Health Professionals, Ltd v. Michael Gayer, Sheriff, Pulaski County, Indiana (mem. dec.)

MEMORANDUM DECISION
Pursuant to Ind. Appellate Rule 65(D),
this Memorandum Decision shall not be FILED
regarded as precedent or cited before any May 31 2017, 10:19 am
court except for the purpose of establishing CLERK
the defense of res judicata, collateral Indiana Supreme Court
Court of Appeals
and Tax Court
estoppel, or the law of the case.
ATTORNEY FOR APPELLANT ATTORNEY FOR APPELLEE
Edward A. Chapleau Mark A. Lienhoop
South Bend, Indiana Newby, Lewis, Kaminski &
Jones, LLP
LaPorte, Indiana
IN THE
COURT OF APPEALS OF INDIANA
Health Professionals, Ltd., May 31, 2017
Appellant/Cross-Appellee, Court of Appeals Case No.
Third-Party Defendant, 66A04-1612-CT-2752
Appeal from the Pulaski Circuit
v. Court
The Honorable Michael A. Shurn,
Michael Gayer, Sheriff, Judge
Pulaski County, Indiana, Trial Court Cause No.
Appellee/Cross-Appellant, 66C01-1003-CT-4
Third-Party Plaintiff
Baker, Judge.
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[1] The Pulaski County jail contracted with Health Professionals, Ltd. (Health
Professionals), for the provision of healthcare services to jail inmates. The
contract included a provision requiring Health Professionals to indemnify and
defend the County from claims related to the negligence of Health
Professionals. An inmate sued the County, alleging that he had received
negligent medical care at the jail. The County demanded that Health
Professionals provide a defense from the complaint; Health Professionals
refused. The County then filed a third-party complaint against Health
Professionals. Following a bench trial, the trial court found in favor of the
County.
[2] Health Professionals now appeals, arguing that it had no duty to defend or
indemnify the County; the County cross-appeals the amount of damages
awarded by the trial court. Finding no error with respect to the judgment in
favor of the County, but finding a question with respect to the trial court’s
intended damages award, we affirm and remand for further proceedings.
Facts
[3] During the relevant period of time, the County and Health Professionals were
in a contractual relationship, pursuant to which Health Professionals provided
healthcare services to jail inmates and detainees. The contract between the
County and Health Professionals contained the following indemnification
provision:
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INDEMNIFICATION. HPL will only be responsible for claims
resulting from HPL’s negligence while performing its duties
under this Agreement. If a claim is brought against the
COUNTY relating to HPL’s negligent performance of its duties
under this Agreement, the COUNTY shall promptly notify HPL
of the claim. HPL will take all steps necessary to promptly
defend and protect the COUNTY including the retention of the
defense counsel. However, HPL will not be responsible for any
claims arising out of (1) COUNTY or its employees or agents
intentionally preventing an inmate from receiving medical care
ordered by HPL or its agents, employees or independent
contracts [sic]; or (2) negligence of COUNTY’s employees or
agent [sic] in promptly presenting an ill or injured inmate to HPL
for treatment if it should have been obvious to a non-medical
individual that the inmate was in serious need of immediate
attention.
Tr. Vol. III p. 17.
[4] Health Professionals was responsible for, among other things, prescribing,
dispensing, and administering medication; conducting inmate health
assessments; and conducting sick calls on a timely basis. Health Professionals
agreed to have a physician and/or nurse on call twenty-four hours per day,
seven days per week. Additionally, Health Professionals agreed to arrange for
hospitalization and other off-site services, such as x-rays, for all inmates who
were determined to need such treatment by Health Professionals staff.
[5] The jail staff did not provide inmates with prescription medication or perform
medical examinations. More specifically, jail personnel were not trained to
administer healthcare other than CPR, defibrillation, minor emergency first aid,
and trying to stop bleeding in a life-threatening emergency. Only if no one from
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Health Professionals was available and it was obvious to a lay person that an
inmate was in serious need of medical attention would jail personnel call an
ambulance on their own to transport that inmate to a hospital—relieving jail
staff from making such medical decisions was a major reason for contracting
with Health Professionals.
[6] In April 2008, Layne Scheffer was an inmate at the jail; Scheffer has a seizure
disorder. On April 3, 2008, Scheffer had a grand mal seizure. Jail personnel
responded by wrapping a blanket around his head until the seizure subsided and
then moved him by wheelchair to a holding cell, where Scheffer complained of
right shoulder pain. Jail staff called the Health Professionals nurse to report the
situation, and the nurse ordered that Scheffer be given an ice pack and be put
on medical watch. Health Professionals staff examined Scheffer on April 4 and
on another eight occasions in the subsequent weeks. Health Professionals staff
also prescribed medication for Scheffer.
[7] At some point, Health Professionals advised the jail commander to contact the
Department of Correction (DOC) to transport Scheffer for an x-ray. There is
no evidence that Health Professionals had advised the jail commander of the
history of Scheffer’s condition or diagnosis. Despite multiple attempts, the jail
commander was unable to reach DOC for transportation and advised a Health
Professionals nurse of the situation. On April 18, 2008, Health Professionals
called the DOC to request that Scheffer be transported for an x-ray, and
Scheffer was picked up the same day. The x-ray revealed that Scheffer had
fractured his shoulder. Scheffer ended up needing surgery to repair the fracture.
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[8] On March 20, 2010, Scheffer sued the County, alleging that the County had
been negligent in its medical care and that its negligence led to his injuries. The
County notified Health Professionals of the complaint and demanded that
Health Professionals defend and indemnify the County pursuant to the
Contract. Health Professionals refused, and the County retained an attorney.
[9] On May 20, 2010, the County filed a third-party complaint against Health
Professionals, alleging that Health Professionals had a duty to defend and
indemnify the County pursuant to the indemnification provision in the
Contract. The County filed a motion for summary judgment in Scheffer’s
complaint; on October 5, 2015, the trial court granted that motion based on its
conclusion that the County had immunity.
[10] The trial court held a bench trial on August 10, 2016, in the County’s third-
party complaint against Health Professionals. On November 11, 2016, the trial
court issued an order finding in favor of the County. In relevant part, the trial
court found as follows:
. . . HPL further promised “[i]f a claim is brought against
COUNTY relating to HPL’s negligent performance of its duties
under this Agreement . . . HPL will take all necessary steps
necessary to promptly defend and protect the County including
the retention of the defense counsel.” . . . HPL provided health
care to inmates of County under a contract with County. HPL
was an unnamed third party for purposes of liability. . . . HPL
should have provided a defense with counsel through entry of
summary judgment and disposition of the potential appeal.
Ironically, HPL most ably through its counsel sat second chair
for the entire proceedings but never stepped forward to relieve
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County of its obligation to hire its own counsel. HPL should
now be responsible to County for the fees of its counsel to defend
Gayer and determine this matter.
Appellant’s App. p. 21. The trial court ordered Health Professionals to pay the
County damages in the amount of $75,496.48. Health Professionals now
appeals, and the County cross-appeals the amount of the damages order.
Discussion and Decision
I. Indemnification Provision
[11] The trial court’s order here is a general judgment, which we will affirm if there
is substantial evidence of probative value supporting the judgment on any legal
theory. Eagledale Enters., LLC v. Cox, 816 N.E.2d 917, 922 (Ind. Ct. App. 2004).
This case also requires us to interpret the Contract, which is a pure question of
law to which we apply a de novo standard of review. Broadbent v. Fifth Third
Bank, 59 N.E.3d 305, 311 (Ind. Ct. App. 2016), trans. denied. Our goal is to give
effect to the intent of the parties as expressed within the four corners of the
document. Id.
[12] Health Professionals raises the following arguments: (1) because the trial court
granted summary judgment for the County in the underlying complaint, no
liability was fixed and no indemnification is owed; (2) the indemnification
provision is unenforceable because to apply it here would indemnify the County
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for the County’s own negligence; and (3) the indemnification provision does
not provide for attorney fees.1
[13] The County’s claim against Health Professionals is, essentially, a breach of
contract claim. The County argues, among other things, that Health
Professionals breached its duty to defend the County against Scheffer’s
negligence claim. Consequently, we must first determine whether, in fact,
Health Professionals breached the Contract.
[14] As noted above, the indemnification provision provides as follows:
HPL will only be responsible for claims resulting from HPL’s
negligence while performing its duties under this Agreement. If a
claim is brought against the COUNTY relating to HPL’s negligent
performance of its duties under this Agreement, the COUNTY shall
promptly notify HPL of the claim. HPL will take all steps necessary
to promptly defend and protect the COUNTY including the retention of
the defense counsel. However, HPL will not be responsible for any
claims arising out of (1) COUNTY or its employees or agents
intentionally preventing an inmate from receiving medical care
ordered by HPL or its agents, employees or independent
contracts [sic]; or (2) negligence of COUNTY’s employees or
agent [sic] in promptly presenting an ill or injured inmate to HPL
for treatment if it should have been obvious to a non-medical
1
Health Professionals also argues that the County should have filed a declaratory judgment action rather
than a third-party complaint. While it is true that such a course of action would have been permitted—and,
indeed, Health Professionals likewise had the option to file a declaratory judgment action seeking a
declaration that it had no duty to defend or indemnify the County—there is no authority supporting a
proposition that a declaratory action was required and a third-party complaint was prohibited. This argument
is unavailing.
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individual that the inmate was in serious need of immediate
attention.
Tr. Vol. III p. 17 (emphases added). We must consider, therefore, whether
Scheffer’s claim against the County “related to” Health Professionals’ alleged
negligence.
[15] Scheffer’s complaint includes two specific acts of alleged negligence: (1) failure
to provide appropriate seizure medication and (2) failure to perform an
appropriate medical examination after his seizure.2 As noted above, under the
Contract, Health Professionals is responsible for administering prescription
medication to and conducting medical examinations of the inmates. Jail
personnel were neither trained in nor authorized to take those actions. It is
apparent, therefore, that Scheffer’s complaint “relates to” allegedly negligent
acts by Health Professionals. Consequently, when the County notified Health
Professionals of Scheffer’s complaint and demanded that Health Professionals
defend it, the refusal to defend was a breach of the Contract.
[16] The arguments made by Health Professionals that indemnification is
improper—either because Scheffer’s complaint was dismissed or because it
would indemnify the County for its own alleged negligence—miss the point.
The trial court’s order here does not result in indemnification. Instead, it
2
The complaint also includes a catch-all allegation covering “any other act of negligence which may be
proven at trial of this matter.” Appellant’s App. p. 26. In theory, this could encompass negligent acts of the
County, but even if that were the case, the fact that the two explicit actions included in the complaint “relate
to” the actions of Health Professionals means that the duty to defend was triggered.
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compensates the County for Health Professionals’ breach of its duty to defend
the County from Scheffer’s lawsuit. See Henthorne v. Legacy Healthcare, Inc., 764
N.E.2d 751, 757 (Ind. Ct. App. 2002) (holding that duty to defend is
independent of duty to indemnify).
[17] That leaves us with the question, however, of how the County’s damages
should be properly quantified. In Legacy, Legacy had contracted for Sunshine
Rehab to provide therapy to the residents at Legacy, a nursing facility.
Sunshine Rehab agreed to defend and indemnify Legacy from all liability, loss,
cost, or expense arising from Sunshine Rehab’s performance under the contract.
The estate of a former Legacy resident sued Legacy and Sunshine Rehab for
severe burns to that resident, allegedly caused by a Sunshine Rehab therapist.
Sunshine Rehab refused to defend or indemnify Legacy, and Legacy then filed
a cross-claim. This Court noted that, as in the instant case, the contract
provided that Sunshine Rehab was obligated to defend only for its own
negligence and not for Legacy’s. Id. at 760. The fault apportionment between
Sunshine Rehab and Legacy had not yet been determined, however, so this
Court remanded for apportionment and calculation of damages. Id.
[18] Here, as in Legacy, Health Professionals owed a duty to defend the County from
Scheffer’s complaint but not for claims arising from the County’s own
negligence. Unlike Legacy, which was decided in the context of a summary
judgment order, the case before us stems from a bench trial during which the
trial court was able to consider evidence relating to the respective fault of the
parties. While the trial court did not make an explicit finding with respect to
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fault apportionment, we infer from its order that it found that Scheffer’s
complaint stemmed solely from the alleged negligence of Health Professionals.
The following evidence supports that implicit conclusion:
 Health Professionals was responsible for prescribing, dispensing, and
administering medication to inmates. It was also responsible for medical
examinations and conducting sick calls on a timely basis.
 Jail personnel were not trained on medical procedures aside from
emergency life-saving techniques such as CPR.
 Health Professionals conducted all examinations of this inmate.
 The need for and timing of off-site tests such as x-rays was a medical
decision made solely by Health Professionals.
 At some point, Health Professionals advised the jail commander to
contact the DOC to transport Scheffer for an x-ray. The jail commander
telephoned DOC and left four messages over the course of three days.
There is no evidence that Health Professionals had advised the jail
commander of the specific circumstances of Scheffer’s condition.
 After the jail commander was unable to reach DOC, he called a Health
Professionals nurse and indicated he had left messages but not actually
reached anyone. The nurse replied, “Okay.” Tr. Vol. II p. 46.
 On April 18, 2008, Health Professionals called the DOC, who picked up
Scheffer that same day. The jail commander testified that DOC had
picked up the inmate because they had gotten the commander’s
messages.
The trial court had the benefit of reviewing all the evidence, observing all the
witnesses, and evaluating the credibility of those witnesses. Having done so, it
implicitly concluded that Health Professionals was solely responsible for the
alleged negligence underlying Scheffer’s complaint, and we cannot and will not
second-guess that conclusion. There is substantial evidence of probative value
supporting the trial court’s conclusion that, based on the Contract, Health
Professionals “should have provided a defense” to the County from Scheffer’s
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complaint and its order that Health Professionals “should now be responsible to
County for the fees of its counsel” incurred during the defense of Scheffer’s
claim. Appellant’s App. p. 21.
[19] Health Professionals points out that the indemnification provision does not
include an attorney fees clause. While that is accurate, it does not mean that a
reversal is in order. As noted above, the County’s third-party claim against
Health Professionals is in the nature of a breach of contract claim. Having
established that Health Professionals breached the Contract, the County is
entitled to the damages it sustained as a result of that breach, which happens to
consist of its incurred attorney fees and litigation costs. In other words, this is
not an attorney fee award based on a contractual provision; it is a contractual
damages award. See, e.g., Ozinga Transp. Sys., Inc. v. Ash Sales, Inc., 676 N.E.2d
379, 388 (Ind. Ct. App. 1997) (holding that when a party breaches the duty to
defend or indemnify, proper damages may include attorney fees and litigation
costs). Consequently, it is of no moment that the indemnification provision
does not contain an attorney fees clause and we decline to reverse for this
reason.
[20] In sum, Health Professionals owed a duty to defend the County from claims
relating to the alleged negligence of Health Professionals. The trial court
implicitly found that Scheffer’s complaint was based solely on the alleged
negligence of Health Professionals, and it drew this conclusion having
conducted a bench trial, assessed witness credibility, and evaluated and
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weighed all of the evidence. There is substantial evidence of probative value
supporting the trial court’s order; consequently, we affirm.
II. Cross-Appeal
[21] The County appeals the amount of the trial court’s attorney fee award. On July
11, 2016, the County filed a brief in support of a motion for judgment on the
evidence. That brief indicated that, as of that date, the total amount of incurred
attorney fees and litigation costs was $75,496.48. At the August 10, 2016,
bench trial, evidence was presented that, as of that date, the total amount had
increased to $83,622.09. The trial court ordered Health Professionals to pay
damages in the amount of $75,496.48.
[22] The County insists that “[i]t is clear that the trial court intended to award the
entire amount of the attorney fees and expenses incurred by the County” in
defending Scheffer’s claim and prosecuting the third-party complaint.
Appellee’s Br. p. 39-40. It argues, therefore, that the trial court may have made
an inadvertent error by selecting the July 11 amount rather than the August 10
amount of fees incurred.
[23] The County has indicated its intent to seek further compensation for the
attorney fees and costs incurred defending this appeal. If, in fact, the trial court
made an inadvertent error in its original calculation of attorney fees, that error
could be corrected upon request at this anticipated hearing.
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[24] The judgment of the trial court is affirmed and remanded for further
proceedings.
Barnes, J., and Crone, J., concur.
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