Court Opinion

ID: 9897230
Source: CourtListenerOpinion
Date Created: 2023-11-14 19:08:59.63026+00
Date Added: 2024-06-11T09:16:29.889131
License: Public Domain

FILED
                                                                            Nov 09 2023, 8:34 am

                                                                                CLERK
                                                                            Indiana Supreme Court
                                                                               Court of Appeals
                                                                                 and Tax Court

      ATTORNEYS FOR APPELLANT                                   ATTORNEY FOR APPELLEE
      Colby A. Barkes                                           Michael A. Sarafin
      Jeffrey S. Wrage                                          Crown Point, Indiana
      Valparaiso, Indiana

                                                  IN THE
          COURT OF APPEALS OF INDIANA

      Laurie Gardner,                                           November 9, 2023
      Appellant-Plaintiff,                                      Court of Appeals Case No.
                                                                23A-CT-345
              v.                                                Appeal from the Lake Superior
                                                                Court
      Anonymous Physician,                                      The Honorable Calvin Delee
      Appellee-Defendant                                        Hawkins, Judge
                                                                Trial Court Cause No.
                                                                45D02-2004-CT-417

                                      Opinion by Chief Judge Altice
                                      Judges May and Foley concur.

      Altice, Chief Judge.

      Case Summary
[1]   Laurie Gardner, a nurse at St. Mary Medical Center, Inc. (the Hospital), filed a

      proposed complaint against Anonymous Physician for medical malpractice.

      Anonymous Physician sought dismissal, arguing that because he and Gardner

      Court of Appeals of Indiana | Opinion 23A-CT-345 | November 9, 2023                           Page 1 of 15
      were in the same employ and she sustained a workplace injury, her exclusive

      remedy was under the Worker’s Compensation Act (WCA). The trial court

      dismissed the medical malpractice action based on Ind. Trial Rule 12(B)(1) for

      lack of subject matter jurisdiction.

[2]   On appeal, Gardner argues that physicians are third parties under the WCA

      and thus are not shielded from claims of medical negligence brought by an

      employee of the same company. We agree that the exclusivity provision of the

      WCA does not immunize a physician from claims for medical negligence

      arising from a doctor-patient relationship with the injured party, who is in the same

      employ as the physician. The exclusivity provision, however, does apply to

      claims brought against a physician that are unrelated to the physician’s medical

      treatment of a fellow employee.

[3]   Reading the proposed complaint in a light most favorable to Gardner, we

      conclude that some of her allegations of malpractice appear to have arisen out

      of a doctor-patient relationship between her and Anonymous Physician and not

      simply from their common employment at the Hospital. While Gardner may

      not proceed against Anonymous Physician based on his treatment of another

      patient or his actions as a medical director at the Hospital, she may pursue a

      medical malpractice action related to any treatment she received from

      Anonymous Physician for her workplace injury. Accordingly, the trial court

      erred in dismissing the proposed complaint.

[4]   We reverse and remand.

      Court of Appeals of Indiana | Opinion 23A-CT-345 | November 9, 2023           Page 2 of 15
      Facts & Procedural History
[5]   On September 1, 2016, Gardner was exposed to crusted (Norwegian) scabies in

      the course and scope of her employment as a nurse at the Hospital. She

      contracted scabies from contact with a patient and then unknowingly exposed

      her family, resulting in family members contracting the skin infection.

[6]   Gardner filed a worker’s compensation claim against the Hospital in March

      2018, which was settled by a compromise agreement in October 2019. In the

      meantime, on May 23, 2018, she filed a proposed complaint against

      Anonymous Physician with the Indiana Department of Insurance (the DOI).

      Gardner asserted the following negligence allegations:

              7. [Anonymous Physician] failed to protect Plaintiff from
              exposure to and failed to diagnose the scabies which led to a
              delay in appropriate treatment. Said failure to diagnose caused
              Plaintiff to unknowingly expose her family to scabies which
              resulted in her family members also contracting scabies.

              8. [Anonymous Physician] negligently directed Plaintiff’s care by
              failing to provide appropriate and timely treatment and for his
              failure to refer Plaintiff to medical care providers specializing in
              the treatment of the scabies condition which Plaintiff contracted
              at her place of employment.

      Appendix at 27.

[7]   On September 15, 2022, while the matter still pended before the DOI,

      Anonymous Physician sought a preliminary determination of law by the trial

      court that the proposed complaint should be dismissed pursuant to T.R.

      Court of Appeals of Indiana | Opinion 23A-CT-345 | November 9, 2023       Page 3 of 15
      12(B)(1) for lack of subject matter jurisdiction. Anonymous Physician argued

      that dismissal was warranted because Gardner “exhausted her sole remedy, a

      worker’s compensation claim, upon a workplace accident and subsequent

      medical care which occurred when she and [Anonymous Physician] were

      employed by subsidiaries of the same corporate parent(s).” Appendix at 13.

[8]   Among the limited exhibits provided by Anonymous Physician in support of

      his motion to dismiss was the affidavit of Nancy Moser, Vice President for

      Corporate Compliance and Quality/Risk Management for Community

      Healthcare System, which includes, among others, Community Foundation of

      Northwest Indiana, Inc. (CFNI), the Hospital, St. Catherine Hospital, Inc.

      (SCH), Munster Medical Research Foundation, Inc. (MMRF), and Community

      Care Network, Inc (CCNI). The corporate organizational structure of these

      entities is summarized by the following flow chart:

                                           CFNI

                 THE HOSPITAL, MMRF & SCH
                                  Each 100% held by CFNI

                                           CCNI
                 Equally held (1/3) by the Hospital, MMRF & SCH

      Court of Appeals of Indiana | Opinion 23A-CT-345 | November 9, 2023   Page 4 of 15
       According to Moser, Anonymous Physician was at all relevant times an

       employee of CCNI 1 and contracted as the Medical Director of the Hospital’s

       Infection Control and Wound Care Department.

[9]    Following briefing and oral argument on the T.R. 12(B)(1) motion, the trial

       court issued an order on January 30, 2023, dismissing Gardner’s proposed

       complaint. Gardner now appeals.

       Discussion & Decision
[10]   Where a party defends against a negligence claim based on the exclusivity

       provision of the WCA, the defense is properly advanced through a T.R.

       12(B)(1) motion to dismiss for lack of subject matter jurisdiction. See GKN Co.

       v. Magness, 744 N.E.2d 397, 401 (Ind. 2001). “In ruling on a motion to dismiss

       for lack of subject matter jurisdiction, the trial court may consider not only the

       complaint and motion but also any affidavits or evidence submitted in support.”

       Id. Ultimately, the opponent of subject matter jurisdiction has the burden of

       proving the lack of jurisdiction. Curry v. D.A.L.L. Anointed, Inc., 966 N.E.2d 91,

       95 (Ind. Ct. App. 2012), trans. denied.

[11]   Where jurisdictional facts are not in dispute or where they are disputed but the

       trial court ruled on a paper record without conducting an evidentiary hearing,

       we afford no deference to the trial court on appeal. GKN Co., 744 N.E.2d at

       1
           CCNI is a multi-specialty medical practice group and a subsidiary of the Hospital, MMRF, and SCH.

       Court of Appeals of Indiana | Opinion 23A-CT-345 | November 9, 2023                            Page 5 of 15
       401. In other words, our review is de novo in these circumstances because we

       are in as good a position as the trial court to determine the existence of subject

       matter jurisdiction, and we will affirm on any legal theory the evidence of

       record supports. Id.

[12]   The WCA provides compensation to employees for accidental injuries that arise

       out of, and in the course of, employment, and its exclusive remedies provision –

       Ind. Code § 22-3-2-6 – precludes a trial court from hearing a common law

       action brought by the employee for the same injuries. “It is the employer-

       employee relationship that defines the parameters of the immunity granted by

       the WCA’s exclusive remedy provision.” Brenner v. All Steel Carports, Inc., 122

       N.E.3d 872, 877 (Ind. Ct. App. 2019) (citing Ross v. Schubert, 388 N.E.2d 623,

       627 (Inc. Ct. App. 1979), trans. denied). Thus, the WCA does not reach beyond

       the employment relationship to benefit a third party. Id.

[13]   I.C. § 22-3-2-13 specifically addresses the right of an injured employee to pursue

       remedies in tort against a third party (as well as an employer’s rights to

       subrogation) and provides in relevant part:

               Whenever an injury or death, for which compensation is payable
               under chapters 2 through 6 of this article shall have been
               sustained under circumstances creating in some other person
               than the employer and not in the same employ a legal liability to
               pay damages in respect thereto, the injured employee, or the
               injured employee’s dependents, in case of death, may commence
               legal proceedings against the other person to recover damages
               notwithstanding the employer’s or the employer’s compensation
               insurance carrier’s payment of or liability to pay compensation
               under chapters 2 through 6 of this article.
       Court of Appeals of Indiana | Opinion 23A-CT-345 | November 9, 2023          Page 6 of 15
       I.C. § 22-3-2-13(a) (emphasis supplied). “With this provision the WCA creates

       an exception to the exclusive remedy provision for actions to be brought against

       third parties, namely someone other than the employer or a fellow employee, in

       which legal liability was created by a WCA-compensable injury.” Brenner, 122

       N.E.3d at 877; see also Walls v. Markley Enterprises, Inc., 116 N.E.3d 479, 483

       (Ind. Ct. App. 2018) (“Although the [WCA] bars a court from hearing any

       common law claim brought against an employer for an on-the-job injury, it

       does permit an action for injury against a third-party tortfeasor provided the

       third-party is neither the plaintiff’s employer nor a fellow employee.”), trans.

       denied.

[14]   There is no dispute in this case that Gardner’s injuries arose out of and in the

       course of her employment as a nurse at the Hospital. Indeed, she contracted

       scabies from a patient at the Hospital where both she and Anonymous

       Physician worked. Gardner, however, contends that Anonymous Physician

       was an independent contractor at the Hospital by virtue of his status as a

       physician and that, therefore, he is a third party against whom she can pursue a

       medical malpractice action.

[15]   Gardner acknowledges that at all relevant times Anonymous Physician was an

       employee of CCNI, a multi-specialty medical practice group, and that he

       worked at the Hospital as Medical Director of Infection Control and Wound

       Care. Further, the undisputed evidence establishes that Anonymous

       Physician’s employer, CCNI, was a subsidiary of the Hospital and two other

       hospitals with the three hospitals all being wholly owned subsidiaries of CFNI.

       Court of Appeals of Indiana | Opinion 23A-CT-345 | November 9, 2023       Page 7 of 15
[16]   Relevant here, the WCA’s definition of “employer” provides:

               A corporation, limited liability company, or limited liability
               partnership that controls the activities of another corporation,
               limited liability company, or limited liability partnership, or a
               corporation and a limited liability company or a corporation and
               a limited liability partnership that are commonly owned entities,
               or the controlled corporation, limited liability company, limited
               liability partnership, or commonly owned entities, and a parent
               corporation and its subsidiaries shall each be considered joint
               employers of the corporation’s, the controlled corporation’s, the
               limited liability company’s, the limited liability partnership’s, the
               commonly owned entities’, the parent’s, or the subsidiaries’
               employees for purposes of IC 22-3-2-6 and IC 22-3-3-31.

       I.C. § 22-3-6-1(a); see also Hall v. Dallman Contractors, LLC, 51 N.E.3d 261, 264-

       66 (Ind. Ct. App. 2016) (addressing this statutory provision in the context of

       “multiple tiers of subsidiaries” and holding that the parent corporation and its

       subsidiaries – one a direct subsidiary and the other a third-tier subsidiary – were

       all joint employers under the WCA). Thus, the Hospital and CCNI were joint

       employers of Anonymous Physician for purposes of the exclusivity provision of

       the WCA.

[17]   Nonetheless, Gardner argues that Anonymous Physician cannot be considered

       to have been in the same employ as her because “as a matter of law physicians

       are independent contractors and not ‘fellow employees.’” Appellant’s Brief at 16.

       She relies on Ross v. Schubert, 388 N.E.2d 623 (Ind. Ct. App. 1979), for this

       proposition.

       Court of Appeals of Indiana | Opinion 23A-CT-345 | November 9, 2023         Page 8 of 15
[18]   Ross involved a factory worker, Ross, who received medical treatment from

       physicians employed in a clinic located inside International Harvester’s plant.

       The physicians were salaried employees at the plant. Ross sued the physicians

       for damages based on alleged medical negligence that occurred during their

       treatment of him for a nonindustrial accident. At trial, the jury was instructed,

       over Ross’s objection, that if the defendant doctors were employees of

       International Harvester, then they were immune from a claim of damages based

       on malpractice. Ross appealed after receiving an adverse jury verdict.

[19]   On appeal, this court held that the “fellow employee immunity provisions” of

       the WCA do not protect a company physician from a claim of medical

       negligence brought by an employee of the same company. Id. at 625 (internal

       quotations omitted). The Ross court explained:

               After carefully studying the history of the [WCA] and examining
               its provisions, we are unable to discern from the Act any
               legislative design to immunize physicians from medical
               malpractice claims or to interfere with the customary physician-
               patient relationship. It is our opinion that it would torture the
               Indiana legislature’s intent, as evidenced by its objectives in
               enacting the [WCA], to let the simple rubric of “in the same
               employ” insulate physicians from liability arising out of the
               performance of professional medical services.

       Id. at 626.

[20]   Anonymous Physician recognizes the holding in Ross but argues that it has been

       eroded over time and should no longer be followed. This requires a close look

       at the underpinnings of Ross.
       Court of Appeals of Indiana | Opinion 23A-CT-345 | November 9, 2023      Page 9 of 15
[21]   The Ross court observed that prior to the language “in the same employ” being

       added to the WCA, the Indiana Supreme Court had adopted the rule that “the

       physician, whether hired by the employer or not, is a third party within the

       contemplation of the [WCA].” Id. at 627 (quoting Seaton v. U.S. Rubber Co., 61

       N.E.2d 177, 181 (Ind. 1945)). The Ross court “d[id] not believe the legislature’s

       subsequent insertion of the words, ‘and not in the same employ’ was intended

       to abrogate the [Supreme] Court’s interpretation that the Act failed to

       immunize physicians.” Id. at 628.

[22]   Additionally, the Ross court looked to cases outside the area of worker’s

       compensation law that had “consistently held that a doctor, even though

       employed by an entity, is personally liable as an independent contractor when

       he engages in the practice of medicine.” Id. at 629. Of particular note here, the

       court relied on Iterman v. Baker, 15 N.E.2d 365 (Ind. 1938), which held that

       physicians employed by a professional medical corporation were independent

       contractors and that because the corporation could not legally engage in the

       practice of medicine, it could not be held vicariously liable for the medical

       negligence of its physicians. Id. at 369-71.

[23]   The holding of Iterman eroded over time with the enactment of the Professional

       Corporation Act of 1983, 2 which “stands as a pronouncement of public policy

       concerning a corporation’s vicarious liability for the acts of its employee-

       2
           Ind. Code §§ 23-1.5-1-1 to -5-2.

       Court of Appeals of Indiana | Opinion 23A-CT-345 | November 9, 2023       Page 10 of 15
       physician.” Sloan v. Metro. Health Council of Indianapolis, Inc., 516 N.E.2d 1104,

       1107 (Ind. Ct. App. 1987). In Sword v. NKC Hosps., Inc., the Supreme Court

       acknowledged the demise of Iterman and that “courts no longer allow hospitals

       to use their inability to practice medicine as a shield to protect themselves from

       liability.” 714 N.E.2d 142, 149 (Ind. 1999). The Court recognized, however,

       that physicians can be either employees of a hospital or independent contractors

       and held that hospitals may be subject to vicarious liability for the negligence of

       its independent contractor physicians under the theory of apparent or ostensible

       agency. Id. at 149-52; see also Sloan, 516 N.E.2d at 1109 (“We hold that where

       the usual requisites of agency or an employer-employee relationship exist, a

       corporation may be held vicariously liable for malpractice for the acts of its

       employee-physicians.).

[24]   It is evident that Ross’s independent contractor rationale and reliance on Iterman

       no longer has sound footing. But this was not the entire basis for the holding in

       Ross. On the contrary, the court emphasized the Supreme Court’s distinct

       holding in Seaton (that is, treating physicians are third parties under the WCA,

       whether hired by the employer or not). The court then noted that when

       amending I.C. § 22-3-2-23 to include “and not in the same employ,” the

       legislature “must be deemed to have been cognizant of the court’s

       determination that physicians employed by corporations were liable as third

       parties, and in light of this knowledge, they retained the employee’s right to

       proceed against a third party” and “did not expressly or by necessary inference

       curtail[] or den[y this common law right].” Ross, 388 N.E.2d at 628. The court

       Court of Appeals of Indiana | Opinion 23A-CT-345 | November 9, 2023      Page 11 of 15
       continued: “The suggestion that the legislature intended, by this amendment, to

       include the company physician as a fellow employee of the injured industrial

       worker is a startlingly illogical concept.” 3 Id.

[25]   After noting that International Harvester had no control over the manner in

       which the physicians rendered treatment to Ross, the court stated:

                 The liability of these physicians arose from their independent exercise of
                 medical judgment, that is, it arose from their doctor-patient relationship
                 with Ross and not from the employer-employee relationship which the
                 Act was designed to regulate. We have not permitted physicians to
                 escape liability by working for hospitals or forming medical
                 corporations, and it is our opinion that the [WCA] was, likewise, never
                 intended to abrogate the rights of an employee who stands in the shoes of
                 a patient, from suing a doctor who treats him.

                 This court is not persuaded that we should sanction protection of
                 company physicians while at the same time hold liable
                 independent physicians who provide identical services. In either
                 circumstance, the liability arises because of the individual
                 doctor’s exercise of medical judgment. Where that judgment is
                 exercised, i.e., upon the company’s premises as opposed to the
                 physician’s private office, should not be the determinative factor
                 as to whether or not an individual may bring an action for

       3
           The Ross court observed in a footnote:

               The amended statute was drafted with the objective of insuring that a particular class of
               industrial accidents was covered – that at least for that class of accidents, industry owed its
               workers an obligation; therefore, if in the course of the employment relationship an employee is
               injured due to the actions of a fellow employee, IC 22-3-2-13 immunizes that fellow employee
               from liability, but the immunization is because of the type of accident involved, not because of a direct
               objective to immunize particular persons…. An injury sustained due to the malpractice of a
               physician does not come within the class of industrial accidents which the [WCA] was designed
               to encompass.
       Id. at n.6 (emphasis supplied).

       Court of Appeals of Indiana | Opinion 23A-CT-345 | November 9, 2023                                      Page 12 of 15
                medical malpractice since in both instances, the physician
                controls the manner of medical treatment. To hold otherwise
                would encourage the company physician to be less assiduous….
                Clearly, forcing the wrongdoer to bear the cost of his wrong,
                rather than the industry, will have a salutary effect in that it will
                operate as an incentive for careful conduct.

                We find nothing in [the WCA] which indicates the Act was
                intended to shield a physician from the legal obligations entailed
                by the doctor-patient relationship. We, therefore, hold that these
                physicians were not immune from liability by virtue of IC 22-3-2-
                when they engaged in the practice of medicine.

       Id. at 629-30 (emphases supplied and footnotes omitted).4

[26]   We do not believe that Anonymous Physician has made a good case for

       abandoning the holding of Ross, which, though battered, has remained standing

       since 1979 and has not been altered by any of the multiple amendments to I.C.

       § 22-3-2-13 since that time. Its holding, however, does not extend so far as

       Gardner attempts to employ it. Ross does not hold that a physician can never

       benefit from the WCA’s fellow employee immunity provision. It holds only

       that immunity does not apply to claims of medical negligence arising out of a

       doctor-patient relationship between the claimant and the physician.

       4
         In Tarr v. Jablonski, this court declined to extend the Ross exception to paramedics, observing that the
       essence of the exception was “the independent professional judgment which a physician must necessarily
       exercise.” 569 N.E.2d 378, 380 (Ind. Ct. App. 1991), trans. denied.

       Court of Appeals of Indiana | Opinion 23A-CT-345 | November 9, 2023                              Page 13 of 15
[27]   Here, Gardner’s proposed complaint plainly shows that she is seeking, at least

       in part, to impose liability on Anonymous Physician for actions unrelated to

       any doctor-patient relationship between the two of them. Gardner was exposed

       to and contracted scabies from a patient while working as a nurse at the

       Hospital. This injury was directly related to her employment relationship, and

       Anonymous Physician was not a third party while working alongside her; he

       was her coworker. Gardner’s exclusive remedy for this workplace injury was

       through the WCA, and she cannot sue Anonymous Physician for negligence

       based on him allegedly failing to timely diagnose the patient and protect

       Gardner from exposure to scabies or for his general handling of the scabies

       outbreak in his role as medical director.

[28]   That said, to the extent Anonymous Physician directly engaged in a doctor-

       patient relationship with Gardner after her exposure and exercised independent

       medical judgment to treat her, his status then changed to that of a third party,

       making him subject to liability for any aggravation of her workplace injury

       resulting from his negligent treatment of her. While Gardner’s proposed

       complaint does not contain a positive assertion that an actual doctor-patient

       relationship existed between her and Anonymous Physician, the allegations

       suggest – sufficiently to withstand dismissal – that such a relationship existed

       (namely, Gardner alleged that Anonymous Physician negligently directed her

       care, failed to provide appropriate and timely treatment, and failed to refer her

       to appropriate specialists for treatment). This matter may be fleshed out more

       Court of Appeals of Indiana | Opinion 23A-CT-345 | November 9, 2023      Page 14 of 15
       on remand, but at this early stage and on this limited record, 5 Anonymous

       Physician has failed to establish that the trial court lacked jurisdiction to hear

       this medical malpractice action.

[29]   We reverse and remand for further proceedings consistent with this opinion.

       May, J. and Foley, J., concur.

       5
         Anonymous Physician did not present any affidavits or other evidence to show the absence of a doctor-
       patient relationship with Garnder related to her diagnosis and treatment for scabies.

       Court of Appeals of Indiana | Opinion 23A-CT-345 | November 9, 2023                           Page 15 of 15