Laurie Gardner v. Anonymous Physician

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

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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.

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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.

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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

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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.

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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.

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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.

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[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.

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[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.

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[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.

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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

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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).

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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.

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[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

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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.

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