Title: Lowe v. Zarghami

State: new-jersey

Issuer: New Jersey Supreme Court

Document:

(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the interests of brevity, portions of any opinion may not have been summarized). Garibaldi, J., writing for a unanimous Court. The primary issue in this case and in the companion case of Eagan v. Boyarsky, ___ N.J., __ (1999) is whether a clinical professor employed by the University of Medicine and Dentistry ( UMDNJ ) who practices medicine in a private hospital affiliated with UMDNJ is a public employee entitled to notice under the Tort Claims Act, N.J.S.A. 59:1-1 to -14.4 ( TCA ) when an injured person seeks to file a claim against the doctor. UMDNJ is a public entity to which the TCA is applicable. Pursuant to statute, UMDNJ enters affiliation agreements with private hospitals so that UMDNJ faculty may treat patients and instruct medical students in hospital settings. UMDNJ's faculty practice plan, through which the faculty treat patients, is intended to attract patients for teaching purposes, supplement faculty salaries (paid by UMDNJ), serve as a patient-referral source, and permit UMDNJ faculty to retain and refine their clinical skills. Here, UMDNJ had an affiliation agreement with Kennedy Memorial Hospital-Stratford Division ( KMH ). A UMDNJ faculty member, Dr. Faramarz Zarghami, had staff privileges at KMH under the faculty practice plan and operated on patients there under procedures established by KMH. UMDNJ provided him a staffed office and billed all the patients he treated. The injured person in this medical malpractice action is Linda Lowe, who was referred to Dr. Zarghami by her personal physician for treatment for cervical cancer. Dr. Zarghami operated on Lowe at KMH on September 26, 1994, and Lowe later suffered medical problems said to be caused by a metal clip that had been left on her ureter during surgery. Lowe stated that Dr. Zarghami had told her two days after surgery to remove the clip that the clip would not cause her any problems. After Lowe had further surgery in 1995 and a medical resident told her her problems may have resulted from poor medical care, Lowe consulted an attorney, who filed a medical malpractice action against Dr. Zarghami and KMH on February 8, 1996. Dr. Zarghami provided UMDNJ with a copy of the complaint on March 4, 1996, and moved to dismiss the complaint, asserting that he was an employee of UMDNJ and that Lowe had failed to file a notice of claim against him within ninety days after her claim accrued as required by the TCA. The court denied that motion and later denied Lowe's application to file a late notice of claim, finding that her cause of action had accrued in December 1994, when Lowe had learned that the clip was in her body, and noting that in any event the case did not present the extraordinary circumstances required for filing a late notice of claim. Ultimately, the trial court granted summary judgment in favor of Dr. Zarghami. Lowe moved for leave to appeal that decision to the Appellate Division. The court granted her motion and reversed the judgment. The court concluded that Dr. Zarghami was not an employee of UMDNJ when he treated Lowe at KMH but rather was an independent contractor for whom no notice of claim need be filed under the TCA. The question of extraordinary circumstances was not addressed because of the conclusion that Dr. Zarghami was not a public employee. The case was sent back for trial. The Supreme Court granted Dr. Zarghami's motion for leave to appeal the order of the Appellate Division. HELD: UMDNJ faculty members practicing in affiliated hospitals are public employees to whom the notice provisions of the Tort Claims Act apply. The injured party in this case has presented extraordinary circumstances that justify permitting her to file a late notice of claim. 1. Under 1994 amendments to the TCA, public employees, like public entities, are entitled to receive notice of a claim filed against them within ninety days after accrual of a cause of action. The definition of employee specifically excludes one who is an independent contractor. Status as an employee or an independent contractor may be determined by application of the control test or by the relative nature of the work test. The latter may be used to supplement the former in limited circumstances, such as in situations involving professional services and where social legislation has created the working relationship. If the control test is inconclusive, the court must decide if it is appropriate to apply the relative nature of the work test. (pp.8-14) 2. Under the control test, Dr. Zarghami's status as a UMDNJ employee is a close question, but the Court disagrees with the Appellate Division's finding that KMH exercised more control over him than did UMDNJ. Because Dr. Zarghami's work required him to exercise professional judgment while educating students and treating patients and because of the public policy concerns expressed in UMDNJ's enabling legislation, the relative nature of the work test is more appropriate than the control test to determine Dr. Zarghami's employment status. The fact that the TCA was intended to limit public liability does not make that test inapplicable. (pp. 14-19) 3. An aspect of the relative nature of the work test is the extent of the economic dependence of the worker on the business he serves. Here, because Dr. Zarghami was totally economically dependent on UMDNJ and his work was an integral part of UMDNJ's business, Dr. Zarghami should be considered a public employee under this test. Further support for this conclusion is found in Attorney General Formal Opinion No. 23-1976, which addresses various issues regarding UMDNJ's faculty practice plan. (pp.19-22) 4. Although Lowe was able to identify Dr. Zarghami as one responsible for her injury, Dr. Zarghami's status as a public employee was obscured by his apparent status as a private physician and Lowe had no reason to know that he was associated with a public entity. Lowe promptly sought medical treatment and she contacted an attorney as soon as she learned of the possibility of malpractice. Her failure to file a timely notice of claim was not due to lack of diligence. For those reasons and because of the heretofore unsettled legal status of UMDNJ professors as public employees, Lowe has presented extraordinary circumstances that warrant permitting her to file a late notice of claim against Dr. Zarghami. There will be no prejudice to Dr. Zarghami or to UMDNJ. (pp.23-33) 5. To make clear to patients the employment status of their doctors, UMDNJ must require its clinical professors to inform their patients orally and in writing that they are UMDNJ employees. The notice should be given as soon as practicable. Wearing badges proclaiming this relationship also would be helpful. (p.33) The judgment of the Appellate Division is REVERSED and the case is remanded for further proceedings consistent with this opinion. CHIEF JUSTICE PORITZ and JUSTICES POLLOCK, O'HERN, STEIN and COLEMAN join in JUSTICE GARIBALDI's opinion. JUSTICE HANDLER did not participate. LINDA C. LOWE and THOMAS LOWE, wife and husband, Plaintiffs-Respondents, v. FARAMARZ C. ZARGHAMI, M.D., Defendant-Appellant, and KENNEDY MEMORIAL HOSPITAL, JOHN DOE, HENRY DOE, MICHAEL DOE, JAMES DOE, FRANCIS DOE, RICHARD DOE, STEPHEN DOE, LOUIS DOE, MARK DOE and CHARLES DOE, Defendants. Argued November 30, 1998 -- Decided June 7, 1999 On appeal from the Superior Court, Appellate Division, whose opinion is reported at 305 N.J. Super. 90 (1997). Jerry Fischer, Assistant Attorney General, argued the cause for appellant (Peter Verniero, Attorney General of New Jersey and Budd, Larner, Gross, Rosenbaum, Greenberg & Sade attorneys; Mr. Fischer and Mary C. Jacobson and Joseph L. Yannotti, Assistant Attorneys General, of counsel; Karen L. Jordan, Deputy Attorney General, on the briefs). Lawrence R. Cohan, argued the cause for respondents (Anapol, Schwartz, Weiss and Cohan, attorneys). Abbott S. Brown argued the cause for amici curiae, The New Jersey State Bar Association and The Association of Trial Lawyers of America-New Jersey (Brown & Gold, attorneys; Mr. Brown and William L. Gold, on the brief). The opinion of the Court was delivered by GARIBALDI, J. The basic issue in this case, as in Eagan v. Boyarsky, ___ N.J. ___ (1999), also decided today, is whether a clinical professor employed by the University of Medicine and Dentistry of New Jersey ( UMDNJ ), who practices medicine in a UMDNJ affiliated private hospital, is a public employee entitled to notice under the Tort Claims Act, N.J.S.A. 59:1-1 to -14.4 ("TCA"). The amendment also made the notice requirements under N.J.S.A. 59:8-3 applicable to both public entities and public employees. Under the TCA, a public employee is entitled to notice of a claim within 90 days of the accrual of a cause of action. N.J.S.A. 59:8-3, 8-8. A plaintiff must wait six months after the notice of claim is received before filing suit. N.J.S.A. 59:8-8. Those notice provisions, however, apply only if the worker is a public employee. The Tort Claims Act defines employee as follows: 'Employee' includes an officer, employee or servant, whether or not compensated or part-time, who is authorized to perform any act or service; provided, however, that the term does not include an independent contractor. [Marcus, supra, 58 N.J. Super. at 597 (Conford, J.A.D., dissenting).] Although used primarily in workers' compensation cases, the New Jersey courts have found that the relative nature of the work test may sometimes be useful in other contexts. New Jersey Property, supra, 195 N.J. Super. at 11 (acknowledging that "there may be non-compensation cases involving social legislation where public policy considerations require that the control test be supplemented by the relative nature of the work standard"). Two New Jersey cases have relied explicitly on the relative nature of the work test to determine that workers are "employees" within the meaning of the Tort Claims Act. Delbridge, supra, 238 N.J. Super. at 323, held that designated pro bono attorneys acting on behalf of the Office of the Public Defender are "employees" under the Tort Claims Act. Ibid. The court reasoned that the creation of the Office of the Public Defender involved social legislation where public policy considerations required the application of the relative nature of the work test, even though the case arose under the Tort Claims Act. Id. at 321. Dunellen v. F. Montecalvo Contracting Co., 273 N.J. Super. 23, 28-30 (App. Div. 1994), applied the relative nature of the work test to determine that a borough engineer was entitled to indemnification under a borough ordinance adopted pursuant to N.J.S.A. 59:10-4. The control test was not an appropriate gauge because "as is the case with all professional employees, the governing body did not control the details of how [the engineer] performed . . . services." Id. at 28. The result in Dunellen implies that it is appropriate generally to apply the relative nature of the work test in situations involving work performed by professional employees. Ibid. See also Wajner v. Newark Beth Israel Medical Center, 298 N.J. Super. 116, 120-21 (App.Div. 1997)(finding under both control test and relative nature of work test that medical students acting as staff-residents at affiliated UMDNJ hospitals are employees under Tort Claims Act). The relative nature of the work test supplements the control test in limited circumstances. If a working relationship was created by social legislation under which public policy concerns dictate a more liberal standard, then a court may apply the relative nature of the work test rather than the control test. Wajner, supra, 298 N.J. Super. at 120; Delbridge, supra, 238 N.J. Super. at 321; Dunellen, supra, 273 N.J. Super. at 28-29. Also, if the working relationship involves professional services where an employer cannot exercise control over the methods used to provide those services, the relative nature of the work test may provide a more accurate assessment of the working relationship. Dunellen, supra, 273 N.J. Super. at 28. CHIEF JUSTICE PORITZ and JUSTICES POLLOCK, O'HERN, STEIN,and COLEMAN join in JUSTICE GARIBALDI'S opinion. JUSTICE HANDLER did not participate. NO. A-192 LINDA C. LOWE and THOMAS LOWE, wife and husband, Plaintiff-Respondents, v. FARAMARZ C. ZARGHAMI, M.D., Defendant-Appellant, KENNEDY MEMORIAL HOSPITAL, et al., Defendants. DECIDED