Kentucky Court Report - SCOKY & COAKY

WORKERS COMP & UM: Co-employee's immunity did not preclude UM claim for work-related death in MVA in case of first impression in Ky: State Farm Mutual Automobile Insurance Company v. Slusher (COA 7/27/2009)

State Farm Mutual Automobile Insurance Company v. Slusher
2008-CA-000169
02/27/2009
2009 WL 485027
Opinion by Judge Wine; Judge Caperton concurred; Judge Taylor dissented by separate opinion.

The Court affirmed a judgment of the circuit court finding that the estate of an employee was entitled to receive uninsured motorist benefits under a policy issued to the deceased on his personal automobile.

In a case of first impression, the Court held that the co-employee’s immunity from liability under the Workers’ Compensation Act, KRS 342.690(1), did not preclude the estate from recovering uninsured motorist’s benefits from the policy. Because the policy language “legally entitled to recover” was ambiguous, the Court applied the “essential facts” approach. Because the parties stipulated that the co-employee’s negligence caused the accident and that the damages exceeded the workers’ compensation benefits and were at least the policy limits for UM or UIM benefits, recovery was appropriate. Further, because the clear intent of the UIM statute was to allow an insured to purchase additional coverage so as to be fully compensated, it was of no consequence that the tortfeasor was unable to respond in damages.

Wrongful death statute - non-adopted stepchild not a beneficiary: Davis v. Johnson (COA 2/20/2009)

Davis v. Johnson
2007-CA-002394
02/20/2009
2009 WL 414008
Opinion by Senior Judge Buckingham; Judges Dixon and Nickell concurred.

The Court reversed a judgment of the circuit court that reversed a judgment of the district court finding that appellee could not recover a share of damages under Kentucky’s wrongful death statute.

The Court held that a decedent’s stepchild who was not legally adopted could not recover a share of the damages under KRS 441.130.

Causes of action - legal malpractice claim cannot be assigned: Davis v. Scott (COA 2/13/2009)

Davis v. Scott
2007-CA-002279
02/13/2009
2009 WL 367219
Opinion by Judge Dixon; Judges Caperton and VanMeter concurred.

The Court affirmed an order of the circuit court granting summary judgment in favor of appellees and dismissing appellants’ claim for legal malpractice.

The Court held that the trial court did not err in dismissing the claim. Appellants’ assignment of the proceeds from the legal malpractice action as settlement in federal litigation, conditioned upon appellant pursuing a legal malpractice claim against his attorney, constituted an impermissible assignment of a legal malpractice claim, which was void as against public policy. The Court further held that the cause of action could not be maintained apart from the assignment as, under the express terms of the settlement agreement in the federal litigation, appellant could not be the real party in interest.

INSURANCE: Underinsured motorist benefits and policy exclusion for resident relative who owned an auto: Auto-Owners Insurance Company v. Goode (COA 2/13/2009)

Auto-Owners Insurance Company v. Goode
2008-CA-000350
02/13/2009
2009 WL 367216
Opinion by Judge Keller; Chief Judge Combs and Senior Judge Henry concurred.

The Court affirmed a jury verdict in favor of appellee on her claim for coverage under her mother’s underinsured motorist coverage, which exempted from coverage a relative who owned an automobile.

The Court first held that the definition of “automobile” in the policy was ambiguous. The Court then held that the holding in Lewis v. American Family Ins. Group, 555 S.W.2d 579 (Ky. 1977) was applicable and therefore, the trial court did not err in defining “automobile” as one that had not been retired from service for an indefinite time into the future.

The Court next held that the jury instruction regarding the operability of appellee’s car was not erroneous, as counsel had ample opportunity to flesh out the legal nuances regarding the extent of damage to appellee’s car, the cost to repair it and whether appellee intended to repair it.

The Court finally held that the trial court did not err in denying the insurer’s motion for a directed verdict. Appellee’s evidence that the automobile did not have a steering column, needed brake repairs, had bald tires and had not been driven for several months was sufficient for a jury to reasonably conclude that the repairs necessary to make the car roadworthy and/or operable were not minor in nature.

INSURANCE - CGL policy coverage for auto accident, exclusion not apply: Auto-Owners Insurance Company v. Veterans of Foreign Wars Post 5906 (COA 1/16/2009)

Auto-Owners Insurance Company v. Veterans of Foreign Wars Post 5906
2008-CA-000141
01/16/2009
2009 WL 103197
Opinion by Judge Lambert; Judges Clayton and Wine concurred.

The Court affirmed a summary declaratory judgment in favor of a VFW post finding that it was entitled to liability coverage and indemnity under a liability policy entered into with the appellant insurer. The Court held the commercial general liability insurance policy provided coverage for a wrongful death claim arising from an automobile accident involving a driver who had visited the VFW prior to the accident. The exclusion contained in the policy pertaining to incidents involving bodily injury or property damage in causing or contributing to the intoxication of a person was not applicable because the VFW was not in the business of manufacturing, distributing, selling, serving, or furnishing alcoholic beverages but rather, was primarily concerned with the operation of its bingo hall and various charitable activities and simply a storage facility for its members’ alcohol.

TRIAL - Instructions on threshold, apportionment in error; no DV for settling defendant: COMBS V. STORTZ (COA 1/9/2009)

Combs v. Stortz
2007-CA-001232
01/09/2009
2009 WL 50174
Opinion by Judge Caperton; Judge Keller and Wine concurred.

The Court reversed and remanded a judgment of the circuit court entered pursuant to a jury verdict finding liability but awarding no damages on appellant’s claims for negligence arising from an automobile accident.

The Court held that 1) the damage instructions impermissibly linked the two threshold questions of monetary damages for reasonably necessary medical expenses exceeding $1,000 and the specifically enumerated physical or permanent injuries, loss, or death, as allowed by KRS 304.39-060(2)(b); 2) appellant was not entitled to a directed verdict on the liability of a settling party; 3) the apportionment instruction as to the liability of the settling party was not improper and even so, any error was harmless; 4) the trial court did not commit reversible error by excluding reference to the insurer as the provider of UIM coverage; 4) the trial court did not err in admitting expert opinion testimony that took into account the mechanism of injury, appellant’s medical history and available medical records, in addition to the information derived from a physical examination; 5) the trial court did not err by allowing testimony regarding prior workers’ compensation claims and insurance payments for impeachment purposes; 6) the trial court did not err in excluding expert medical testimony regarding appellant’s condition that was couched in terms of possibility, rather than probability or certainty, and that was not timely produced; 7) appellant placed her medical condition at issue and therefore, defense counsel did not improperly cross-examine her regarding past workers’ compensation claims, past treatment and injury claims with past employers; 8) while cross-examination about appellant’s nephew’s employment by appellant’s counsel was admitted in error, the error was harmless; and 9) expert testimony by an auto mechanic regarding alleged brake failure was properly admitted.

TORTS: EMTLA, Medical Negligence, and punitive damages -- Larry O'Neil Thomas v. St. Joseph Healthcare, Inc. (COA 12/5/2008)

Larry O'Neil Thomas v. St. Joseph Healthcare, Inc.
TORTS:  EMTLA, Medical Negligence, and punitive damages
2007-CA-001192
PUBLISHED: AFFIRMING IN PART, REVERSING IN PART, AND REMANDING
PANEL:  WINE PRESIDING; CLAYTON CONCURS; DIXON CONCURS IN RESULT ONLY 
FAYETTE COUNTY
DATE RENDERED: 12/5/2008

In this medical negligence case resulting from a death following an ER visit, the COA concluded that a medical negligence claim and a violation by the hospital of the Emergency Medical Treatment and Active Labor Act (EMTALA) are not mutually exclusive claims.  Furthermore, the failure to stabilize a medical condition does not require the hospital have actual knowledge of the specific medical condition but rather its duty under the statute arises upon the Hospital’s determination that the patient is manifesting symptoms of sufficient severity as to constitute an “emergency medical condition.”  With regard to the award of punitive damages, the COA found the instructions were deficient and reversed since holding the hospital liable for punitive damages for the conduct of its employees for violating the EMTALA required the hospital to either have ratified the acts of have knowledge of the acts.  Even though the punitive damages instruction was found deficient the COA then addressed the punitive damage award and found it not to have been excessive.

Although the facts were vigorously disputed by both parties, they did agree that James Milford Gray (Gray), age 39, arrived at St. Joseph Hospital’s (Hospital) emergency room on April 8, 1999, at 8:08 p.m.  was complaining of abdominal pain, constipation for four days, nausea and vomiting and that he was seen by physician’s assistant Julia Adkins (Adkins) and Dr. Barry Parsley. He received medication for pain and later received an enema and manual disimpaction of his colon. Although lab tests were ordered, either Gray refused to cooperate, or upon reorder, they were never conducted. Likewise, no x-rays were conducted. The patient was discharged by Dr. Geren and died later that day.  The autopsy report listed the cause of death as purulent peritonitis caused by a rupture of a duodenal ulcer due to duodenal peptic ulcer disease. The autopsy report also listed constrictive atherosclerotic coronary artery disease as a contributory cause of Gray’s death.

Gray’s Estate (Estate) brought this action alleging medical negligence against the Hospital, Dr. Joseph Richardson (a physician who treated Gray during an earlier visit to the Hospital on March 9, 1999), Dr. Parsley, Dr. Geren, physician’s assistant Adkins, and several members of the nursing staff.  In addition, the Estate alleged that the Hospital violated the Emergency Medical Treatment and Active Labor Act (EMTALA). After a lengthy period of discovery, the matter proceeded to trial on October 3, 2005. However, that trial ended in a mistrial.  Before the second trial, the Estate settled with all but the hospital and proceeded against it with the jury apportioning 15 % of the fault to the hospital. The jury awarded compensatory damages of $25,000.00, of which the Hospital’s share was $3,750.00. The jury also assessed punitive damages against the Hospital in the amount of $1,500,000.00.  The trial court concluded that the award of punitive damages was clearly excessive and therefore a new trial on that issue was in order. This appeal and cross-appeal followed.

The Hospital first argues that the Estate failed to establish the elements of a viable claim under EMTALA. Specifically, the Hospital raises two arguments. First, the Hospital contends that a plaintiff cannot simultaneously pursue a claim under EMTALA and for medical negligence.

Second, the Hospital argues that it cannot be liable under EMTALA merely because its agents failed to correctly diagnose Gray’s condition claiming it could only be liable for failing to stabilize an emergency medical condition which its physicians actually detected.

The Court of Appeals disagreed with the Hospital that claims under EMTALA and for medical negligence are mutually exclusive. The case law makes it clear that these claims are separate and have different elements of proof. Nevertheless, a failure to provide appropriate medical screening and stabilization of an emergency medical condition may amount to both a violation of EMTALA and medical negligence. See Cleland v. Bronson Health Care Group, Inc., 917 F.2d 266, 270 (6th Cir. 1990).

Thus, the fact that the Estate is asserting a medical negligence claim does not automatically preclude it from bringing a claim against the Hospital under EMTALA. The more germane issue is whether the Estate has presented sufficient evidence to support a claim under EMTALA

Consequently, the only issue presented to the jury was whether the Hospital failed to stabilize Gray’s emergency medical condition prior to discharging him. The Hospital argues that the Estate cannot sustain an action under the Act because Gray actually received treatment. 

Liability under EMTALA does not rest on its negligence for failing to detect and treat a condition, but rather the Hospital’s duty to stabilize arose “if it determined that . . . Gray had an emergency medical condition.” The instruction’s definition of “emergency medical condition” is the same as the statutory definition found at 42 U.S.C. § 1395dd(e)(1).  For liability to arise, the doctors on duty must have actual knowledge of the patient’s emergency medical condition.  The duty to stabilize under EMTALA “to provide such medical treatment of the [emergency medical] condition as may be necessary to assure, within reasonable medical probability, that no material deterioration of the condition is likely to result from or occur during the transfer of the individual from a facility[.] . . .” 42 U.S.C. § 1395dd(e)(3)(A).  Thus it is clear that the duty to stabilize under EMTALA does not require that the Hospital have actual knowledge of a specific condition. Rather, the duty arises upon the Hospital’s determination that the patient is manifesting symptoms of sufficient severity as to constitute an “emergency medical condition.”

The Hospital argues that punitive damages could not be assessed against it without a showing that it ratified the grossly negligent conduct of its employees. The Hospital argues that there was no evidence showing that it had ratified the conduct of the physicians and Hospital staff, and therefore it was entitled to a directed verdict on the Estate’s claim for punitive damages.

Kentucky Revised Statutes (KRS) 411.184(3) limits vicarious liability for punitive damages to instances where the employer authorized, ratified, or should have anticipated the bad conduct of its employee.  The Hospital contends that it was entitled to a jury instruction on ratification as a prerequisite to an award of punitive damages. COA agreed.

Not only did the court fail to provide such an instruction on ratification of the employees acts, its answer to the jury’s question implied that it could impose punitive damages on the Hospital for the acts of its agents without a finding that it ratified or had reason to know of their conduct.

We also agree with the Hospital that the trial court erred in failing to instruct the jury that the Estate must prove its right to punitive damages by clear and convincing evidence.

Since the COA found that the punitive damages instruction was inadequate, a new trial would be necessary in any event. However, the COA did address the trial court’s decision finding that the award of punitive damages was excessive.

In State Farm Mutual Automobile Ins. Co. v. Campbell, 538 U.S. 408, 425, 123 S. Ct. 1513, 1524, 155 L. Ed. 2d 585 (2003), the United States Supreme Court suggested that “few awards exceeding a single-digit ratio between punitive and compensatory damages, to a significant degree, will satisfy due process.” In this case, the jury’s award of punitive damages is 60 times the total amount of compensatory damages awarded to the Estate and 400 times the amount of compensatory damages apportioned against the Hospital. Based on this obvious disparity, the trial court concluded that the award of punitive damages was clearly excessive.

However, the Court in Campbell rejected a bright-line ratio or mathematical formula to determine the reasonableness of a punitive damages award. Campbell, 538 U.S. at 424-25, 123 S. Ct. at 1524. Rather, the Court specified that in order to satisfy due process, punitive damage awards must be evaluated under three factors: “1) the degree of reprehensibility of the defendant’s conduct; (2) the disparity between the actual or potential harm suffered by the plaintiff and the punitive damages award; and (3) the difference between the punitive damages awarded by the jury and the civil penalties authorized or imposed in comparable cases.” Campbell, 538 U.S. at 418, 123 S. Ct. at 1520. See also BMW of North America v. Gore, 517 U.S. 559, 116 S. Ct. 1589, 134 L. Ed. 2d 809 (1996).

Of the three factors, “the most important indicium of the reasonableness of a punitive damages award is the degree of reprehensibility of the defendant’s conduct.” Campbell, 538 U.S. at 419.  The purpose of the EMTALA is to protect indigent and uninsured patients from being refused emergency medical treatment.  While the Hospital’s actions may have amounted to a deliberate indifference to Gray’s rights, there is no showing that it was inspired by intentional malice or trickery.

Since the jury apportioned 25% of the fault to Gray himself, thus diminishing the Hospital’s overall responsibility for the injury. Under these circumstances, an award of punitive damages may have been appropriate, but the amount awarded in this case appears excessive.

Accordingly, the judgment of the Fayette Circuit Court is affirmed in all respects except for the award of punitive damages. While the trial court’s order granting a new trial on the issue of punitive damages was affirmed, the COA did find that the Hospital was entitled to instructions properly setting out the law as to ratification and the standard of proof. Therefore, the COA did remand this matter for a new trial  in accord with this opinion.

Digested by Michael Stevens

Whistleblower Statute; Limitations period and 90 remedy period -- CONSOLIDATED INFRASTRUCTURE MANAGEMENT AUTHORITY v. THOMAS EVERETTE ALLEN (COA 11/26/2008)

CONSOLIDATED INFRASTRUCTURE MANAGEMENT AUTHORITY v. THOMAS EVERETTE ALLEN
TORTS:  Whistleblower Statute; Limitations period and 90 remedy period
2006-SC-000188-DG.pdf
PUBLISHED: AFFIRMING
OPINION BY CUNNINGHAM (MINTON NOT SITTING)
LOGAN COUNTY
DATE RENDERED: 11/26/2008

Appellant/Cross-Appellee CIMA, Inc. was a municipal corporation formed to administer water and sewer services for Russellville and Auburn. In August 2001, Allen, CIMA’s safety director and Appellee/Cross-Appellant, sent a letter to CIMA’s board threatening to have Ky. OSHA conduct a survey if safety violations were not repaired. In February 2002, CIMA informed Allen that he was being laid off for budgetary reasons. The following week, Allen sent a letter to the Kentucky Labor Cabinet documenting the safety violations at CIMA and requesting an unannounced inspection of the facility. Allen later sued CIMA for violating Kentucky’s Whistleblower Act, and was awarded $40,000 in compensatory damages, plus attorney’s fees. The Court of Appeals affirmed the judgment. On appeal, CIMA argued that Allen’s claims were time barred by KRS 61.103(2) which reads in part “employees alleging a violation…may bring a civil action for appropriate injunctive relief or punitive damages, or both, within ninety (90) days…” In affirming, the Supreme Court held that, under the plain language of the Whistleblower Act, the 90-limitation only applied to claims for punitive damages and injunctive relief, not to compensatory damages. Secondly, the Supreme Court rejected CIMA’s argument that Allen was not entitled to Whistleblower Act Protection since he did not report the plant condition until after he was a laid off. The Court held that the threat of reporting—which Allen did in his letter to CIMA’s board-- triggers the protections of the Whistleblower Act. Finally, on the cross-appeal, the Court affirmed the trial court’s ruling that CIMA was not required to post a supersedeas bond upon its dissolution. Since the CIMA was absorbed into the cities of Russellville and Auburn, the statutory exemption for governmental entitiessupersedeas bonds applied. 

From SC November Summaries

Kentucky Whistleblower Act; State Agency; Statutory Interpretation -- WORKFORCE DEVELOPMENT CABINET (DIV. OF UNEMPLOYMENT INS.) v. MARY C. GAINES (SC 11/26/2008)

WORKFORCE DEVELOPMENT CABINET (DIV. OF UNEMPLOYMENT INS.) v. MARY C. GAINES
TORTS:  Kentucky Whistleblower Act; State Agency; Statutory Interpretation
 2005-SC-000965-DG.pdf
PUBLISHED: AFFIRMING
OPINON BY SCHRODER (Special Justice Royse dissents by sep. op. in which Minton and Special Justice Stewart Conner join)  Abramson, Noble not sitting.
FRANKLIN COUNTY
DATE RENDERED: 11/26/2008

Appellee worked for the Jefferson County office of the Division of Unemployment Insurance for many years, advancing from office assistant to auditor and eventually retiring. During that time, however, she alleged gender discrimination and retaliation and file suit against the Workforce Development Cabinet in 1998. According to appellee, after the Cabinet settled her suit, her work environment deteriorated. In 2002 she was informed she would be transferred to a less desirable local office; she filed a second suit. 

According to appellee, in 2003 she witnessed her supervisor and another employee throwing away confidential and proprietary information that may have had a bearing on pending litigation in a publicly accessible dumpster. Appellee contacted her attorney and asked him to report the purge. The same day, her attorney contacted an attorney for the Cabinet, who contacted the Department Commissioner, who conducted an investigation finding no wrongdoing. Four days later, four managers presented appellee with a letter from the Department Commissioner informing her of her transfer to the less desirable office. She was barred from the downtown office and her keys and security card confiscated. She subsequently amended her complaint to include a whistleblower claim under KRS 61.102. 

The trial court granted summary judgment to the Cabinet on the whistleblower and gender discrimination claims; a jury found for the Cabinet on the retaliation claim. Appellee appealed on the whistleblower claim and the Court of Appeals reversed because an internal report to the Cabinet qualifies as a report to "any other appropriate body or authority" under the whistleblower act. 

This case is purely a matter of statutory interpretation. The Supreme Court holds that "any other appropriate body or authority" should be read to include any public body or authority with the power to remedy or report the perceived misconduct. ... Generally, the most obvioud public body with the power to remedy perceived misconduct is the employee's own agency (or the larger department or cabinet). ... The evidence in this case presents a genuine issue of material fact as to whether there was a causal connection between [Appellee's] report and her transfer. 

Cunningham, Scott, and Venters, JJ. Concur. Special Justice David T. Royse dissents by separate opinion in which C.J. Minton and Special Justice Stewart E. Conner join. Abramson and Noble, JJ. not sitting.

Digested by John E. Hamlet

TORTS: SOVEREIGN IMMUNITY for Metro Gov't, statutory waiver KRS 441.054(3) -- JEWISH HOSP HEALTHCARE SVCS V. LOUISVILLE/JEFFERSON METRO GOV'T (COA 11/14/2008)

JEWISH HOSPITAL HEALTHCARE SERVICES, INC. V. LOUISVILLE/JEFFERSON METRO GOV'T
TORTS:  SOVEREIGN IMMUNITY for Metro Gov't, statutory waiver KRS 441.054(3)
2008-CA-000095
PUBLISHED: AFFIRMING IN PART, VACATING AND REMANDING IN PART
PANEL:  LAMBET JAMES PRESIDING; HENRY, NICKELL CONCUR
JEFFERSON CIR. CT.
DATE RENDERED: 11/14/2008

At issue in this case is whether KRS 441.045(3) waives Louisville Metro’s immunity. The statute provides in pertinent part that “the cost of providing necessary medical, dental, and psychological care for indigent prisoners in the jail shall be paid from the jail budget.” 

Louisville Metro entered into a contract with University Hospital for the treatment and medical care of inmates of Metro Corrections. Some of Louisville Metro’s inmates were diverted to Jewish Hospital under a diversion plan put into place by Louisville-area hospitals. Jewish sued for reimbursement for its care of indigent prisoners diverted to its care. Louisville Metro defended on grounds that sovereign immunity barred Jewish’s claim.

The Court of Appeals agreed, without much analysis of the argument. Of note in the opinion, at least to me, is that in finding Louisville Metro was entitled to sovereign immunity, the Court relied on Cullinan v. Jefferson County, 418 S.W.2d 407, 408 (Ky. 1967). Cullinan holds that Kentucky counties are entitled to sovereign immunity. Louisville Metro is not a county, though it should still be entitled to sovereign immunity. Also of note is that the Court used the test for waiver for sovereign immunity set forth in Withers v. University of Kentucky, 939 S.W.2d 340 (Ky. 1997), which construed changes to the Board of Claims Act several years before the creation of Louisville Metro as a local consolidated government. 

By Hays Lawson