Community Hospital, Inc.[,] provided patient care and preserved and
enhanced the quality and availability of medical care in Gem County, Idaho, as
specified in the Articles of Incorporation of Walter Knox Community Hospital,
Inc. ... Therefore[,] Plaintiffs correctly identified Walter Knox Community
Hospital, Inc.[,] d/b/a Valor Health as a defendant in this case.
(Citations to the record omitted).
II. STANDARD OF REVIEW
“When reviewing an order for summary judgment, the standard of review used by this
Court is the same standard used by the district court in ruling on the motion.” Van v. Portneuf
Med. Ctr., 147 Idaho 552, 556, 212 P.3d 982, 986 (2009). Summary judgment is appropriate “if
the movant shows that there is no genuine dispute as to any material fact and the movant is
entitled to judgment as a matter of law.” I.R.C.P. 56(a). “A genuine issue of material fact exists
when the evidence is such that a reasonable jury could return a verdict for the non-moving
party.” Marek v. Hecla, Ltd., 161 Idaho 211, 220, 384 P.3d 975, 984 (2016); see also Houpt v.
Wells Fargo Bank, Nat. Ass’n, 160 Idaho 181, 186, 370 P.3d 384, 389 (2016) (“If reasonable
people could reach different conclusions or inferences from the evidence, summary judgment is
inappropriate.”). “This Court liberally construes the record in favor of the party opposing the
motion for summary judgment and draws any reasonable inferences and conclusions in that
party’s favor.” Robison v. Bateman-Hall, Inc., 139 Idaho 207, 209, 76 P.3d 951, 953 (2003).
III. ANALYSIS
A. Hollingsworth exercised due diligence in ascertaining whether the ITCA applied to
Valor Health.
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The parties now agree the proper defendants are Dr. Thompson and Walter Knox
Community Hospital, Inc., d/b/a Valor Health. Valor Health is the assumed business name of the
nonprofit corporation Walter Knox Community Hospital, Inc. Yet, prior to this appeal,
Respondents maintained that Hollingsworth incorrectly named the corporate entity in the suit
because the corporate entity is not the county hospital, Valor Health. Now on appeal,
Respondents seek to “clarify any confusion” and acknowledge the corporate entity is a correctly
named party. The filing of the 2009 Articles of Incorporation, they now assert, made “Walter
Knox Community Hospital, Inc.,” the county hospital’s official business name.
The question before this Court is whether the district court erred when it found that
Hollingsworth lacked due diligence in determining whether the ITCA applied to his claims
against the hospital and its employee. To answer this, we must consider (1) whether the
corporate filings associated with Valor Health gave Hollingsworth sufficient notice that it was a
governmental entity to which the ITCA applied, and (2) whether due diligence required
Hollingsworth to look beyond the corporate filings to ascertain Valor Health’s governmental
status.
1. The corporate filings with the Idaho Secretary of State did not indicate that
Valor Health is a governmental entity.
With some exceptions, the ITCA makes governmental entities, including county
hospitals, liable for money damages for negligent conduct related to its employees’ actions. I.C.
§§ 6-902(2), 6-903(1). Where the ITCA applies, the claim must “be presented to and filed with
the clerk or secretary of the political subdivision” within 180 days “from the date the claim arose
or reasonably should have been discovered, whichever is later.” I.C. § 6-906. This Court has
found that compliance with the ITCA’s notification requirements is “a mandatory condition
precedent to suit, the failure of which is fatal to a claim, no matter how legitimate.” Cobbley v.
City of Challis, 138 Idaho 154, 157, 59 P.3d 959, 962 (2002).
Here, Hollingsworth admittedly did not satisfy the ITCA’s notice requirement by
presenting its claim to Gem County within 180 days of the alleged malpractice. Respondents
argue this must be fatal to Hollingsworth’s claim because the hospital at issue is owned by Gem
County, thereby bringing the action under the provisions of the ITCA. However, the nature of the
corporate filings associated with the hospital have complicated the issue. While it is true that the
ITCA clearly applies to a county-owned hospital, the ITCA does not necessarily apply to a
separate, private corporation created by that hospital. Therefore, to assess Hollingsworth’s due
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diligence, this Court must first determine if the corporate filings associated with Valor Health put
Hollingsworth on notice the hospital was operating as a county-owned hospital as Respondents
claim, or if those filings indicate a nongovernmental corporation.
Prior to this appeal, Respondents averred that the corporation was not the hospital and, in
support, described the corporate entity’s separate origin. Respondents detailed how they created
Walter Knox Community Hospital, Inc., to work around the Idaho Supreme Court’s ruling in
Frazier. Brad Turpen, Valor Health’s CEO, testified that the hospital “explored the possibility of
creating a completely separate non-profit organization whereby Walter Knox Memorial Hospital,
Inc.[,] could sell or lease assets to said non-profit organization, which could thereby more easily
obtain a loan through said non-profit organization.” Walter Knox Community Hospital, Inc.,
became that separate entity. The IRS approved the nonprofit corporation a year later, but by then
Idaho law had changed again, and the corporation was never used as originally envisioned.
Nonetheless, Walter Knox Community Hospital, Inc., continued to exist on paper even though,
as Turpen insisted, it had “never been a state licensed hospital established by Gem County.”
Corporations are generally regarded as separate legal entities, meaning any person or
entity who controls the corporation is not personally liable for the corporation’s acts or debts. See
Lunneborg v. My Fun Life, 163 Idaho 856, 867, 421 P.3d 187, 198 (2018). According to the
Idaho Nonprofit Corporation Act, Idaho Code sections 30-30-101 et seq, a nonprofit corporation
comes into existence by filing articles of incorporation with the Secretary of State. I.C. § 30-30-
203. The term “entity” is defined in the Idaho Uniform Business Organizations Code, Idaho
Code sections 20-21-101 et seq, as including a nonprofit corporation, section 30-21-
102(11)(A)(ii), but it specifically excludes a “government or a governmental subdivision, agency
or instrumentality.” I.C. § 30-21-102(11)(B)(v). Importantly, the ITCA applies only to
governmental entities and specifically includes political subdivisions, such as county hospitals.
I.C. § 6-902(2).
Regarding Walter Knox Community Hospital, Inc., as a nongovernmental corporate
entity is entirely consistent with Respondents’ original explanation: that the hospital wanted to
make a separate, non-public entity to avoid the Idaho Constitution’s debt limitations—in other
words, a nongovernmental entity. This would explain why the terms of the Articles of
Incorporation for Walter Knox Community Hospital, Inc., are consistent with the legal
organization of a private nonprofit corporation, rather than a county-owned hospital. Yet,
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regarding the entity as nongovernmental is inconsistent with Respondents’ recent concession that
Walter Knox Community Hospital, Inc., is the same thing as the hospital, which Gem County
owns.
Idaho law requires governmental control of county hospital boards, mandating they be
both created by and comprised of county commissioners. I.C. §§ 31-3602, –3603. Contrast this
to nonprofit corporations, which have no such restrictions on board members. I.C. § 30-30-205.
Here, the Articles of Incorporation for Walter Knox Community Hospital, Inc., require only that
board members be Gem County citizens; no provision requires control by the county
government, as it should for a county hospital. Additionally, the Articles of Incorporation for
Walter Knox Community Hospital, Inc., show its directors are not necessarily Gem County
commissioners, but instead may include any Gem County resident elected by other board
members.
Furthermore, Respondents’ argument that Walter Knox Community Hospital, Inc., is
only the official business name for Valor Health is not reasonable under state law. A person or
entity who wishes to conduct business under another name may do so by filing a Certificate of
Assumed Business Name with the Secretary of State. I.C. § 30-21-807. However, this “does not
create an entity separate from the person doing business under the assumed business name.” I.C.
§ 30-21-807(c). If one wants to conduct business under another name, filing a Certificate of
Assumed Business Name is the legal pathway to do just that without the unnecessary
complication of creating a separate corporate entity, as Respondents did here.
For the above reasons, we hold the corporate filings Respondents submitted to the
Secretary of State regarding Walter Knox Community Hospital, Inc., represented to the public that
it was a private, nonprofit corporation, to which the ITCA did not apply. Based on the corporate
filings, Hollingsworth could not have determined that the hospital was owned by Gem County or
that the ITCA applied to it.
2. Due diligence did not require that Hollingsworth look beyond the corporate
filings.
Next, we must determine whether due diligence required Hollingsworth to look beyond
corporate filings with the Secretary of State, which indicated the hospital was nongovernmental,
to find whether the ITCA applied.
According to the Idaho Uniform Business Organization Code, any entity conducting
business under a name other than its actual name is required to file a d/b/a certificate with the
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Secretary of State. I.C. § 30-21-805. Noncompliance with this statute occurs when someone files
“false, misleading or incomplete information in a Certificate of Assumed Business Name” or
fails to file altogether. I.C. § 30-21-810.
In previous cases, this Court has examined how noncompliance with the assumed
business name statute affects statutes of limitations. The Idaho Code does not list tolling a statute
of limitations as a consequence of noncompliance. However, we have suggested a late-named
party might be prevented from asserting a statute of limitations defense if a plaintiff failed to
identify that party due to seriously misleading, noncompliant corporate filings. Ketterling v.
Burger King Corp., 152 Idaho 555, 558–559, 272 P.3d 527, 530–531 (citing Winn v. Campbell,
145 Idaho 727, 731, 184 P.3d 852, 856 (2008)). On the other hand, we have held that a statute of
limitations’ general purpose is “to protect defendants against stale or unduly delayed claims.”
Credit Suisse Sec. (USA) LLC v. Simmonds, 566 U.S. 221, 227, 132 S. Ct. 1414, 1420, 182 L.
Ed. 2d 446 (2012). In that context, this Court has found a simple failure to file a d/b/a certificate
did not qualify as seriously misleading where the party who failed to file could have been
identified through other simple inquiries
For example, in Winn, a plaintiff fell at a motel. 145 Idaho at 728, 184 P.3d at 853. Winn
sued Wayne Campbell, d/b/a Home Hotel and Motel, whom she thought operated the motel, but
she later discovered it was operated by a corporation, Campbell, Inc. Id. Then it turned out the
motel was actually Tumbling Waters Motel, which Campbell, Inc. also operated. Id. After the
statute of limitations had passed, Winn moved to substitute Campbell, Inc., as the defendant. Id.
at 729, 184 P.3d at 854. Winn argued the statute should be tolled because Campbell, Inc., had
failed to file a Certificate of Assumed Business Name for Tumbling Waters Motel. Id. at 731,
184 P. 3d at 856. This Court disagreed. Id. Winn’s problem, we concluded, was she had failed to
take the simple step to discover the name of the motel where she fell. Id. Had she sued Tumbling
Waters Motel first, a missing d/b/a certificate might have been seriously misleading. Id.However, in Ketterling v. Burger King Corp., we found a missing d/b/a certificate by
itself was still insufficient to toll the statute of limitations. 152 Idaho 555, 556, 272 P.3d 527, 528
(2012). Ketterling fell in a snowy Burger King parking lot and, finding no d/b/a certificate
associated with that Burger King, filed a claim against Burger King Corp. Id. HB Boys had a
contract to manage the Burger King franchise but had not filed a Certificate of Assumed
Business Name. Id. at 557, 272 P.3d at 529. After the statute of limitations had passed, Ketterling
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moved to add HB Boys as a defendant. Id. The district court found that the late amendment did
not relate back to a time before the statute of limitations had run. This Court agreed, finding
“Ketterling’s search of the Secretary of State’s records was reasonable, but she clearly could
have done more,” including visiting the restaurant to ask who operated it, or contacting the
health district to find out who had the license for the restaurant. Id. at 560–61, 272 P.3d 532–33.
Other simple inquiries would have provided HB Boys’ identity, and so we found the missing
d/b/a certificate alone had not prevented Ketterling from naming the correct party. Id. at 561, 272
P.3d at 533.
Ketterling parallels what the district court held that Hollingsworth could have done here,
including phoning health and welfare to ask about the hospital’s license, or phoning the hospital
to ask whether the hospital was governmental. While such an approach may seem consistent with
our past rulings, this analysis mistakenly conflates the policy considerations underlying statutes
of limitations with those underlying the ITCA. Further, it understates the confusion created here
by the content of the corporate filings.
The ITCA’s notice requirement is distinct from the statutes of limitations we have
considered before. Winn and Ketterling both reflect our interest in assuring statutes of limitations
protect defendants against delayed claims. Where simple inquiries would have revealed the
correct party, we have declined to toll the statutes of limitations. However, the ITCA’s notice
requirement is different. The ITCA is essentially a waiver of sovereign immunity, with the
purpose of providing “much needed relief to those suffering injury from the negligence of
government employees.” Rees v. State, Dep’t of Health & Welfare, 143 Idaho 10, 19, 137 P.3d
397, 406 (2006) (quoting United States v. Muniz, 374 U.S. 150, 165 (1963)). To this end, we
have previously held that “the ITCA is to be construed liberally, consistent with its purpose, and
with a view to ‘attaining substantial justice.’ ” Id.The ITCA’s notice requirement serves its purpose by (1) providing opportunity to resolve
claims without incurring the expense of litigation, (2) prompting investigation into the cause of
injury and the government’s liability, and (3) allowing the government to prepare defenses.
CNW, LLC v. New Sweden Irrigation Dist., 161 Idaho 89, 91–92, 383 P.3d 1259, 1261–62
(2016) (quoting Farber v. State of Idaho, 102 Idaho 398, 401, 630 P.2d 685, 688 (1981)). We
have “taken a ‘liberal approach to interpreting the notice requirement of the ITCA’ ” to “avoid
thwarting meritorious claims on nonmeritorious grounds.” Doe v. Durtschi, 110 Idaho 466, 474,
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716 P.2d 1238, 1246 (1986) (quoting Farber, 102 Idaho at 402, 630 P.2d at 689). Thus, looking
through the ITCA’s justice-oriented lens, we must then carefully review the circumstances to
determine whether the content of Respondents’ corporate filings were seriously misleading.
Here, the facts go far beyond just a missing d/b/a certificate. Instead, Respondents filed a
Certificate of Assumed Business Name and Articles of Incorporation, which strongly suggested
that Walter Knox Community Hospital, Inc., d/b/a Valor Health, was a private nonprofit
corporation. They further reinforced its nongovernmental status by describing a corporate
structure inconsistent with a county hospital. The district court concluded that the word
“community” in the name of the hospital and its business filings should have tipped off
Hollingsworth that the hospital was governmental. However, a corporation can choose almost
any name it pleases and the term “community” is not in the government’s exclusive domain. It
could be just as persuasively argued that a modern, corporate sounding name like “Valor Health”
is more indicative of a private corporate entity than a county-owned facility. Likewise,
Respondents assert Hollingsworth might have noticed that upon dissolution, the corporation’s
assets were to be distributed to other nonprofit hospitals or to Gem County. Yet, it is well within
reason that a dissolved nonprofit corporation might elect to distribute its remaining assets to
other nonprofits or the public. Reason and fairness do not allow us to require plaintiffs bringing
claims under the ITCA, where the goal is attaining substantial justice, to ignore the plain
language of official governmental filings and instead search for murky clues of a hidden truth
that might be uncovered by only the most perceptive individuals.
Additionally, we cannot fairly speculate as to whether further investigation would have
actually led Hollingsworth to reach the proper conclusion. Ketterling emphasized a missing d/b/a
certificate alone was not seriously misleading where other obvious and simple inquiries would
have revealed the correct party. We acknowledge that Hollingsworth might have asked someone
about the hospital who then would have told him it is owned by Gem County. However, in this
action, Respondents themselves have made different representations at different times
concerning the legal status of Walter Knox Community Hospital, Inc. Even the hospital’s own
CEO mistakenly stated under oath that Walter Knox Community Hospital was only an on-paper
corporate entity and not the county hospital. With the legal ground upon which Respondents
have stood in this case shifting—even while this appeal has been pending—we cannot conclude
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with confidence that further inquiry with hospital staff, let alone its CEO, would have revealed
the correct answer to Hollingsworth in a timely manner.
The district court determined that Hollingsworth lacked due diligence in failing to
determine the hospital was a political subdivision, subject to the notice requirements of the
ITCA. However, considering both the ITCA’s purpose and the County’s misleading filings with
the Secretary of State, we are persuaded Hollingsworth was entitled to rely upon the hospital’s
corporate filings and due diligence did not require him to look beyond the public record. Thus,
under the unique circumstances presented here, we hold that the district court erred in granting
summary judgment as a matter of law. The record establishes Hollingsworth acted with due
diligence in attempting to comply with the ITCA because he was actively misled about the true
nature of Respondents’ governmental status by its own business filings with the Secretary of
State.
B. Equitable considerations bar Valor Health from claiming the protections of the
ITCA.
Hollingsworth argues that the equitable remedies of either equitable estoppel or quasi-
estoppel provide a remedy that relieves him from the notice requirements of the ITCA. This
Court has previously noted that there are situations where it is appropriate to apply equitable
remedies against a state agency:
Although estoppel is generally not applicable to state agencies acting in a
sovereign or governmental capacity, Sagewillow, Inc. v. Idaho Dep’t of Water
Res., 138 Idaho 831, 845, 70 P.3d 669, 683 (2003), it may apply where required
by notions of justice and fair play. Brandt v. State, 126 Idaho 101, 105, 878 P.2d
800, 805 (Ct.App.1994). See also City of Sandpoint v. Sandpoint Ind. Hwy.
Dist., 126 Idaho 145, 151, 879 P.2d 1078, 1084 (1994) (holding
that estoppel may apply against a highway district “in order to prevent manifest
injustice”). Still, in order to state a claim for promissory, equitable, and quasi-
estoppel, a plaintiff must at least allege, among other things, a promise or
representation by the party to be estopped. … Ogden v. Griffith, 149 Idaho 489,
495, 236 P.3d 1249, 1255 (2010) (Equitable estoppel requires “a false
representation or concealment of a material fact.”); Mortensen v. Stewart Title
Guar. Co., 149 Idaho 437, 443, 235 P.3d 387, 393 (2010) (Quasi-
estoppel involves a party taking “a different position than his or her original
position.”).
Idaho Wool Growers Ass’n, Inc. v. State, 154 Idaho 716, 723, 302 P.3d 341, 348 (2012). Thus,
we must determine whether “notions of justice and fair play” demand that the principles of
equitable estoppel or quasi estoppel be applied to the facts of this case. Id.11
1. Equitable estoppel does not apply.
Hollingsworth argues equitable estoppel is appropriate because he relied on the d/b/a
certificate, which stated Valor Health was actually the nonprofit corporation Walter Knox
Community Hospital, Inc., and did not indicate that Valor Health is owned by Gem County.
Equitable estoppel has four elements:
1) there must be a false representation or concealment of a material fact made
with actual or constructive knowledge of the truth; 2) the party asserting estoppel
did not and could not have discovered the truth; 3) there was intent that the
misrepresentation be relied upon; and 4) the party asserting estoppel relied upon
the misrepresentation or concealment to his or her prejudice.
Sorensen v. Saint Alphonsus Reg’l Med. Ctr., Inc., 141 Idaho 754, 759, 118 P.3d 86, 91 (2005).
Equitable estoppel does not extend or toll a notice period; instead, it prevents a defendant from
“asserting the statute of limitations as a defense for a reasonable time after the party asserting
estoppel discovers or reasonably could have discovered the truth.” City of McCall v. Buxton, 146
Idaho 656, 663, 201 P.3d 629, 636 (2009).
While it appears that the first, third, and fourth elements of equitable estoppel apply here,
we cannot find that the second element—“the party asserting estoppel did not and could not have
discovered the truth”—has been established. Although we previously concluded that
Hollingsworth acted with “due diligence” in relying on the corporate filings of the hospital in
determining its status under the ITCA, this is not the same standard required for equitable
estoppel to apply. Just because Hollingsworth acted with reasonable diligence in relying upon the
corporate filings of Valor Health does not mean that Hollingsworth “could not have discovered
the truth.” Equitable estoppel encompasses a higher standard than due diligence. Although not
required under a due diligence standard, further investigation by Hollingsworth could have
eventually revealed the true governmental nature of Respondents. Therefore, because we cannot
conclude that this was an undiscoverable truth, equitable estoppel does not apply.
2. Quasi-estoppel precludes Valor Health from asserting the notice requirements of
the ITCA as a defense.
Hollingsworth also contends that because Respondents changed their position from
representing themselves as a corporate entity to representing themselves as a governmental
hospital, this disadvantaged Hollingsworth, thereby making quasi-estoppel applicable. We agree
quasi-estoppel is an appropriate remedy.
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Quasi-estoppel prevents a party from changing its legal position and, as a result, gaining
an unconscionable advantage or imposing an unconscionable disadvantage over another. Garner
v. Bartschi, 139 Idaho 430, 437, 80 P.3d 1031, 1038 (2003). Unlike equitable estoppel, quasi-
estoppel does not require an undiscoverable falsehood, and it requires neither misrepresentation
by one party nor reliance by the other. Id. Instead, quasi-estoppel applies where:
(1) the offending party took a different position than his or her original position
and (2) either (a) the offending party gained an advantage or caused a
disadvantage to the other party; (b) the other party was induced to change
positions; or (c) it would be unconscionable to permit the offending party to
maintain an inconsistent position from one he or she has already derived a benefit
or acquiesced in.
Trumble v. Farm Bureau Mut. Ins. Co. of Idaho, 166 Idaho 132, 136, 456 P.3d 201, 215 (2019),
reh’g denied (Jan. 30, 2020) (quoting Keybank Nat’l Ass’n v. PAL I, LLC, 155 Idaho 287, 294,
311 P.3d 299, 306 (2013)).
Here, Respondents changed their position by publicly holding out Walter Knox
Community Hospital, Inc., d/b/a Valor Health as a private corporation in their business filings,
and then later asserting its status as a governmental entity when sued. It does not matter whether
Respondents intended to mislead anyone by the nature of its business filings; those filings
reasonably led Hollingsworth to believe the hospital was a private corporation and, thus, to miss
the ITCA notice deadline to Respondents’ benefit. This makes the doctrine of quasi-estoppel
applicable. Respondents gained an unfair advantage while unconscionably disadvantaging
Hollingsworth.
For these reasons, we hold that the doctrine of quasi-estoppel applies and conclude that
the district court erred in finding Respondents were entitled to summary judgment as a matter of
law. Accordingly, we remand the case to the district court to proceed with Hollingsworth’s
claims on the merits.
C. We need not consider Hollingsworth’s argument that the prelitigation hearing
application provided actual notice.
In the alternative, Hollingsworth argues the prelitigation hearing application he submitted
for the medical malpractice screening process, which was then forwarded by the Idaho State
Board of Medicine to Valor Health’s CEO and counsel, provided actual notice to Respondents.
He asserts that this satisfied the ITCA notice requirement. Similar arguments have been
previously rejected by this Court and the Court of Appeals. See Foster v. Kootenai Medical
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Center, 143 Idaho 425, 146 P.3d 691 (Ct. App. 2006) (holding a Prelitigation Hearing
Application forwarded by the Idaho State Board of Medicine to a relevant party did not also
satisfy the ITCA’s notice requirement); Mitchell v. Bingham Memorial Hospital, 130 Idaho 420,
425, 942 P.2d 544, 549 (1997) (finding “without merit” the argument that notice requirements
for the prelitigation hearing pre-empt the notice requirements for the ITCA); Blass v. County of
Twin Falls, 132 Idaho 451, 974 P.2d 503 (1999) (finding that, under the ITCA, a third party may
submit a claim on the claimants behalf only if they have a subrogation interest in the claim).
Inasmuch as we have decided this case on alternative grounds, we do not reconsider those
decisions today.
D. Attorney Fees and Costs on Appeal.
Respondents seek an award of attorney fees and costs on appeal, pursuant to Idaho Code
section 6-918A and Idaho Appellate Rules 41 and 40(a); however, Respondents are not entitled
to such an award because they did not prevail. On the other hand, although Hollingsworth did not
seek attorney fees in his initial brief on appeal, he now requests attorney fees in his reply brief
pursuant to the same authorities cited by Respondents. Hollingsworth points the Court to
Respondents’ change of position on appeal concerning a dispositive fact—that “Plaintiffs
correctly identified Walter Knox Community Hospital, Inc.[,] d/b/a Valor Health as a defendant
in this case”—and argues that if this fact had been admitted in the proceedings below, the district
court likely would not have granted summary judgment in Respondents’ favor. We agree that
under the unique circumstances of this case, Hollingsworth should be afforded an opportunity to
have his request for attorney fees on appeal considered.
The Idaho Appellate Rules require a party seeking attorney fees to make and support such
a claim in their initial briefing; however, the rules allow this Court some flexibility:
Any party seeking attorney fees on appeal must assert such a claim as an issue
presented on appeal in the first appellate brief filed by such party as provided by
Rules 35(a)(5) and 35(b)(5); provided, however, the Supreme Court may permit a
later claim for attorney fees under such conditions as it deems appropriate.
I.A.R. 41(a) (emphasis added). In this case, Hollingsworth did not seek attorney fees in his initial
brief because the conditions supporting such a request did not exist. However, on appeal, after
receipt of Respondents’ brief, a basis for attorney fees existed that was not present before.
Namely, Respondents attempted to “clarify” their position by conceding that the corporation is
the hospital’s business identity. This does not square with its earlier narrative of how the
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corporate entity came into being, nor does it align with the affidavit from Valor Health’s CEO,
asserting the hospital and corporation were not and never have been the same thing. It appears
that until Respondents filed their brief on appeal, Respondents had yet to pin down the truth
about the legal status of Walter Knox Community Hospital, Inc. Therefore, it is appropriate to
consider Hollingsworth’s request for attorney fees because the basis for the request did not exist
when he filed his opening brief on appeal.
Although we have agreed to consider Hollingsworth’s request for attorney fees, he must
still comply with the standard set forth in Idaho Code section 6-918A for determining whether
attorney fees should be awarded under the ITCA:
At the time and in the manner provided for fixing costs in civil actions, and at the
discretion of the trial court, appropriate and reasonable attorney fees may be
awarded to the claimant, the governmental entity or the employee of such
governmental entity, as costs, in actions under this act, upon petition therefor and
a showing, by clear and convincing evidence, that the party against whom or
which such award is sought was guilty of bad faith in the commencement,
conduct, maintenance or defense of the action. …
Idaho Code Ann. § 6-918A.
Notwithstanding Respondents’ troubling change of position, we ultimately conclude that
Hollingsworth is not entitled to recover attorney fees. The standard in section 6-918A is a high
bar, requiring a finding of bad faith by clear and convincing evidence. The record demonstrates
that Respondent’s change in position was more likely than not the result of confusion by the
Respondents as to the legal effect of their actions, and an incorrect legal analysis by their
attorneys handling the case below. Although the change of position is troubling, we cannot find
by clear and convincing evidence it was an intentional act of bad faith on the part of
Respondents. Indeed, had Respondents not made this damaging concession when they did, the
outcome of this appeal might have been different. Due to their candor in bringing this error to
our attention, we will not punish Respondents by imposing attorney fees. Accordingly, although
Hollingsworth is entitled to costs on appeal, each party will bear their own respective attorney
fees.
IV. CONCLUSION
We conclude the district court erred in holding Hollingsworth did not exercise due
diligence by relying on the corporate filings associated with Walter Knox Community Hospital,
Inc., d/b/a Valor Health to determine the named defendant was not a governmental entity subject
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to the ITCA. Additionally, we conclude the doctrine of quasi-estoppel applies, thereby entitling
Hollingsworth to proceed on the merits of his claims. Therefore, we reverse the district court’s
summary judgment order and remand the case for further proceedings. Costs on appeal are
awarded to Hollingsworth pursuant to I.A.R. 40.
Chief Justice BURDICK, Justices BEVAN, STEGNER and Justice Pro Tem
MELANSON CONCUR.
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