Opinion ID: 2584095
Heading Depth: 2
Heading Rank: 1

Heading: Act 300 Governs The Settlement.

Text: Dr. Adams argues, notwithstanding that Troyer's complaint pleads medical negligence and lack of informed consent, that Troyer's claims arise[ ] out of contracts for medical care entered into by [Troyer] from December 1997 to January 1998 i.e., the various consents that Troyer signed in order to obtain medical treatment for her injury and, consequently, that Act 300 does not govern the subject matter of her settlements with Drs. Bailey and Bellatti, by virtue of the language of Act 300, § 6(1), see supra note 6. [10] In support of his statutory interpretation, Dr. Adams contends that, in Francis v. Lee, 89 Hawai'i 234, 971 P.2d 707 (1999), Best Place, Inc. v. Penn America Ins. Co., 82 Hawai'i 120, 920 P.2d 334 (1996), and Leong v. Kaiser Foundation Hospitals, 71 Haw. 240, 788 P.2d 164 (1990), Hawai'i [c]ourts have recognized the special nature of medical torts as having a contractual basis and that [o]ther courts have similarly recognized medical torts as arising out of the underlying contract. Troyer counters (1) that HRS § 663-15.5(h), see supra note 1, supercedes the mandate of Act 300[,] § 6, see supra note 6, and that the present matter does not meet the preclusion criteria of HRS § 663-15.5(h), because it does not involve co-obligors to a contract, and (2) that even if Act 300, § 6 were deemed controlling, Troyer's claims do not arise out of a contract because (a) Troyer's complaint pleads medical negligence and lack of informed consent, which are medical torts within the meaning of HRS § 671-1(2) (1993), [11] and (b) [t]he nature of [a] right or claim is determined from the allegations contained in the pleadings. Furthermore, Troyer argues that Francis and Leong are unhelpful to Dr. Adams, inasmuch as Francis, 89 Hawai'i at 240, 971 P.2d at 713, merely notes that medical malpractice cases grow[ ] out of relationships and duties that originate in contract[,] and Leong, 71 Haw. at 243, 788 P.2d at 166, holds that a plaintiff does not have a right to a jury trial when the plaintiff has waived that right by means of an agreement to arbitrate any claims for damages arising out of services provided under contract. Troyer points out that her consents to medical treatment did not address what the parties were to do in the event of medical malpractice. Drs. Bailey and Bellatti concur with Troyer's assertion that her claims sound in `medical tort,' pursuant to HRS § 671-1(2) and, therefore, that HRS § 663-15.5(h) does not exclude the present matter from the purview of Act 300. Neither Dr. Bailey nor Dr. Bellatti address the language of Act 300, § 6(1), upon which Dr. Adams relies, although Dr. Bellatti contends that Dr. Adams is making a huge stretch in trying to make this medical tort case into a contract case. None of the parties actually assert that the settlement in the present matter involves co-obligors on an alleged contract debt. Thus, the sole questions presented on appeal regarding the applicability of HRS § 663-15.5 are (1) whether HRS § 663-15.5(h) supercedes Act 300, § 6 and (2) if not, whether Troyer's claims arise[ ] out of a contract made prior to January 1, 2002 for purposes of Act 300, § 6(1). Pursuant to the plain language of Act 300, § 6(1), see supra note 6, and HRS § 663-15.5(h), see supra note 1, Troyer's argument that HRS § 663-15.5(h) supercedes Act 300, § 6, or, put differently, that claims arising out of a contract, as set forth in Act 300, § 6, should be interpreted in light of HRS § 663-15.5(h) to mean claims among co-obligors on an alleged contract debt, is compelling. As Dr. Bailey's counsel argued in the May 23, 2002 hearing conducted by the circuit court, discussed supra in section I, it is only necessary to exclude releases, dismissals, and covenants not to sue or not to enforce a judgment given to a co-obligor on an alleged contract debt from the good faith settlement provisions set forth in HRS § 663-15.5, because separate and independent contracts that have no co-obligation among the defendants would, by operation of law, not allow obligations of equitable contribution or indemnity under any circumstances. In other words, the only contracts that are governed by HRS § 663-15.5 are contracts involving co-obligors, because they are the only types of contracts that implicate contribution and indemnification rights. [12] Accordingly, it would make no sense for the legislature to have excluded anything other than certain contracts involving co-obligors from the purview of the Act. In any event, Troyer's claims do not arise[ ] out of a contract made prior to January 1, 2002. The question of how to determine the nature of an action has arisen in other contexts. For example, in deciding which statute of limitation applies to an action we said that [t]he nature of the right or claim is determined from the allegations contained in the pleadings. Au v. Au, 63 Haw. [210,] 214, 626 P.2d [173,] 177 [(1981)]. As a general proposition, the character of an action is determined from the facts stated in, and the issues raised by, the plaintiff's complaint, declaration, or petition. It is determined from the substance of the entire pleading, the nature of the grievance, and the relief sought, rather than from the formal language employed or the form of the pleadings. Schulz v. Honsador, Inc., 67 Haw. 433, 436, 690 P.2d 279, 282 (1984) (citation omitted), overruled on other grounds, Blair v. Ing, 96 Hawai'i 327, 331 n. 6, 31 P.3d 184, 188 n. 6 (2001). As discussed supra in section I, Troyer's complaint alleged that the defendants were negligent (Count I) and failed to obtain her informed consent (Count II) with respect to their medical treatment of her injury; the complaint simply does not allege any breach of contract. The settling parties correctly note that HRS § 671-1(2) defines medical tort to mean professional negligence, the rendering of professional services without informed consent, or an error or omission in professional practice, by a health care provider, which proximately causes death, injury, or other damage to a patient. Thus, it is clear that the present matter involves a medical malpractice claim rather than a contract dispute. Dr. Adams does not disagree, as such, with the foregoing conclusion but contends, nevertheless, that a medical malpractice claim may arise out of an underlying contract for the provision of medical care and urges this court to interpret arising out of, as employed in Act 300, § 6(1), more broadly than sounding in contract. Thus, he seems to be suggesting that a claim can both sound in tort, e.g., constitute a medical tort pursuant to HRS § 671-1(2), and aris[e] out of a contract for purposes of Act 300, § 6(1). [13] Dr. Adams's contention is unpersuasive for a number of reasons. First, reading Act 300, § 6(1) in pari materia with Act 300, § 6(2), see supra note 6, which instructs that the Act applies to [c]ontract claims where the contract was made on or after January 1, 2002, it is reasonable to construe the exclusion of claims arising out of a contract made prior to January 1, 2002 simply to exclude from the purview of the Act the type of claims that the following subsection includes, the only difference being the date of the underlying contract. Dr. Adams offers no reason why the legislature might have wanted to exclude a broader category of cases from Act 300 pursuant to section 6(1) than it sought to include pursuant to section 6(2), or why this would make any sense. Second, although there is no legislative history expressly explaining why the legislature wished to exclude claims arising out of contracts made prior to January 1, 2002, there is an obvious explanationnamely, to avoid disrupting the expectations of co-obligors, whose obligations could potentially be impacted by HRS § 663-15.5 and who had entered into or were negotiating a contract when the Act took effect on June 28, 2001. Assuming such a legislative purpose, there would be no reason to exclude anything other than contract claims involving co-obligors, arising out of a contract made prior to January 1, 2002, from the purview of the Act. Again, Dr. Adams offers no reason why the legislature might have wanted to exclude a broader category of cases. Third, the cases that Dr. Adams cites in support of his contention that Troyer's medical malpractice claims arise out of contracts for the purposes of Act 300, § 6 are unhelpful to him. In Francis, this court overruled Dold v. Outrigger Hotel, 54 Haw. 18, 501 P.2d 368 (1972), and held that Hawai'i would no longer recognize a claim of tortious breach of contract, but that the state's courts could still award damages for emotional distress arising out of a breach of contract ... where emotional distress accompanies bodily injury and the action may be regarded as one in tort. 89 Hawai'i at 240, 244, 971 P.2d at 713, 717. This court included medical malpractice cases growing out of relationships and duties that originate in contract in this exceptional category and cited Leong as an example. Id. at 240, 971 P.2d at 713. But this court's holding in Francis that certain breaches of contract may give rise to damages for emotional distress hardly supports Dr. Adams's contention that medical malpractice claims arise out of contracts within the meaning of Act 300, § 6. [14] In Leong, 71 Haw. at 242-43, 788 P.2d at 166, the plaintiffs appealed an order compelling arbitration of their medical negligence and negligent hiring claims against several parties, notwithstanding a clause in their health plan that required binding arbitration of `any claims for damages for personal injury ... arising out of the rendition of or failure to render services under this contract[.]'  (Brackets and ellipses in original.) This court held that the clause was enforceable and affirmed the order compelling arbitration. Noting that it [was] only under the contract that [plaintiffs] were entitled to and received the medical services from Kaiser, this court pointed out that the plaintiffs could not pick and choose for their benefit the provisions of the contract that were retroactive and those that were not. Id. None of the parties in the present matter suggest that the forum for the resolution of Troyer's medical tort claims is dictated by any contract. Finally, Best Place, Inc., 82 Hawai'i at 132, 920 P.2d at 346, held that there is a legal duty, implied in a first- and third-party insurance contract, that the insurer must act in good faith in dealing with its insured, and a breach of that duty of good faith gives rise to an independent tort cause of action. Obviously, the fact that a contractual breach may spawn the tort of bad faith does not mean that medical torts arise out of contracts for purposes of Act 300, § 6. The cases from foreign jurisdictions that Dr. Adams cites are no more persuasive. Toledo v. Kaiser Permanente Medical Group, 987 F.Supp. 1174 (N.D.Cal.1997), like Leong, turned, inter alia, on whether an arbitration clause in the plaintiffs' health care contract extended to the plaintiffs' medical malpractice claim. Although the Colorado Supreme Court stated in Greenberg v. Perkins, 845 P.2d 530, 533 (Colo.1993), that the relationship that generally underlies the recognition of a duty of care and that consequently gives rise to a physician's liability is contractual in nature[,] the court expressly held that, if a physician undertakes to diagnose, treat, or otherwise care for a person, ... at least to the extent of the responsibility undertaken, the examination itself may be said to create a relationship between the parties and impose upon the physician a duty to exercise a level of care that is consistent with his professional training and expertise. Id. at 536. Thus, Greenberg repudiates the notion that the nature of a physician's duty to his or her patient depends on the existence of any contract between them. Similarly, in Dingle v. Belin, 358 Md. 354, 749 A.2d 157 (2000), although the Maryland Court of Appeals noted that malpractice actions have traditionally been tort-based, the tort arising from the underlying contractual relationship[,] the court also recognized circumstances in which a duty of care arose in the absence of contract, emphasizing that care must be taken to keep [tort and contract] actions separate and not to allow the theories, elements, and recoverable damages to become improperly intertwined. Id. at 164. Finally, in Rand v. Miller, 185 W.Va. 705, 408 S.E.2d 655, 656-58 (1991), the West Virginia Supreme Court recognized that a medical malpractice action presupposed a physician-patient relationship, but the court made no reference to contracts at all. In light of the foregoing, we conclude that Act 300, § 6(1) simply excludes from the Act's purview releases, dismissals with or without prejudice, or covenants not to sue or not to enforce a judgment given to a co-obligor on an alleged contract debt where the contract was made prior to January 1, 2002. There is no logical reason to construe the exclusion more broadly. Troyer's claims in this case do not depend in any way upon the expectations of the parties to the contracts that Dr. Adams invokes, the contracts themselves, or the parties' understanding of the statutory framework governing contribution rights at the time that they entered into those contracts. Troyer's claims are traditional medical malpractice claims. Consequently, we hold that Act 300 governs the settlement in the present matter.