Opinion ID: 2753793
Heading Depth: 2
Heading Rank: 2

Heading: Instrumentality of the Commission

Text: ¶36. The Guaranty Association asserts that it is an instrumentality of the state because it acts as an intermediary or agent of the Commission and carries out some of the Commission’s functions at its direction. The Tort Claims Act does not define “instrumentality” under Section 11-46-1, but the Court has held that the Legislature used “‘instrumentality’ as an inclusive term so as not to limit the means by which the state could carry out its governmental functions.” Mozingo v. Scharf, 828 So. 2d 1246, 1255 (¶ 26) (Miss. 2002). The Court also has adopted the dictionary definition of “instrumentality,” writing that it is defined as “something that serves as an intermediary or agent through which one or more functions of a controlling force are carried out: a part, organ, or subsidiary branch esp. of a governing body.” Bolivar Leflore Med. Alliance, LLP v. Williams, 938 So. 2d 1222, 1228 (¶ 16) (Miss. 2006) (quoting Webster’s Third New Int’l Dictionary 1172 (3d ed. 1986)). 18 ¶37. The Guaranty Association cites Estate of Fedrick ex rel. Sykes v. Quorum Health Res., Inc., 45 So. 3d 667 (Miss. Ct. App. 2009), rev’d, 45 So. 3d 641 (Miss. 2010); Bolivar Leflore Med. Alliance, LLP v. Williams, 938 So. 2d 1222 (Miss. 2006); and Mozingo v. Scharf, 828 So. 2d 1246 (Miss. 2002), in support of its position that it is an instrumentality of the state, like the entities in the above-listed cases, which were agents of community hospitals. The Tort Claims Act definition of political subdivision specifically includes community hospitals. See Miss. Code Ann. § 11-46-1(i) (Supp. 2014). ¶38. Estate of Fedrick was a Court of Appeals case that was overruled on other issues. The entity in question, Quorum, was the management company for a nursing home, which was a subsidiary of a community hospital owned by the county. Estate of Fedrick, 45 So. 3d at 669 (¶ 3). Quorum had entered a management agreement with the hospital, which specifically provided that Quorum was an agent of the hospital, that the hospital did not relegate any of its authority or control of operations to Quorum, that Quorum was required to submit its budget and annual management plan to the hospital for approval, and that Quorum could not hire or execute contracts without approval. Id. at 675 (¶¶ 26-30). Based on the specific terms of the management agreement, the Court of Appeals held that Quorum was an instrumentality of the state entitled to protection under the Tort Claims Act. Id. at 675 (¶ 31). The record in the instant case does not include a similar agreement between the Guaranty Association and the Commission. ¶39. Bolivar Leflore Medical Alliance was a family medical clinic created by agreement between Greenwood Leflore Hospital and several physicians. Bolivar Leflore, 938 So. 2d 19 at 1223 (¶ 2). The Court held that Bolivar Leflore Medical Alliance was an instrumentality of Greenwood Leflore Hospital, a community hospital. The decision was based on the fact that Greenwood Leflore had a 98% interest in the clinic and majority control of the executive committee for Bolivar Leflore, which executive committee in turn had authority and control over its business affairs. Id. at 1232 (¶ 28). The Court found that Bolivar Leflore was “an intermediary or agent through which certain functions of [Greenwood Leflore] are accomplished” and, therefore, it was an “instrumentality” of Greenwood Leflore entitled to the protections of the Tort Claims Act. Id. In the instant case, the Guaranty Association is comprised of a group of private employers, and it is not owned or operated by the Commission. ¶40. In Mozingo v. Scharf, the Mozingos sued Dr. Scharf for medical malpractice. Dr. Scharf was a physician and professor employed by the University of Mississippi Medical Center (UMMC) and University Anesthesia Services (UAS), which was a departmental practice plan at UMMC.17 Mozingo, 828 So. 2d at 1249 (¶ 3). The Court applied a five-part test, established in Miller v. Meeks, 762 So. 2d 302 (Miss. 2000), for determining whether “a doctor is considered an independent contractor or a state employee for the purposes of the MTCA.” Mozingo, 828 So. 2d at 1250 (¶ 8). As an employee of UMMC, Dr. Scharf was 17 “Medical practice plans are organized groups of physicians with medical school faculty appointments who, in addition to research and medical education responsibilities, provide patient care services to both insured and uninsured patients. Most of the medical practice plans utilize UMMC departmental personnel within their respective departments to perform work on behalf of the medical practice plans.” Mozingo, 828 So. 2d at 1254 (¶ 23). 20 “required to participate in his department’s practice plan, UAS[,]” and he provided dual services as an anesthesiologist and a professor. Id. at 1253 (¶ 21). Dr. Scharf was an employee of both UMMC and UAS, and he received compensation from both. Id. The Court held that Dr. Scharf was a state employee because he was employed by UMMC, and he was entitled to immunity under the Tort Claims Act. Id. The instant case does not involve any state employees. The Guaranty Association exercises its power through a board of directors, who are volunteers not employed by the Commission. However, the Commission must approve the members of the board. Miss. Code Ann. § 71-3-161(1) (Rev. 2011). ¶41. The entities in the cases cited by the Guaranty Association are not comparable. The Court has established a separate test for determining whether doctors are state employees under the Tort Claims Act, and it lacks applicability here. Mozingo, 828 So. 2d at 1250 (¶ 8); Miller, 762 So. 2d 310 (¶ 20). In Estate of Fedrick, Quorum operated under a management agreement that specifically named it an agent of the community hospital subject to the hospital’s control and direction. Estate of Fedrick, 45 So. 3d at 675 (¶ 31). No similar agreement is in the record here. In Bolivar Leflore, the entity at issue was akin to a subsidiary of the community hospital, and it was owned and controlled by the hospital. Bolivar Leflore, 938 So. 2d at 1232 (¶ 28). Community hospitals are defined in the Tort Claims Act, thus, a definition can be applied to determine if they, or their agents or intermediaries, fall within its scope. The Guaranty Association is an entirely different type of organization. 21 ¶42. Comp Choice relies on several cases in which the Court held that the entities at issue were not instrumentalities of the state: Poppenheimer v. Estate of Coyle, 98 So. 3d 1059 (Miss. 2012), Flye v. Spotts, 94 So. 3d 240 (Miss. 2012), and Knight v. Terrell, 961 So. 2d 30 (Miss. 2007). Poppenheimer and Flye dealt with volunteer fire departments, and Knight addressed a private security officer. In Flye, the Court held that the term “body corporate” under the definition of “political subdivision” applied “only to governmental/public entities, not private.” Flye, 94 So. 3d at 245 (¶ 9). The volunteer fire department was a private entity that contracted with the county to provide fire protection services. Id. at 247 (¶ 15). The Flye Court cited Knight v. Terrell, writing that it stood “for the proposition that a private company and its employees who provide ‘governmental activities’ via contract with a political subdivision are not immune from liability under the MTCA.” Id. at 247 (¶ 14). The Knight Court held, “[u]nless or until the Legislature expressly crafts the statute to provide constabulary immunity to independent contractors, we will not draft one where it does not exist.” Knight, 961 So. 2d at 33 (¶ 12). Notably, Section 11-46-1 has since been amended to include volunteer firefighters and volunteer fire departments in the definitions of “employee” and “political subdivisions.” See Miss. Code Ann. § 11-46-1(f), (i) (Supp. 2014). In Poppenheimer, the Court relied almost exclusively on Flye and held that the volunteer fire department was an independent contractor, and “as a private, nonprofit organization, the volunteer fire department did not meet the definition of a ‘political subdivision.’” Poppenheimer, 98 So. 3d at 1064 (¶¶ 14, 17) (citing Flye, 94 So. 3d at 244- 22 48 (¶¶ 5-15)). Again, the Guaranty Association is quite different from a volunteer fire department, making the comparison a difficult one. ¶43. Comp Choice also asserts that the Guaranty Association should be likened to MIGA, which the Court has held is not a state agency. While Comp Choice is correct that the Court has said “MIGA is not a state agency[,]” the cases cited by Comp Choice are not Tort Claims Act cases and the contexts were very different from the case at hand. See Owens Corning v. Miss. Ins. Guar. Ass’n, 947 So. 2d 944, 945-46 (¶ 5) (Miss. 2007). For instance, in Owens Corning, the Court made the statement that MIGA was not a state agency in determining whether deference should be given to MIGA’s interpretation of the Insurance Association Guaranty Law. Id. The Court was not considering whether MIGA was subject to the protections of the Tort Claims Act, and the case does not provide an analysis under the Tort Claims Act. ¶44. Comp Choice boldly writes that “other numerous cases over the years adequately suggest that [the Guaranty Association], as well as any other guaranty association in Mississippi, is not entitled to the protections of Miss. Code Ann. § 11-46-1, et seq., as it is not an instrumentality of the state or other political subdivision.” In support of its contention, Comp Choice cites Mississippi Surplus Lines Association v. State of Mississippi, 442 F. Supp. 2d 335 (S.D. Miss. 2006), and Bobby Kitchens, Inc. v. Mississippi Insurance Guaranty Association, 560 So. 2d 129 (Miss. 1989). Neither case stands for Comp Choice’s proposition, and neither is a Tort Claims Act case. In Mississippi Surplus Lines Association, although the Southern District Court said MSLA was not a “public body,” it concluded that 23 MSLA existed for the sole purpose of assisting the Insurance Commissioner, and the court’s rationale actually supports the position that guaranty associations are agents or instrumentalities of the entities they were created to assist. Miss. Surplus Lines Assoc., 442 F. Supp. 2d at 339. ¶45. While the cases cited by both parties present factual situations and address entities far different from the Guaranty Association, some insight can be gleaned from analyzing them. In each case, control by the state entity was an important factor in determining whether the other entity was an instrumentality of the state. The Guaranty Association is not under the complete control of the Commission, but it is required to get the Commission’s approval for many actions. It also acts at the direction of the Commission, evidenced by its involvement in the instant case, as the Commission directed the Guaranty Association to take over the Comp Choice Fund. The Commission also acts on the recommendations of the Guaranty Association. For instance, the Commission issued the order assessing $1,950,000 to be divided among the Comp Choice members at the Guaranty Association’s request. ¶46. The Guaranty Association maintains that the Legislature intended it to act as an agent of the Commission to carry out statutorily established activities. For example, by administering Comp Choice pursuant to the Commission’s orders, the Guaranty Association “carried out” some of the Commission’s regulatory functions. The Guaranty Association claims that is an agent through which the Commission accomplishes the day-to-day regulation of self-insurer groups, including: managing and administering the statutory fund required under Section 71-3-163(c) to which all group self-insurers are required to 24 contribute; aiding the Commission in detecting and preventing member insolvencies by asking the Commission to examine groups that it believes are in a hazardous financial condition pursuant to Section 71-3-173(a); and preparing reports and making recommendations to the Commission regarding solvency or reorganization of group selfinsurers pursuant to Section 71-3-173(c) and (d). ¶47. The Guaranty Association maintains that it is an intermediary of the Commission under its control, and it provides the following examples of oversight and control by the Commission: the Commission must approve the Guaranty Association’s board of directors; the Guaranty Association is required to submit a plan of operation to the Commission for approval; the Guaranty Association is regulated by the Commission and subject to examination by the Commission; the Guaranty Association must submit annual financial reports to the Commission and make its minutes and records available to the Commission. See Miss. Code Ann. §§ 71-3-161, 71-3-165, 71-3-175 (Rev. 2011). The evidence of oversight by the Commission and examples of activities performed by the Guaranty Association indicate that the Commission exerts a substantial amount of control over the Guaranty Association and that the Guaranty Association assists the Commission with its dayto-day regulatory functions. ¶48. The Guaranty Association furthers the purpose of the Commission and the Workers’ Compensation Law, which is to provide compensation for injured employees with the goal of rehabilitation and restoration to work. Applying the broad definition of “instrumentality” from Mozingo – that the Legislature intended it to be “an inclusive term so as not to limit the 25 means by which the state could carry out its governmental functions,” in addition to the dictionary definition adopted in Bolivar Leflore, that an instrumentality is something that “serves as an intermediary or agent through which one or more functions of a controlling force are carried out” – I would hold that the Guaranty Association is an instrumentality of the Commission. See Mozingo, 828 So. 2d at 1255 (¶ 26); Bolivar Leflore, 938 So. 2d at 1228 (¶ 16).