M.O. v. Indiana Dept. of Insurance, Indiana Patient's Compensation Fund

FOR PUBLICATION
ATTORNEY FOR APPELLANT: ATTORNEYS FOR APPELLEE:
NEAL F. EGGESON, JR. A. RICHARD M. BLAIKLOCK
Eggeson Appellate Services CHARLES R. WHYBREW
Indianapolis, Indiana Lewis Wagner, LLP
Indianapolis, Indiana
FILED
May 03 2012, 8:21 am
IN THE
CLERK
COURT OF APPEALS OF INDIANA of the supreme court,
court of appeals and
tax court
M.O., )
)
Appellant-Plaintiff, )
)
vs. ) No. 53A05-1112-PL-682
)
INDIANA DEPARTMENT OF INSURANCE, )
INDIANA PATIENT’S COMPENSATION FUND, )
)
Appellee-Defendant. )
APPEAL FROM THE MONROE CIRCUIT COURT
The Honorable Erik C. Allen, Special Judge
Cause No. 53C01-0604-PL-723
May 3, 2012
OPINION - FOR PUBLICATION
SHARPNACK, Senior Judge
STATEMENT OF THE CASE
This case presents issues of which of two statutes sets the interest rate on
payments by the Indiana Department of Insurance Patient’s Compensation Fund (“the
Fund”) to successful malpractice claimants and of when interest begins to accrue on
payments due.1 The trial court concluded that Indiana Code section 24-4.6-1-101 (1993),
with its eight percent rate, applied and that interest began to accrue on the fifteenth day of
the month following the end of the claim period in which the claim was filed with the
Fund. We agree and affirm.
ISSUE
M.O. raises two issues, which we consolidate and restate as: whether the trial
court erred in determining the date upon which postjudgment interest began to accrue and
the applicable rate of interest.
FACTS AND PROCEDURAL HISTORY
M.O. sued IMA, Inc. (“IMA”), a qualified health care provider as defined by
Indiana’s Medical Malpractice Act (“the Act”), claiming medical malpractice. On July 1,
2010, a jury returned a verdict in favor of M.O. in the amount of $1.25 million. On
September 27, 2010, the trial court entered a final judgment in favor of M.O. in the same
amount. IMA paid M.O. $250,000, the maximum amount for which it was liable under
the Act, and filed a partial satisfaction of judgment on October 5, 2010.
1
A third statute, Indiana Code section 34-54-8-5 (1998), is discussed in M.O.’s Appellant’s Brief, but
M.O. recognizes that it does not apply here. Appellant’s Br. pp. 6-7.
2
M.O. sent a certified copy of the final judgment to the Fund. The Fund received
the judgment on October 12, 2010, and initially rejected M.O.’s request to pay the unpaid
portion of the judgment. Consequently, M.O. returned to the trial court and requested
that the Fund be added as a party. The trial court granted M.O.’s request on November
17, 2010.2 On May 9, 2011, M.O. filed a motion asking the trial court to order the Fund
to pay M.O. one million dollars plus postjudgment interest. On June 21, 2011, the trial
court ordered the Fund to pay M.O. one million dollars and determined that the question
of postjudgment interest would be decided by separate motion. Next, the Fund filed a
Notice of Appeal. However, the Fund subsequently ended its opposition to M.O.’s claim
for the unpaid portion of the judgment and dismissed its appeal, which had proceeded
under Cause Number 53A05-1107-PL-352. On September 8, 2011, the Fund paid M.O.
one million dollars.
Meanwhile, M.O. had filed a motion for postjudgment interest. After further
proceedings, the trial court granted M.O.’s motion and held: “[M.O.] is entitled to post-
judgment interest to be paid by [the Fund] and the post-judgment interest shall accrue
pursuant to statute at the annual rate of 8% and shall begin accruing as of January 15,
2011.” Appellant’s App. p. 26. This appeal followed.
DISCUSSION AND DECISION
The parties agree that there are no factual disputes and that the appeal presents a
pure issue of law. We review questions of law under a de novo standard and owe no
2
On December 22, 2010, the Fund initiated a separate declaratory judgment action in Marion County,
asking the court to determine that the Fund was not liable to M.O. for the unpaid portion of the judgment.
The case was transferred to Monroe County, and the outcome of the case is not provided in the record.
3
deference to a trial court’s legal conclusions. 600 Land, Inc. v. Metro. Bd. of Zoning
Appeals of Marion Cnty., 889 N.E.2d 305, 309 (Ind. 2008).
We first address whether the trial court established the correct postjudgment
interest rate. The parties agree that the applicable interest rate is set by statute, but they
disagree as to which statute applies. M.O. contends that Indiana Code section 34-13-3-18
(1998) provides the appropriate rate. That statute provides:
(a) A claim or suit settled by, or a judgment rendered against, a
governmental entity shall be paid by the governmental entity not later than
one hundred eighty (180) days after the date of settlement or judgment,
unless there is an appeal, in which case not later than one hundred eighty
(180) days after a final decision is rendered.
(b) If payment is not made within one hundred eighty (180) days after the
date of settlement or judgment, the governmental entity is liable for interest
from the date of settlement or judgment at an annual rate of six percent
(6%). The governmental entity is liable for interest at that rate and from
that date even if the case is appealed, provided the original judgment is
upheld.
Id. The Fund argues that Indiana Code section 24-4.6-1-101 sets forth the proper rate.
That provision states:
Except as otherwise provided by statute, interest on judgments for money
whenever rendered shall be from the date of the return of the verdict or
finding of the court until satisfaction at:
(1) the rate agreed upon in the original contract sued upon, which shall not
exceed an annual rate of eight percent (8%) even though a higher rate of
interest may properly have been charged according to the contract prior to
judgment; or
(2) an annual rate of eight percent (8%) if there was no contract by the
parties.
Id.
4
Our Supreme Court’s opinion in Poehlman v. Feferman, 717 N.E.2d 578 (Ind.
1999), provides guidance as to which statute applies. In that case, Poehlman obtained a
judgment against a doctor for medical malpractice. The doctor paid Poehlman the
maximum amount that he owed under the Act. Next, the Fund paid Poehlman the unpaid
balance of her judgment, excluding postjudgment interest. As a result, Poehlman filed a
separate complaint for declaratory judgment against the doctor, the doctor’s insurer, and
the Fund, seeking postjudgment interest. The trial court concluded that Poehlman was
not entitled to postjudgment interest from any of the three defendants. On appeal, a panel
of this Court concluded that the Fund was obligated to pay all amounts in excess of the
health care provider’s statutory limit, including postjudgment interest.
On transfer, our Supreme Court noted that the parties disagreed “over whether [the
Act’s] liability limits apply to damages only or also to the interest and costs and over how
to allocate those expenses between the doctor and patient’s compensation fund.” Id. at
579. The Court concluded that the Act’s recovery limitations are intended to limit only
the amount of damages, “not collateral litigation expenses,” including postjudgment
interest. Id. at 581. Thus, Poehlman was entitled to collect postjudgment interest.
Next, the Court recognized that health care providers and the Fund are both
potentially responsible for paying medical malpractice judgments, but they may have
separate litigation strategies that may delay payment and independently generate
collateral litigation expenses. For this reason, our Supreme Court rejected the Court of
Appeals’ determination that the Fund must pay all amounts in excess of the health care
provider’s statutory limit. The Court determined that if the health care provider is not
5
held responsible for its share of collateral litigation expenses, the provider would have an
incentive “to run up collateral litigation expenses to be subsidized with the monies of the
[Fund.]” Id. at 583. Consequently, our Supreme Court concluded that the health care
provider and the Fund are individually responsible for their collateral litigation expenses.
Furthermore, the Court held that Indiana Code section 24-4.6-1-101 “fully applies to
medical malpractice judgments.” Id. at 584. Thus, Indiana Code section 24-4.6-1-101
sets the applicable rate for calculating postjudgment interest in medical malpractice cases.
In this case, we are bound by our Supreme Court’s holding in Poehlman, and we
conclude that Indiana Code section 24-4.6-1-101 sets the rate for postjudgment interest.
M.O. argues that Indiana Code section 34-13-3-18 applies to postjudgment interest
claims against the Fund, regardless of the holding in Poehlman, because that statute
supersedes Poehlman. We disagree. Our Supreme Court handed down its opinion in
Poehlman on October 7, 1999. Indiana Code section 34-13-3-18 took effect on July 1,
1998. 1998 Ind. Acts p. 51. Thus, Poehlman was issued well after Indiana Code section
34-13-3-18 took effect.
M.O. also argues that Indiana Code section 34-13-3-18 must apply instead of
Indiana Code section 24-4.6-1-101 because Indiana Code section 34-13-3-18 is more
specific in application. It is true that specific statutory language should control over more
general language when there is a conflict between the two. Nat’l Cable & Telecomms.
Ass’n, Inc. v. Gulf Power Co., 534 U.S. 327, 335, 122 S. Ct. 782, 151 L. Ed. 2d. 794
(2002). However, the specific statute controls only within its self-described scope. Id. at
336.
6
Here, we cannot conclude that Indiana Code section 34-13-3-18 conflicts with,
much less controls over, Indiana Code section 24-4.6-1-101. Indiana Code section 34-
13-3-1 (1998) provides, “This chapter [which includes Indiana Code section 34-13-3-18]
applies only to a claim or suit in tort.” A claim against the Fund for unpaid damages is
not a tort claim. The Fund is a creation of the Act, which was designed to curtail liability
for medical malpractice. Chamberlain v. Walpole, 822 N.E.2d 959, 963 (Ind. 2005). The
Act does not create substantive rights or new causes of action. Atterholt v. Robinson, 872
N.E.2d 633, 639-40 (Ind. Ct. App. 2007). Instead, the Act designated the Fund as a
source for “[r]ecovery of excess damages” after a health care provider or its insurer has
paid a portion of the damages owed for medical malpractice. Atterholt v. Herbst, 902
N.E.2d 220, 222 (Ind. 2009), clarified on reh’g, 907 N.E.2d 528 (2009). Allowing
claims against the Fund for excess damages is not based on tort principles of
compensating patients for any purported wrongdoing by the Fund, but rather serves a
purpose of “limit[ing] providers’ financial exposure, thereby allowing them to acquire
affordable malpractice insurance.” Ind. Patient’s Comp. Fund v. Butcher, 863 N.E.2d 11,
20 (Ind. Ct. App. 2007). Thus, M.O.’s claim against the Fund for excess damages is not a
tort claim and does not fall within the scope of Indiana Code section 34-13-3-18.
To summarize, Indiana Code section 24-4.6-1-101 applies to this case, and
pursuant to that statute, the relevant rate for calculating postjudgment interest is eight
percent. Consequently, the trial court did not err by determining that eight percent is the
applicable interest rate.
7
Next, we determine whether the trial court erred by designating January 15, 2011,
as the date upon which postjudgment interest began to accrue. M.O. contends that the
date of the jury verdict against IMA is the appropriate start date. The Fund contends that
the trial court properly selected the beginning date.
Indiana Code section 24-4.6-1-101 provides, in relevant part, “Except as otherwise
provided by statute, interest on judgments for money whenever rendered shall be from
the date of the return of the verdict or finding of the court until satisfaction . . . .”
(emphasis added). Resolution of this issue requires us to consider the portions of the Act
that govern claims against the Fund for unpaid damages.
The Act provides, in relevant part:
If a health care provider or its insurer has agreed to settle its liability on a
claim by payment of its policy limits of two hundred fifty thousand dollars
($250,000), and the claimant is demanding an amount in excess of that
amount, the following procedure must be followed:
(1) A petition shall be filed by the claimant in the court named in the
proposed complaint, or in the circuit or superior court of Marion County, at
the claimant’s election, seeking:
(A) approval of an agreed settlement, if any; or
(B) demanding payment of damages from the patient’s
compensation fund.
Ind. Code § 34-18-15-3 (1999). A copy of the petition with summons shall be served on
the commissioner, the health care provider, and the health care provider’s insurer. Id.
Similarly, another section of the Act provides, in relevant part:
[A]ll amounts that may subsequently become due and payable to a claimant
arising out of an act of malpractice of the health care provider occurring
during the year in which the annual aggregate was exhausted shall be paid
8
from the patient’s compensation fund under the following terms and
conditions:
(1) A health care provider whose annual aggregate has been
exhausted has no right to object to or refuse permission to settle such
a claim.
(2) If a health care provider or the commissioner and claimant agree
on a settlement, the following procedure must be followed:
(A) A petition shall be filed by the claimant with the court in
which the action is pending against the health care provider
or, if none is pending, in the circuit or superior court of
Marion County, seeking approval of the agreed settlement.
(B) A copy of the petition shall be served on the
commissioner and the health care provider at least ten (10)
days before filing and must contain sufficient information to
inform the other parties about the nature of the claim and the
amount of the proposed settlement.
Ind. Code § 34-18-6-6 (1998). Under either statute, the Fund has the authority to object
to the amount of damages requested by the patient and to request an evidentiary hearing
to determine the appropriate amount. Ind. Code §§ 34-18-15-3(3), 34-18-6-6(a)(2)(C).
The Act also establishes a procedure for the Fund to pay patients who present
claims for unpaid damages:
Claims for payment from the patient’s compensation fund that become final
during the first six (6) months of the calendar year must be computed on
June 30 and must be paid not later than the following July 15. Claims for
payment from the fund that become final during the last six (6) months of
the calendar year must be computed on December 31 and must be paid not
later than the following January 15.
Ind. Code § 34-18-6-4 (1998). Another provision of the Act explains:
The auditor of state shall issue a warrant in the amount of each claim
submitted to the auditor against the fund on June 30 and December 31 of
9
each year. The only claim against the fund shall be a voucher or other
appropriate request by the commissioner after the commissioner receives:
(1) a certified copy of a final judgment against a health care
provider; or
(2) a certified copy of a court approved settlement against a health
care provider.
Ind. Code § 34-18-6-5 (1998).
Thus, after a final judgment is issued against a health care provider in a medical
malpractice action and the provider pays the maximum amount allowed under the Act, a
patient that seeks payment for the remaining portion of the judgment must submit a
certified copy of the final judgment to the Fund. The Fund may accept the amount of
damages requested by the patient or dispute the amount and request an evidentiary
hearing. In either event, once the Fund agrees (or is ordered by a court) to pay a patient’s
claim for damages, the commissioner of the Department submits a voucher to the auditor
of state, who issues payments from the Fund biannually.
In Poehlman, our Supreme Court discussed the applicability of these statutes to
claims for postjudgment interest. In that case, the Court noted that a successful plaintiff
under the Act who seeks payment of additional damages from the Fund must first submit
a certified copy of the judgment to the Commissioner. Furthermore, the Court
determined that the biannual payment procedure set forth in Indiana Code section 34-18-
6-4 (formerly Indiana Code section 27-12-6-4), which prevents immediate payout of
funds to claimants, is consistent with the requirement that the Fund’s money be “held in
trust . . . [and] invested, and reinvested.” 717 N.E.2d at 584 n.6 (quoting Ind. Code § 27-
10
12-6-1(b) (current version at Ind. Code § 34-18-6-1(b) (1998)). Thus, our Supreme Court
concluded that postjudgment interest accrues upon the Fund’s liability for damages
“beginning on the first biannual payment date applicable to the claim.” Id. The Court
characterized the period of time between the issuance of the final jury verdict and the
biannual payment date upon which postjudgment interest begins to accrue as a “grace
period.” Id.
Based upon our review of the statutes and the holding in Poehlman,3 we conclude
that postjudgment interest began to accrue against the Fund on the first biannual payment
date applicable to the claim. M.O. submitted a certified copy of the jury verdict against
IMA to the Fund on October 12, 2010. The next payment date under Indiana Code
section 34-18-6-4 was January 15, 2011. Therefore, the trial court did not err in setting
the starting date for calculating postjudgment interest.
M.O. argues that our Supreme Court’s holding in Poehlman is the result of “poor
statutory construction.” Appellant’s Reply Br. p. 4. We find the Court’s reasoning in
Poehlman to be clear and applicable here. In any event, we may not disregard our
Supreme Court’s precedent.
3
M.O. argues that the Court’s conclusion in Poehlman regarding the starting date for calculating
postjudgment interest owed by the Fund is not binding upon this case because that conclusion is dicta.
Statements that are not necessary in the determination of the issues presented in an appeal are dicta and
are not binding. Dutchmen Mfg., Inc. v. Reynolds, 891 N.E.2d 1074, 1083 (Ind. Ct. App. 2008), trans.
denied. In Poehlman, our Supreme Court was asked to determine how to allocate interest and court costs
between a health care provider and the Fund. The Court stated that the provider and the Fund were
individually responsible for their shares of interest and court costs. In determining the portion of
postjudgment interest attributable to the Fund, it was necessary for our Supreme Court to decide when the
Fund’s postjudgment interest liability began to accrue. Thus, Poehlman’s holding that postjudgment
interest begins to accrue against the Fund “beginning on the first biannual payment date applicable to the
claim” is not dicta, and we are bound to follow our Supreme Court’s precedent.
11
M.O. also contends that the Fund has waived the “grace period” discussed in
Poehlman because the Fund failed to promptly pay M.O.’s claim for damages and instead
filed a separate action for a declaratory judgment, seeking a ruling that the Fund was not
required to pay any excess damages to M.O. We disagree. Waiver is the voluntary and
intentional relinquishment of a known right. In re Unsupervised Estate of Deiwert, 879
N.E.2d 1126, 1129 (Ind. Ct. App. 2008). Silence, inactivity or acquiescence is not waiver
unless the party against whom waiver is claimed had a duty to act or speak. Hastetter v.
Fetter Props., LLC, 873 N.E.2d 679, 684 (Ind. Ct. App. 2007).
Here, the Fund had the statutory right to challenge a claimant’s calculation of
unpaid damages and to request a hearing. See Ind. Code §§ 34-18-6-6, 34-18-15-3. The
Fund exercised that right and disputed M.O.’s valuation of damages both in this case and
in a separate declaratory judgment action. We do not construe the Fund’s exercise of its
statutory right as a waiver of the starting date for calculating postjudgment interest or as a
concession that the starting date should be the date of the jury verdict.
CONCLUSION
For the reasons stated above, we affirm the judgment of the trial court.
Affirmed.
DARDEN, J., and VAIDIK, J., concur.
12