A husband brought a lawsuit against a hospital alleging medical malpractice that resulted in the death of the man’s wife.  According to the Indiana Court of Appeal’s opinion, doctors failed to
diagnose a small bowel obstruction resulting in the wife contracting sepsis, which eventually led to her death.  The husband received an $8.5 million jury verdict.  The trial court, at the hospital’s request, reduced the jury verdict award to the $1.25 million statutory cap.  The husband’s attorney objected to the reduction because he claimed the statutory cap violated the Indiana Constitution. The husband’s attorney also requested an evidentiary hearing to pursue the constitutional challenge.

The trial court denied the husband’s request for an evidentiary hearing.  The Indiana Court of Appeals reversed the trial court because the Indiana Supreme Court, in other unrelated cases, has
declared that whether a statute is constitutional can be revisited from time to time.  The party challenging the constitutionality of a statute has the burden to prove that changes in circumstances require the reversal of existing case law.  The Court of Appeals determined that without a hearing the husband would have no means to show a change in circumstances that required a reversal of the existing case law.

It must be emphasized that the Indiana Court of Appeals did not decide on whether the medical malpractice statutory cap was unconstitutional.  It merely determined that the husband should
be able to present his case to the trial court.  As a result of this ruling, the husband’s case now goes back to the trial court judge for the evidentiary hearing.  It seems very likely that this case will work its way back through the appellate courts once the trial court issues a ruling.  Only next time, the Court of Appeals, and possibly the Indiana Supreme Court, will likely address the actual constitutional issue.

For now, the statutory cap for medical malpractice awards in Indiana remains valid.  However, the future of the statutory cap is uncertain at this time due to this recent decision.  Unfortunately, there will not likely be an answer until the constitutional challenge works its way through the trial court, Court of Appeals and the Indiana Supreme Court.  The attorneys at Bamberger will be keeping a
close eye out for developments on this issue.  Please contact us if you have any questions.

Author: Chad M. Smith (bio)
Phone: 812.452.3597
email: csmith@bamberger.com

In the health care arena, apologies and expressions of remorse for medical errors or bad outcomes seem to be a trendy practice.  Generally speaking, the theory is to disclose an adverse medical event with an expression of empathy, followed by an investigation into whether the event was caused by a breach of the standard of care and then a sharing of the investigation results with the patient or patient’s family.  If there was a breach of the standard of care then compensation will be offered.  If there was no breach then no compensation is offered and any legal action is defended.  The hope is that the patient or patient’s family will appreciate the health care provider’s empathy and truthfulness in what is an emotional period of time for the patient or patient’s family, which will lead to a better understanding of what occurred.

This trend of encouraging apologies is reflected in state statutes limiting the admissibility of such statements that have been passed in some form in most states.  Indiana Code 34-43.5-1-1 et seq., passed in 2006, renders “communications of sympathy” inadmissible in court.  However, statements of fault may be admitted into evidence.  This leads us back to the question of whether there is a difference between an apology and an admission.  Clearly there is a distinction. 

But it is not always easy to apologize to a patient without it seeming like an admission of fault.  Physicians often complain of telling the patient “A, B, and C” and the patient hearing “X, Y, and Z.”  In emotionally charged circumstances or in cases involving litigious individuals, expressions of sympathy may be twisted into statements of fault.  For example, in the case of a patient’s death, a health care provider does not admit fault if he or she says to the patient’s family, “I am sorry for your loss.”  However, the patient’s family after receiving devastating news may hear or interpret, “I am sorry I caused your loss.” 

In certain, if not all, cases, expressions of empathy certainly have value for all involved.  There are procedures that can be implemented to minimize and/or alleviate the fears associated with offering empathy to the patient or patient’s family.  But health care providers must be cautious and must be educated on what to say, how to say it and under what circumstances to voice such expressions.  In other words, this is not something to start doing tomorrow after reading this article.  Health care providers will need to give it some thought and seek counseling on how to implement this theory.

Author: Chad M. Smith (bio)
Phone: 812.452.3597
email: csmith@bamberger.com

In Corvee, Inc. v. Mark French, a parent had admitted his child to a healthcare center in Terre Haute, Indiana.  The parent signed a contract accepting financial responsibility for the cost of the child’s treatment.  The contract included the provision: “I also acknowledge that I am responsible for reasonable interest, collection fees, attorney fees of the greater of a) forty (40%) or b) $300.00 of the outstanding balance, and/or court costs incurred in connection with any attempt to collect amounts I may owe.”  The healthcare center billed the parent for $8,500 in services.  The parent did not pay this amount.  A collection agency was assigned the account and started collection proceedings, including a complaint for the amount owed.  The trial court entered a default judgment against the parent awarding the full outstanding balance.  However, the court only awarded the collection agency $1,000 in attorney fees instead of the $3,400 it was asking for (i.e. 40% of the $8,500 outstanding balance).

The Indiana Court of Appeals was asked to review the previously quoted contract provision on attorney fees in order to determine if the collection agency was entitled to 40% of the outstanding balance or the reduced amount as ordered by the trial court.  This was the first time the Court of Appeals addressed this type of contract provision.

The Court of Appeals recognized that there was no dispute that the contract unambiguously required the parent to pay the amount designated as attorney fees.  The question before the court was whether or not the attorney fees provision in the contract was enforceable.  The Indiana Court of Appeals found that there was no evidence that the collection agency had actually incurred $3,400 in attorney fees in attempting to collect the debt from the parent.  The Court of Appeals held that to allow the collection agency to recover 40% of the outstanding balance in the absence of such evidence would “give rise to the possibility” that the collection agency would enjoy a “windfall” at the parent’s expense, or that it will recover more from the parent than the outstanding account balance and the necessary cost the collection agency actually incurred in collecting it.  The Court of Appeals concluded that collection actions should permit creditors to “recover that to which they are rightfully entitled to make themselves whole, and no more.”

While provisions in contracts calling for the recovery of attorney fees remain a valid and useful tool for contracting parties, it is clear from this case that Indiana court will only allow a prevailing party to recover the amount of attorney fees and costs associated with enforcing the contract.

Author: Chad M. Smith (bio)
Phone: 812.452.3597
email: csmith@bamberger.com

You may recall that in 2007 the FTC issued a set of regulations, known as the Red Flags Rule, requiring that certain entities develop and implement written identity theft prevention and detection programs to protect consumers from identity theft.  The Red Flags Rule was originally scheduled for a November 1, 2008 compliance date, but that compliance date has been delayed several times due in large part to the advocacy of the American Medical Association.  The AMA objects to the applicability of the Red Flags Rule to health care providers and other professionals.

As it stands now, healthcare providers need to determine if they are required to comply with the Red Flags Rule by determining if they are creditors with covered accounts.  In the healthcare field, a creditor is an individual or entity that allows a patient to make payments after services are rendered or to set up a payment plan for those services.  A covered account is an account that allows ongoing activity or payments that could reasonably be susceptible to identity theft.

If a healthcare provider is considered a creditor with covered accounts, the healthcare provider is required to create an identity theft prevention and detection program.  The program must indicate red flags inherent in the healthcare industry and how those areas with red flags will be detected and resolved.  Common red flags are documents that appear forged, conflicting personal contact information, and any unusual activity like a patient who is billed for a service she didn’t receive.  The program must also show how they plan to keep the identity theft program up-to-date to adapt to changes in the medical field.

The Red Flags Rule does not specify any sort of framework or procedure for designing the identity theft program.  It is entirely in the discretion of the healthcare provider, but the program should indicate how staff will be trained to apply the program on a daily basis.  Failure to comply with the Red Flags Rule, once it goes into effect, can lead to financial penalties.  Private citizens may also file complaints with the FTC and the FTC can file civil lawsuits for an injunction requiring healthcare providers to comply with the Red Flag Rules.

Healthcare providers need to begin to address this situation by creating an identity theft program if the December 31, 2010 deadline is not extended and Congress does not exempt health care providers.  If you have any further questions regarding this issue, please contact one of your Bamberger attorneys.

Author: Chad M. Smith (bio)
Phone: 812.452.3597
email: csmith@bamberger.com

Recently, the patient’s attorneys have started to ask treating physicians to give a deposition concerning the care of the patient in hopes that the testifying physician will be critical of the health care provider that has been named in the complaint, thus giving the patient an advantage in the claim.  The logic behind this tactic is that it can be part of human nature for a person to profess his or her innocence in a situation by looking negatively at another individual’s involvement in the same situation. 

In some situations, if not most, the patient’s attorney is going as far as telling the testifying physician that the patient is not looking to sue the testifying physician.  This can provide a false sense of security for the testifying physician that he or she will not be dragged into a medical malpractice claim leaving the testifying physician unprepared for the actual deposition.  Healthcare providers need to be cautious because there is nothing to stop the patient’s attorney from adding the testifying physician as a party to the medical malpractice claim after the deposition has been taken.  If that were to happen, the patient’s attorney has the testifying physician’s deposition to use against the targeted health care provider and the patient’s attorney can look to build a case against the testifying physician. 

So what can health care providers do to protect themselves?  There are two quick and simple options you have to make certain you are protected and well advised on how to proceed.  The first is to call your private attorney to advise him or her of the situation.  Your private attorney can make a call to the patient’s attorney to get more information on the matter and then advise you what you should be doing.  The second option is for you or your private attorney to call your medical malpractice insurer to advise it of the situation.  The medical malpractice insurer may opt to provide you with an attorney at the insurer’s expense, especially if the patient’s attorney wants to move forward with the deposition. 

In this type of situation, it is not a bad idea to call both your private attorney and your medical malpractice insurer to ensure you receive as much guidance as possible.  If you have a risk manager associated with your practice group or hospital, you most certainly should contact the risk manager as soon as you are approached by a patient’s attorney.  Your risk manager will be able to help you navigate this situation as well.  If you are ever placed in this situation, the most important thing to remember is that accommodating the request of a patient’s attorney does not mean that you will not be sued even if the patient’s attorney states that you are not being targeted for a lawsuit.

Author: Chad M. Smith (bio)
Phone: 812.452.3597
email: csmith@bamberger.com

In Howard Regional, a young boy suffers from multiple disorders that could have been caused by substandard medical care at the time of his birth in 1999.  The boy’s mother filed a medical malpractice action and asked the hospital to produce evidence relating to the boy’s care.  Eighteen (18) months later the hospital responded with an affidavit stating some of the medical records (including narrative notes, labor flow records, peri-operative nurses’ notes and fetal heart monitor strips) could not be located.  A neonatal doctor later determined that he couldn’t provide an opinion about potential medical malpractice on behalf of the boy and his mother because of this missing evidence.

Indiana Code § 16-39-7-1, requires health care providers to maintain medical records for a minimum of seven years.  A provider violating this statute commits an offense for which a board may impose disciplinary sanctions against the provider under the law that governs the provider’s licensure, registration or certification.  In Howard Regional, the Indiana Court of Appeals found a violation of this statute also to be negligence per se (negligence established as a matter of law) and therefore a private civil cause of action for the patient.  The Court rejected an argument by the hospital that the disciplinary sanctions contained in the statute prevented a private right of action by the patient because the Court of Appeals believed those sanctions would be “wholly ineffectual” to remedy the harm the patient suffered by not being able to bring a medical malpractice lawsuit  since the records had been lost. 

The Howard Regional opinion also created a third-party spoliation claim for the patient against the hospital.  “Third-party spoliation” refers to the negligent or intentional destruction or discarding of evidence that is relevant to a tort action.  Typically the evidence is destroyed or discarded by a person or entity not involved in the lawsuit.  In Howard Regional, the Court of Appeals determined it was permissible for the patient to maintain an action against the hospital for third party spoliation of evidence even though the hospital was a party to the lawsuit because the hospital lost evidence the patient needed in order to pursue an action against her obstetrician.  The Court again relied on the fact that the hospital had a duty to retain the evidence that was lost in reaching its decision on this issue.

What may be even more concerning than the private cause of action that this opinion establishes is that the patient’s claim for spoliation of evidence was unrelated to “the promotion of a patient’s health or the provider’s exercise of professional expertise, skill or judgment” and therefore outside the Indiana Medical Malpractice Act.  As a result, the Malpractice Act’s caps on damages would not apply leaving a health care provider vulnerable to damages that have no limitations.  The Court even noted that damages in third party spoliation claims are difficult and highly speculative because the jury is asked to determine what the damages would have been had the evidence been produced.

Due to the uncertainty of damages a health care provider may face if liable to a patient on a third party spoliation claim, we would encourage each of you to review your policies and practices to ensure you are in compliance in maintaining patients’ medical records for at least seven years and are able to locate all parts of the patients’ files.  Please contact the Employment Law attorneys at Bamberger if you’d like to discuss your policies and procedures in more detail.

Author: Chad M. Smith (bio)
Phone: 812.452.3597
email: csmith@bamberger.com