Court Opinion

ID: 4173074
Source: CourtListenerOpinion
Date Created: 2017-05-31 16:41:18.18464+00
Date Added: 2024-06-11T14:38:35.017891
License: Public Domain

MEMORANDUM DECISION
Pursuant to Ind. Appellate Rule 65(D),
this Memorandum Decision shall not be                              FILED
regarded as precedent or cited before any                    May 31 2017, 10:19 am

court except for the purpose of establishing                       CLERK
the defense of res judicata, collateral                        Indiana Supreme Court
                                                                  Court of Appeals
                                                                    and Tax Court
estoppel, or the law of the case.

ATTORNEY FOR APPELLANT                                  ATTORNEY FOR APPELLEE
Edward A. Chapleau                                      Mark A. Lienhoop
South Bend, Indiana                                     Newby, Lewis, Kaminski &
                                                        Jones, LLP
                                                        LaPorte, Indiana

                                          IN THE
    COURT OF APPEALS OF INDIANA

Health Professionals, Ltd.,                             May 31, 2017
Appellant/Cross-Appellee,                               Court of Appeals Case No.
Third-Party Defendant,                                  66A04-1612-CT-2752
                                                        Appeal from the Pulaski Circuit
        v.                                              Court
                                                        The Honorable Michael A. Shurn,
Michael Gayer, Sheriff,                                 Judge
Pulaski County, Indiana,                                Trial Court Cause No.
Appellee/Cross-Appellant,                               66C01-1003-CT-4
Third-Party Plaintiff

Baker, Judge.

Court of Appeals of Indiana | Memorandum Decision 66A04-1612-CT-2752 | May 31, 2017    Page 1 of 13
[1]   The Pulaski County jail contracted with Health Professionals, Ltd. (Health

      Professionals), for the provision of healthcare services to jail inmates. The

      contract included a provision requiring Health Professionals to indemnify and

      defend the County from claims related to the negligence of Health

      Professionals. An inmate sued the County, alleging that he had received

      negligent medical care at the jail. The County demanded that Health

      Professionals provide a defense from the complaint; Health Professionals

      refused. The County then filed a third-party complaint against Health

      Professionals. Following a bench trial, the trial court found in favor of the

      County.

[2]   Health Professionals now appeals, arguing that it had no duty to defend or

      indemnify the County; the County cross-appeals the amount of damages

      awarded by the trial court. Finding no error with respect to the judgment in

      favor of the County, but finding a question with respect to the trial court’s

      intended damages award, we affirm and remand for further proceedings.

                                                    Facts
[3]   During the relevant period of time, the County and Health Professionals were

      in a contractual relationship, pursuant to which Health Professionals provided

      healthcare services to jail inmates and detainees. The contract between the

      County and Health Professionals contained the following indemnification

      provision:

      Court of Appeals of Indiana | Memorandum Decision 66A04-1612-CT-2752 | May 31, 2017   Page 2 of 13
              INDEMNIFICATION. HPL will only be responsible for claims
              resulting from HPL’s negligence while performing its duties
              under this Agreement. If a claim is brought against the
              COUNTY relating to HPL’s negligent performance of its duties
              under this Agreement, the COUNTY shall promptly notify HPL
              of the claim. HPL will take all steps necessary to promptly
              defend and protect the COUNTY including the retention of the
              defense counsel. However, HPL will not be responsible for any
              claims arising out of (1) COUNTY or its employees or agents
              intentionally preventing an inmate from receiving medical care
              ordered by HPL or its agents, employees or independent
              contracts [sic]; or (2) negligence of COUNTY’s employees or
              agent [sic] in promptly presenting an ill or injured inmate to HPL
              for treatment if it should have been obvious to a non-medical
              individual that the inmate was in serious need of immediate
              attention.

      Tr. Vol. III p. 17.

[4]   Health Professionals was responsible for, among other things, prescribing,

      dispensing, and administering medication; conducting inmate health

      assessments; and conducting sick calls on a timely basis. Health Professionals

      agreed to have a physician and/or nurse on call twenty-four hours per day,

      seven days per week. Additionally, Health Professionals agreed to arrange for

      hospitalization and other off-site services, such as x-rays, for all inmates who

      were determined to need such treatment by Health Professionals staff.

[5]   The jail staff did not provide inmates with prescription medication or perform

      medical examinations. More specifically, jail personnel were not trained to

      administer healthcare other than CPR, defibrillation, minor emergency first aid,

      and trying to stop bleeding in a life-threatening emergency. Only if no one from
      Court of Appeals of Indiana | Memorandum Decision 66A04-1612-CT-2752 | May 31, 2017   Page 3 of 13
      Health Professionals was available and it was obvious to a lay person that an

      inmate was in serious need of medical attention would jail personnel call an

      ambulance on their own to transport that inmate to a hospital—relieving jail

      staff from making such medical decisions was a major reason for contracting

      with Health Professionals.

[6]   In April 2008, Layne Scheffer was an inmate at the jail; Scheffer has a seizure

      disorder. On April 3, 2008, Scheffer had a grand mal seizure. Jail personnel

      responded by wrapping a blanket around his head until the seizure subsided and

      then moved him by wheelchair to a holding cell, where Scheffer complained of

      right shoulder pain. Jail staff called the Health Professionals nurse to report the

      situation, and the nurse ordered that Scheffer be given an ice pack and be put

      on medical watch. Health Professionals staff examined Scheffer on April 4 and

      on another eight occasions in the subsequent weeks. Health Professionals staff

      also prescribed medication for Scheffer.

[7]   At some point, Health Professionals advised the jail commander to contact the

      Department of Correction (DOC) to transport Scheffer for an x-ray. There is

      no evidence that Health Professionals had advised the jail commander of the

      history of Scheffer’s condition or diagnosis. Despite multiple attempts, the jail

      commander was unable to reach DOC for transportation and advised a Health

      Professionals nurse of the situation. On April 18, 2008, Health Professionals

      called the DOC to request that Scheffer be transported for an x-ray, and

      Scheffer was picked up the same day. The x-ray revealed that Scheffer had

      fractured his shoulder. Scheffer ended up needing surgery to repair the fracture.

      Court of Appeals of Indiana | Memorandum Decision 66A04-1612-CT-2752 | May 31, 2017   Page 4 of 13
[8]    On March 20, 2010, Scheffer sued the County, alleging that the County had

       been negligent in its medical care and that its negligence led to his injuries. The

       County notified Health Professionals of the complaint and demanded that

       Health Professionals defend and indemnify the County pursuant to the

       Contract. Health Professionals refused, and the County retained an attorney.

[9]    On May 20, 2010, the County filed a third-party complaint against Health

       Professionals, alleging that Health Professionals had a duty to defend and

       indemnify the County pursuant to the indemnification provision in the

       Contract. The County filed a motion for summary judgment in Scheffer’s

       complaint; on October 5, 2015, the trial court granted that motion based on its

       conclusion that the County had immunity.

[10]   The trial court held a bench trial on August 10, 2016, in the County’s third-

       party complaint against Health Professionals. On November 11, 2016, the trial

       court issued an order finding in favor of the County. In relevant part, the trial

       court found as follows:

               . . . HPL further promised “[i]f a claim is brought against
               COUNTY relating to HPL’s negligent performance of its duties
               under this Agreement . . . HPL will take all necessary steps
               necessary to promptly defend and protect the County including
               the retention of the defense counsel.” . . . HPL provided health
               care to inmates of County under a contract with County. HPL
               was an unnamed third party for purposes of liability. . . . HPL
               should have provided a defense with counsel through entry of
               summary judgment and disposition of the potential appeal.
               Ironically, HPL most ably through its counsel sat second chair
               for the entire proceedings but never stepped forward to relieve

       Court of Appeals of Indiana | Memorandum Decision 66A04-1612-CT-2752 | May 31, 2017   Page 5 of 13
               County of its obligation to hire its own counsel. HPL should
               now be responsible to County for the fees of its counsel to defend
               Gayer and determine this matter.

       Appellant’s App. p. 21. The trial court ordered Health Professionals to pay the

       County damages in the amount of $75,496.48. Health Professionals now

       appeals, and the County cross-appeals the amount of the damages order.

                                    Discussion and Decision
                                I. Indemnification Provision
[11]   The trial court’s order here is a general judgment, which we will affirm if there

       is substantial evidence of probative value supporting the judgment on any legal

       theory. Eagledale Enters., LLC v. Cox, 816 N.E.2d 917, 922 (Ind. Ct. App. 2004).

       This case also requires us to interpret the Contract, which is a pure question of

       law to which we apply a de novo standard of review. Broadbent v. Fifth Third

       Bank, 59 N.E.3d 305, 311 (Ind. Ct. App. 2016), trans. denied. Our goal is to give

       effect to the intent of the parties as expressed within the four corners of the

       document. Id.

[12]   Health Professionals raises the following arguments: (1) because the trial court

       granted summary judgment for the County in the underlying complaint, no

       liability was fixed and no indemnification is owed; (2) the indemnification

       provision is unenforceable because to apply it here would indemnify the County

       Court of Appeals of Indiana | Memorandum Decision 66A04-1612-CT-2752 | May 31, 2017   Page 6 of 13
       for the County’s own negligence; and (3) the indemnification provision does

       not provide for attorney fees.1

[13]   The County’s claim against Health Professionals is, essentially, a breach of

       contract claim. The County argues, among other things, that Health

       Professionals breached its duty to defend the County against Scheffer’s

       negligence claim. Consequently, we must first determine whether, in fact,

       Health Professionals breached the Contract.

[14]   As noted above, the indemnification provision provides as follows:

                HPL will only be responsible for claims resulting from HPL’s
                negligence while performing its duties under this Agreement. If a
                claim is brought against the COUNTY relating to HPL’s negligent
                performance of its duties under this Agreement, the COUNTY shall
                promptly notify HPL of the claim. HPL will take all steps necessary
                to promptly defend and protect the COUNTY including the retention of
                the defense counsel. However, HPL will not be responsible for any
                claims arising out of (1) COUNTY or its employees or agents
                intentionally preventing an inmate from receiving medical care
                ordered by HPL or its agents, employees or independent
                contracts [sic]; or (2) negligence of COUNTY’s employees or
                agent [sic] in promptly presenting an ill or injured inmate to HPL
                for treatment if it should have been obvious to a non-medical

       1
         Health Professionals also argues that the County should have filed a declaratory judgment action rather
       than a third-party complaint. While it is true that such a course of action would have been permitted—and,
       indeed, Health Professionals likewise had the option to file a declaratory judgment action seeking a
       declaration that it had no duty to defend or indemnify the County—there is no authority supporting a
       proposition that a declaratory action was required and a third-party complaint was prohibited. This argument
       is unavailing.

       Court of Appeals of Indiana | Memorandum Decision 66A04-1612-CT-2752 | May 31, 2017              Page 7 of 13
                individual that the inmate was in serious need of immediate
                attention.

       Tr. Vol. III p. 17 (emphases added). We must consider, therefore, whether

       Scheffer’s claim against the County “related to” Health Professionals’ alleged

       negligence.

[15]   Scheffer’s complaint includes two specific acts of alleged negligence: (1) failure

       to provide appropriate seizure medication and (2) failure to perform an

       appropriate medical examination after his seizure.2 As noted above, under the

       Contract, Health Professionals is responsible for administering prescription

       medication to and conducting medical examinations of the inmates. Jail

       personnel were neither trained in nor authorized to take those actions. It is

       apparent, therefore, that Scheffer’s complaint “relates to” allegedly negligent

       acts by Health Professionals. Consequently, when the County notified Health

       Professionals of Scheffer’s complaint and demanded that Health Professionals

       defend it, the refusal to defend was a breach of the Contract.

[16]   The arguments made by Health Professionals that indemnification is

       improper—either because Scheffer’s complaint was dismissed or because it

       would indemnify the County for its own alleged negligence—miss the point.

       The trial court’s order here does not result in indemnification. Instead, it

       2
         The complaint also includes a catch-all allegation covering “any other act of negligence which may be
       proven at trial of this matter.” Appellant’s App. p. 26. In theory, this could encompass negligent acts of the
       County, but even if that were the case, the fact that the two explicit actions included in the complaint “relate
       to” the actions of Health Professionals means that the duty to defend was triggered.

       Court of Appeals of Indiana | Memorandum Decision 66A04-1612-CT-2752 | May 31, 2017                 Page 8 of 13
       compensates the County for Health Professionals’ breach of its duty to defend

       the County from Scheffer’s lawsuit. See Henthorne v. Legacy Healthcare, Inc., 764
N.E.2d 751, 757 (Ind. Ct. App. 2002) (holding that duty to defend is

       independent of duty to indemnify).

[17]   That leaves us with the question, however, of how the County’s damages

       should be properly quantified. In Legacy, Legacy had contracted for Sunshine

       Rehab to provide therapy to the residents at Legacy, a nursing facility.

       Sunshine Rehab agreed to defend and indemnify Legacy from all liability, loss,

       cost, or expense arising from Sunshine Rehab’s performance under the contract.

       The estate of a former Legacy resident sued Legacy and Sunshine Rehab for

       severe burns to that resident, allegedly caused by a Sunshine Rehab therapist.

       Sunshine Rehab refused to defend or indemnify Legacy, and Legacy then filed

       a cross-claim. This Court noted that, as in the instant case, the contract

       provided that Sunshine Rehab was obligated to defend only for its own

       negligence and not for Legacy’s. Id. at 760. The fault apportionment between

       Sunshine Rehab and Legacy had not yet been determined, however, so this

       Court remanded for apportionment and calculation of damages. Id.

[18]   Here, as in Legacy, Health Professionals owed a duty to defend the County from

       Scheffer’s complaint but not for claims arising from the County’s own

       negligence. Unlike Legacy, which was decided in the context of a summary

       judgment order, the case before us stems from a bench trial during which the

       trial court was able to consider evidence relating to the respective fault of the

       parties. While the trial court did not make an explicit finding with respect to

       Court of Appeals of Indiana | Memorandum Decision 66A04-1612-CT-2752 | May 31, 2017   Page 9 of 13
fault apportionment, we infer from its order that it found that Scheffer’s

complaint stemmed solely from the alleged negligence of Health Professionals.

The following evidence supports that implicit conclusion:

     Health Professionals was responsible for prescribing, dispensing, and
      administering medication to inmates. It was also responsible for medical
      examinations and conducting sick calls on a timely basis.
     Jail personnel were not trained on medical procedures aside from
      emergency life-saving techniques such as CPR.
     Health Professionals conducted all examinations of this inmate.
     The need for and timing of off-site tests such as x-rays was a medical
      decision made solely by Health Professionals.
     At some point, Health Professionals advised the jail commander to
      contact the DOC to transport Scheffer for an x-ray. The jail commander
      telephoned DOC and left four messages over the course of three days.
      There is no evidence that Health Professionals had advised the jail
      commander of the specific circumstances of Scheffer’s condition.
     After the jail commander was unable to reach DOC, he called a Health
      Professionals nurse and indicated he had left messages but not actually
      reached anyone. The nurse replied, “Okay.” Tr. Vol. II p. 46.
     On April 18, 2008, Health Professionals called the DOC, who picked up
      Scheffer that same day. The jail commander testified that DOC had
      picked up the inmate because they had gotten the commander’s
      messages.

The trial court had the benefit of reviewing all the evidence, observing all the

witnesses, and evaluating the credibility of those witnesses. Having done so, it

implicitly concluded that Health Professionals was solely responsible for the

alleged negligence underlying Scheffer’s complaint, and we cannot and will not

second-guess that conclusion. There is substantial evidence of probative value

supporting the trial court’s conclusion that, based on the Contract, Health

Professionals “should have provided a defense” to the County from Scheffer’s
Court of Appeals of Indiana | Memorandum Decision 66A04-1612-CT-2752 | May 31, 2017   Page 10 of 13
       complaint and its order that Health Professionals “should now be responsible to

       County for the fees of its counsel” incurred during the defense of Scheffer’s

       claim. Appellant’s App. p. 21.

[19]   Health Professionals points out that the indemnification provision does not

       include an attorney fees clause. While that is accurate, it does not mean that a

       reversal is in order. As noted above, the County’s third-party claim against

       Health Professionals is in the nature of a breach of contract claim. Having

       established that Health Professionals breached the Contract, the County is

       entitled to the damages it sustained as a result of that breach, which happens to

       consist of its incurred attorney fees and litigation costs. In other words, this is

       not an attorney fee award based on a contractual provision; it is a contractual

       damages award. See, e.g., Ozinga Transp. Sys., Inc. v. Ash Sales, Inc., 676 N.E.2d
379, 388 (Ind. Ct. App. 1997) (holding that when a party breaches the duty to

       defend or indemnify, proper damages may include attorney fees and litigation

       costs). Consequently, it is of no moment that the indemnification provision

       does not contain an attorney fees clause and we decline to reverse for this

       reason.

[20]   In sum, Health Professionals owed a duty to defend the County from claims

       relating to the alleged negligence of Health Professionals. The trial court

       implicitly found that Scheffer’s complaint was based solely on the alleged

       negligence of Health Professionals, and it drew this conclusion having

       conducted a bench trial, assessed witness credibility, and evaluated and

       Court of Appeals of Indiana | Memorandum Decision 66A04-1612-CT-2752 | May 31, 2017   Page 11 of 13
       weighed all of the evidence. There is substantial evidence of probative value

       supporting the trial court’s order; consequently, we affirm.

                                           II. Cross-Appeal
[21]   The County appeals the amount of the trial court’s attorney fee award. On July

       11, 2016, the County filed a brief in support of a motion for judgment on the

       evidence. That brief indicated that, as of that date, the total amount of incurred

       attorney fees and litigation costs was $75,496.48. At the August 10, 2016,

       bench trial, evidence was presented that, as of that date, the total amount had

       increased to $83,622.09. The trial court ordered Health Professionals to pay

       damages in the amount of $75,496.48.

[22]   The County insists that “[i]t is clear that the trial court intended to award the

       entire amount of the attorney fees and expenses incurred by the County” in

       defending Scheffer’s claim and prosecuting the third-party complaint.

       Appellee’s Br. p. 39-40. It argues, therefore, that the trial court may have made

       an inadvertent error by selecting the July 11 amount rather than the August 10

       amount of fees incurred.

[23]   The County has indicated its intent to seek further compensation for the

       attorney fees and costs incurred defending this appeal. If, in fact, the trial court

       made an inadvertent error in its original calculation of attorney fees, that error

       could be corrected upon request at this anticipated hearing.

       Court of Appeals of Indiana | Memorandum Decision 66A04-1612-CT-2752 | May 31, 2017   Page 12 of 13
[24]   The judgment of the trial court is affirmed and remanded for further

       proceedings.

       Barnes, J., and Crone, J., concur.

       Court of Appeals of Indiana | Memorandum Decision 66A04-1612-CT-2752 | May 31, 2017   Page 13 of 13