Lake Imaging LLC v. Franciscan Alliance, Inc

FILED

Dec 21 2023, 8:24 am

CLERK

Indiana Supreme Court

Court of Appeals

and Tax Court

ATTORNEY FOR APPELLANT ATTORNEYS FOR APPELLEE

Robert J. Palmer Libby Yin Goodknight

May Oberfell Lorber Krieg DeVault, LLP

Mishawaka, Indiana Indianapolis, Indiana

Julie A. Rosenwinkel

Shannon L. Noder

Krieg DeValult, LLP

Merrillville, Indiana

IN THE

COURT OF APPEALS OF INDIANA

Lake Imaging, LLC, December 21, 2023

Appellant-Defendant, Court of Appeals Case No.

22A-CT-2783

v. Appeal from the Johnson Superior

Court

Franciscan Alliance, Inc. The Honorable Marla K. Clark,

f/d/b/a Saint Margaret Mercy Judge

Health Care Centers, Trial Court Cause No.

Appellee-Plaintiff 41D04-1810-CT-157

Opinion by Judge Riley.

Judges Bailey and Tavitas concur.

Riley, Judge.

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STATEMENT OF THE CASE

[1] Appellant-Defendant, Lake Imaging, LLC (Lake Imaging), appeals the trial

court’s summary judgment on remand in favor of Appellee-Plaintiff, Franciscan

Alliance, Inc. f/d/b/a Saint Margaret Mercy Health Care Centers (Franciscan),

on Franciscan’s indemnification claim stemming from Lake Imaging’s contract

to provide radiology services to Franciscan. 1

[2] We affirm.

ISSUES

[3] In its appeal after remand, Lake Imaging presents this court with two issues,

which we restate as follows:

(1) Whether the trial court properly declined to apply the two-year statute of

limitations period, as included in the Professional Services Statute (PSS),

Ind. Code § 34-1-2-3, to Franciscan’s indemnity claim; and

(2) Whether the trial court properly entered summary judgment in

Franciscan’s favor on its indemnification claim.

FACTS AND PROCEDURAL HISTORY

[4] Between 2004 and 2011, Lake Imaging was a qualified healthcare provider, as

defined in the Medical Malpractice Act (MMA), who provided radiology

1

The trial court also entered summary judgment against defendant, ProAssurance Indemnity Co.

(ProAssurance), and in favor of Franciscan on the parties’ cross-claims for a declaratory judgment on

insurance coverage. ProAssurance elected not to appeal that ruling.

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services to Franciscan’s patients. Pursuant to the Agreement, effective January

1, 2004, Lake Imaging agreed to “indemnify and hold [Franciscan] harmless

from any liability claimed as a result of [Lake Imaging’s] negligence in the

provisions of services undertaken under this [A]greement.” (Appellee’s App.

Vol. II, p. 36).

[5] Joseph Shaughnessy (Shaughnessy) was a patient at Franciscan in April 2011.

While in Franciscan’s care, Lake Imaging’s radiologists interpreted two CT

scans performed on Shaughnessy. Shaughnessy passed away on April 25, 2011.

It was later discovered that Lake Imaging’s employed radiologists had missed

the presence of a right-sided subdural hematoma on the CT scans. Just under

two years later—on April 10, 2013—Shaughnessy’s sons (the Shaughnessys)

filed a proposed medical malpractice complaint with the Department of

Insurance (DOI) against Franciscan and other providers, alleging that negligent

medical care resulted in Shaughnessy’s death. Lake Imaging was not named in

the proposed complaint. During discovery, one of the named providers

divulged that Lake Imaging’s radiologists had failed to report the presence of a

right-sided hematoma on Shaughnessy’s CT scans. The Shaughnessys

subsequently amended their proposed complaint to pursue a vicarious liability

claim against Franciscan based on the radiologists’ negligence. Because the

two-year statute of limitations for medical malpractice claims under the MMA

had expired by then, the Shaughnessys could not name Lake Imaging or its

employed radiologists as defendants in their amended proposed complaint.

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[6] On January 29, 2014, Franciscan notified Lake Imaging of its intent to seek

indemnification pursuant to the Agreement. Lake Imaging did not respond.

On July 21, 2016, Franciscan sent correspondence to Lake Imaging and its

insurance company, ProAssurance Indemnity Co. (ProAssurance), offering to

tender the defense in the medical malpractice lawsuit instigated by the

Shaughnessys. Franciscan advised that it intended to settle the lawsuit

premised solely on the negligence of Lake Imaging’s radiologists and to pursue

indemnification against Lake Imaging unless it received written notice within

twenty days that ProAssurance intended to assume the defense or objected to

Franciscan settling the matter. While Lake Imaging did not respond,

ProAssurance responded on August 9, 2016, rejecting Franciscan’s tender and

instructing Franciscan to use its “own judgment regarding the advisability of

settling [the lawsuit].” (Appellee’s App. Vol. III, pp. 110-11). Franciscan

settled with the Shaughnessys on September 25, 2016.

[7] On July 17, 2018, Franciscan filed its Complaint against Lake Imaging, alleging

breach of contract for Lake Imaging’s failure to provide competent medical care

and for failure to indemnify Franciscan. Franciscan also sought a declaratory

judgment against ProAssurance for payment of any judgment rendered against

Lake Imaging. Lake Imaging moved for summary judgment, claiming that,

because Franciscan premised its claim on alleged medical malpractice by Lake

Imaging, the MMA’s two-year statute of limitations had lapsed. See I.C. § 34-

18-7-1(b). Instead of addressing the statute of limitations claim, the trial court

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dismissed Franciscan’s indemnification claim without prejudice, 2 concluding

that it lacked subject-matter jurisdiction because the MMA required Franciscan

to present its claim to the DOI for an opinion rendered by the medical review

panel before filing its Complaint. See I.C. § 34-18-8-4. Lake Imaging appealed

and Franciscan cross-appealed. The court of appeals affirmed, holding that,

because Franciscan’s claim rested on Lake Imaging’s alleged negligence, the

MMA applied. The Indiana Supreme Court disagreed and concluded that

Franciscan’s indemnification claim is “an ordinary contract claim, rather than a

claim for medical malpractice[.]” See Lake Imaging, LLC v. Franciscan Alliance,

Inc., 182 N.E.3d 203, 210 (Ind. 2022). As such, the procedural requirement of

submitting a claim to the medical review panel does not apply to Franciscan’s

indemnification claim, and the trial court “erred in dismissing the case for lack

of subject matter jurisdiction.” Id. Turning to the nature of the claim and the

statute of limitations, the supreme court held that, “[b]ecause the MMA does

not apply to Franciscan’s claim, neither does the Act’s two-year statute of

limitations.” Id. Instead, either the ten-year or the six-year statute of

limitations for actions upon written contracts governed, depending on whether

the parties’ indemnity agreement is treated as a contract “for the payment of

money.” Id. However, our supreme court determined that it did not need to

reach the issue of “whether the ten-year or six-year statute of limitations

2

The trial court also dismissed Franciscan’s claim that Lake Imaging breached its contract by failing to

provide appropriate radiology services. Franciscan did not appeal the trial court’s dismissal of that claim.

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applie[d] because Franciscan’s indemnification claim—having accrued when it

settled with the Shaughnessys on September 25, 2016—falls within both of

them.” Id. at 210-11. Characterizing Franciscan’s indemnification claim as an

“ordinary contract claim” subject to either the ten-year or the six-year statute of

limitations period for actions upon written contract, the supreme court declined

to address the two-year statute of limitations found in the PSS. Id. at 210.

Delving into Franciscan’s indemnification claim, the supreme court rejected

Lake Imaging’s argument that its obligation to indemnify Franciscan for the

settlement payment expired when the Agreement expired. See id. at 211. The

supreme court remanded with instructions for the trial court to conduct further

proceedings on Franciscan’s indemnification claim and also to consider the

potential liability of ProAssurance under Lake Imaging’s insurance policy with

ProAssurance.

[8] On remand and in light of the supreme court’s decision, the trial court ordered

supplemental briefing on all motions for summary judgment. Although the

parties largely rested on their prior summary judgment briefing and evidentiary

designations filed in the trial court prior to the first appeal, they also submitted

briefing on the law of the case doctrine.

[9] On October 24, 2022, the trial court issued summary judgment in favor of

Franciscan on its indemnification claim against Lake Imaging. In denying

Lake Imaging’s request to apply the PSS’s two-year statute of limitations, the

trial court noted that the supreme court had already “acknowledge[ed] that the

language of Ind. Code [§] 34-11-2-3 [of the PSS] and Indiana’s [MMA] is

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‘strikingly similar’” but had decided “to apply either a six-or ten-year statute of

limitations to the indemnification claim.” (Appellant’s App. Vol. II, p. 22).

Therefore, the trial court “decline[d] to reconsider the same.” (Appellant’s

App. Vol. II, p. 22). Furthermore, the trial court concluded that Franciscan’s

“tender of payment in settlement of the [MMA] trigger[ed] Lake Imaging’s duty

to indemnify Franciscan” under the Agreement as Lake Imaging’s obligation to

indemnify arises “when the party seeking indemnity 1) pays the underlying

claim; 2) pays judgment on the underlying claim; or 3) tenders payment in

settlement of the underlying claim.” (Appellant’s App. Vol. II, pp. 26, 27).

[10] Lake Imaging now appeals. Additional facts will be provided as necessary.

DISCUSSION AND DECISION

I. Standard of Review

[11] Lake Imaging challenges the trial court’s grant of summary judgment to

Franciscan. “The purpose of summary judgment is to terminate litigation

about which there can be no factual dispute and which can be determined as a

matter of law.” Lamb v. Mid Ind. Serv. Co., 19 N.E.3d 792, 793 (Ind. Ct. App.

2014). “The party moving for summary judgment has the burden of making a

prima facie showing that there is no genuine issue of material fact and that it is

entitled to judgment as a matter of law.” Mint Mgmt., LLC v. City of Richmond,

69 N.E.3d 561, 564 (Ind. Ct. App. 2017); Ind. Trial Rule 56(C). Summary

judgment is a “high bar” for the moving party to clear in Indiana. Hughley v.

State, 15 N.E.3d 1000, 1004 (Ind. 2014). If “the moving party satisfies this

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burden through evidence designated to the trial court, the non-moving party

may not rest on its pleadings, but must designate specific facts demonstrating

the existence of a genuine issue for trial.” Biedron v. Anonymous Physician 1, 106

N.E.3d 1079, 1089 (Ind. Ct. App. 2018) (quoting Broadbent v. Fifth Third Bank,

59 N.E.3d 305, 311 (Ind. Ct. App. 2016), trans. denied), trans. denied. “A fact is

material if its resolution would affect the outcome of the case, and an issue is

genuine if a trier of fact is required to resolve the parties’ differing accounts of

the truth, or if the undisputed material facts support conflicting reasonable

inferences.” Williams v. Tharp, 914 N.E.2d 756, 761 (Ind. 2009) (citation and

quotation marks omitted).

[12] We review a court’s ruling on a summary judgment motion de novo, applying

the same standard as the trial court. Hughley, 15 N.E.3d at 1003. “In

conducting our review, we consider only those matters that were designated to

the trial court during the summary judgment stage.” Lowrey v. SCI Funeral

Servs., Inc., 163 N.E.3d 857, 860 (Ind. Ct. App. 2021), trans. denied. “In

determining whether issues of material fact exist, we neither reweigh evidence

nor judge witness credibility [but] accept as true those facts established by the

designated evidence favoring the non-moving party.” Id. (citations omitted).

“Any doubts as to any facts or inferences to be drawn from those facts must be

resolved in favor of the nonmoving party.” Denson v. Est. of Dillard, 116 N.E.3d

535, 539 (Ind. Ct. App. 2018). However, “[m]ere speculation is insufficient to

create a genuine issue of material fact to defeat summary judgment.” Biedron,

106 N.E.3d at 1089. In the summary judgment context, we are not bound by

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the trial court’s findings of fact and conclusions thereon, but they aid our review

by providing the reasons for the trial court’s decision. Howard Cnty. Sheriff's

Dep’t v. Duke, 172 N.E.3d 1265, 1270 (Ind. Ct. App. 2021), trans. denied. The

party that lost in the trial court bears the burden of persuading us that the trial

court erred. Biedron, 106 N.E.3d at 1089.

II. Statute of Limitations

[13] Characterizing Franciscan’s indemnification claim as a breach of contract claim

for failing to provide competent medical services to a patient, Lake Imaging

contends that Franciscan’s claim is barred by the two-year statute of limitations

of the PSS, which provides that

An action of any kind for damages, whether brought in contract or

tort, based upon professional services rendered or which should have been

rendered, may not be brought, commenced, or maintained in any

of the courts of Indiana against physicians, dentists, surgeons,

hospitals, sanitariums, or others, unless the action is filed within

two years from the date of the act, omission or neglect

complained of.

I.C. § 34-11-2-3 (emphasis added). Although the statutory language in Indiana

Code section 34-11-2-3, which defines the scope of liability for professional

services related actions, is “strikingly similar” to that of the MMA, the PSS was

the “original medical malpractice statute” “used to determine the limitation

period for all medical malpractice suits” in Indiana. Lake Imaging, LLC, 182

N.E.2d at 210 n.4; Kroger Co. v. Estate of Hinders, 773 N.E.2d 303, 306 (Ind. Ct.

App 2002). When the MMA was enacted in 1975, it contained its own statute

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of limitations, but the “language of the [PSS] remain[ed] intact.” Kroger Co.,

773 N.E.2d at 306. Since the MMA’s passage, the application of the MMA and

the PSS has been distinguished based on the nature of healthcare providers

alleged to have committed medical malpractice. The MMA defines the

procedures for medical malpractice claims against “qualified” healthcare

providers. I.C. § 34-18-3-1. Qualified healthcare providers under the MMA are

those providers who have complied with the requirements of Indiana Code

Chapter 34-18-3, including the payment of surcharges into the Patient’s

Compensation Fund, to avail themselves of the MMA’s protections. I.C. § 34-

18-2-24.5 (defining qualified provider); Rumell v. Osolo Emergency Med. Servs.,

Inc., 88 N.E.3d 1111, 1114 (Ind. Ct. App. 2017) (reiterating that medical

malpractice claims against healthcare providers who are not qualified under the

MMA are not subject to the protections of the MMA). On the other hand,

since the MMA’s inception, the PSS only governed medical malpractice claims

against “non-qualified” healthcare providers who are not covered under the

MMA. Newkirk v. Bethlehem Woods Nursing & Rehab. Ctr., LLC, 898 N.E.2d 299,

300-01 (Ind. 2008) (confirming that the MMA applied to medical malpractice

claims brought against qualified healthcare providers, whereas the PSS applied

to medical malpractice claims against those who are not qualified providers

under the MMA).

[14] In its designated evidence, Lake Imaging averred that “[a]t all times relevant to

the allegations in [Franciscan’s] Complaint, Lake Imaging [] was a qualified

Health Care Provider, as defined by the [MMA].” (Appellant’s App. Vol. II, p.

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69). Accordingly, contrary to Lake Imaging’s contention, any claims against it

would not be covered by the PSS, rendering its two-year statute of limitations

period inapplicable.

[15] However, despite Lake Imaging’s second appellate attempt to apply a two-year

statute of limitations on Franciscan’s claim and regardless of its status as a

healthcare provider, based on our supreme court’s opinion in Lake Imaging and

the law of the case doctrine, we must conclude that Franciscan’s

indemnification claim is not barred as the viability of the claim is governed by

the statute of limitations for actions upon written contracts. See Lake Imaging,

182 N.E.3d at 210.

[16] The law of the case is a doctrine used to facilitate the finality of issues decided

within the same action. CBR Event Decorators, Inc. v. Gates, 4 N.E.3d 1210, 1216

(Ind. Ct. App. 2014). The law of the case provides that an appellate court’s

determination of a legal issue is binding on the trial court and in any subsequent

appeal in the same case and on substantially the same facts. Id. Essentially, the

law of the case means all issues decided directly or by implication in a prior

decision are binding in all further portions of the same case. Dean V. Kruse

Found., Inc. v. Gates, 973 N.E.2d 583, 590 (Ind. Ct. App. 2012), trans. denied.

However, only those issues conclusively determined are considered the law of

the case, and the issue decided in the prior appeal must clearly be the only

possible construction of an opinion. Id. Statements that are not necessary in

the determination of the issues presented are dicta and do not become the law of

the case. Id. at 590-91. “The doctrine merely expresses the practice of courts

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generally to refuse to reopen what has been decided and is based upon the

sound policy that when an issue is once litigated and decided, that should be the

end of the matter.” INS Investigations Bureau, Inc. v. Lee, 784 N.E.2d 566, 574

(Ind. Ct. App. 2003).

[17] In Lake Imaging, our supreme court, after analyzing the applicability of the

MMA to Franciscan’s indemnification claim, decided that because Franciscan’s

claim was not a claim for bodily injury or death on account of malpractice, or a

derivative claim similar to a claim for loss of services, and did not fit within the

purpose of the MMA, the MMA, and by extension its two-year statute of

limitation, could not be applied. See Lake Imaging, 182 N.E.3d at 209-10.

Characterizing Franciscan’s demand for indemnification as “an ordinary

contract claim, rather than a claim for medical malpractice,” the supreme court

concluded that the statute of limitations for breach of contract applied. Id. at

210. Depending on whether the Agreement was premised on the “payment of

money,” the Lake Imaging court held that either the six-year or the ten-year

limitation period applied. Id. Although the court determined that Franciscan’s

claim constituted a breach of contract claim rather than a medical malpractice

claim, it “need not decide whether the ten-year or six-year statute of limitations

applie[d] because Franciscan’s indemnification claim—having accrued when it

settled with Shaughnessys on September 25, 2016—falls within both of them.”

Id. Accordingly, as the supreme court decided the nature of Franciscan’s claim

and its corresponding statute of limitation as either a six- or ten-year statute of

limitations, the trial court rightly “decline[d] to reconsider” the court’s

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treatment of Franciscan’s indemnification claim. (Appellant’s App. Vol. II, p.

22). Any effort by the trial court to revisit the characterization of Franciscan’s

claim as an ordinary breach of contract issue on remand would have

encroached onto an “issue decided directly” by a higher court and would have

invaded the law of the case doctrine. See Dean V. Kruse Found., Inc., 973 N.E.2d

at 590.

[18] On appeal from the trial court on remand, Lake Imaging now attempts to

circumvent the law of the case doctrine by arguing that the supreme court

“specifically refused to address” the applicability of the PSS’s two-year

limitations period, leaving that issue “ripe for decision.” (Appellant’s Br. pp.

12-13). However, the supreme court did not decline to address the issue; rather,

after defining the nature of Franciscan’s claim as a contract claim and thereby, a

fortiori, rejecting the PSS component of Lake Imaging’s argument, the supreme

court found it unnecessary to further determine the explicit statute of

limitations—either six year or ten year—applicable to Franciscan’s

indemnification claim, as Franciscan’s claim would be able to proceed

regardless of whether the six or ten-year term would govern.

[19] Despite Lake Imaging’s insistence that the PSS, with its two-year statute of

limitations, should govern because “the nature and substance of Franciscan’s

cause of action [for indemnification] is based on the rendering of medical

services,” the supreme court rejected this premise in the context of the MMA.

(Appellant’s Br. p. 12). In its rejection, the supreme court explained that

Franciscan’s claim “for indemnification sounds in contract,” and “neither the

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text of the MMA nor precedent interpreting the [MMA] support categorizing

such a claim as one for medical malpractice.” Lake Imaging, 182 N.E.3d at 205.

The court advanced that the phrase “whether in contract or tort” in Indiana

Code section 34-18-7-1 of the MMA does not transform Franciscan’s

indemnification claim into a medical malpractice claim, because the statute

only “identifies the MMA’s limitations period, not the type of claim subject to

the MMA.” Id. The court further pointed out that the “whether in contract or

tort” language merely recognizes the contractual nature of the physician-patient

relationship and does not suggest the MMA “extends beyond the physician-

patient relationship to encompass commercial contracts between healthcare

providers.” Id.

[20] This analysis regarding the MMA applies equally to the PSS, as our supreme

court determined both statutes to have “strikingly similar” language. Id. at 210

n.4. Just as our supreme court noted in Lake Imaging with respect to the MMA,

“[t]he PSS [does] not create or establish [a] medical malpractice claim.”

Newkirk, 898 N.E.2d at 302. Instead, it merely establishes the limitations period

for filing medical malpractice claims against non-qualified healthcare providers.

Id. In Newkirk, the supreme court, as in Lake Imaging, found “no basis [] for

concluding that the legislative goal [behind the two-year limitations period of

the PSS] would be anything different” than the legislative goal underpinning the

MMA’s two-year statute of limitations. Id. Although the PSS applies to

actions “for damages brought in contract based upon professional services

rendered or which should have been rendered,” just like the MMA’s “whether

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in contract or in tort” phrase, the PSS’s statutory language does not transform

Franciscan’s indemnification claim into a medical malpractice claim as the

language, just as in the MMA, is merely a recognition of the contractual nature

of the patient’s relationship with his healthcare provider. See I.C. § 34-11-2-3;

Lake Imaging, 182 N.E.3d at 210.

[21] Accordingly, based on the law of the case doctrine and our supreme court’s

characterization of Franciscan’s indemnification claim as a contract claim, we

affirm the trial court’s conclusion that Franciscan’s claim is not barred by the

statute of limitations. 3

II. Indemnification

[22] Lake Imaging next contends that there is no remaining breach of contract claim

upon which Franciscan can be indemnified because the trial court dismissed the

3

In its reply brief, Lake Imaging asserts that

[d]espite Franciscan’s argument that Lake Imaging committed medical malpractice, Franciscan did

nothing to join Lake Imaging in the underlying malpractice action. Instead, Franciscan acted in

concert with the underlying plaintiffs to set up a situation in which, without Lake Imaging being a

party to the medical malpractice case, Franciscan persuaded the underlying plaintiffs to amend the

complaint and obtain summary judgment in its favor on all claims other than the vicarious liability

claim that was added to plaintiff’s amended complaint at Franciscan’s urging. Then, when the

statute of limitations precluded any party from joining Lake Imaging in the medical malpractice

action, Franciscan circumvented the entire MMA by seeking to recover for Lake Imaging’s alleged

medical malpractice through the indemnity claim.

(Reply Br. pp. 5-6). Lake Imaging presents no evidence to support these claims, nor did it refer us to any

citations or references in the record. Baseless accusations of questionable legal tactics directed to opposing

counsel are inflammatory and absolutely unacceptable in filings before this or any other court; they are

certainly out of place before this tribunal and woefully unbefitting an appellate advocate.

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breach of contract claim to provide competent medical services, which was

affirmed by the supreme court.

[23] In its Complaint, Franciscan formulated two avenues upon which it sought

relief: (1) breach of contract for Lake Imaging’s failure to provide competent

medical care and (2) breach of contract for failure to indemnify Franciscan.

While we agree with Lake Imaging that the supreme court “affirm[ed] the trial

court’s dismissal of Franciscan’s claim that Lake Imaging breached their

contract by committing medical malpractice[,]” it also held that “[b]ecause

Franciscan’s claim for breach of contract [for failure to indemnify] was not one

for medical malpractice, we reverse the trial court’s dismissal of that claim.”

Lake Imaging, 210 N.E.3d at 211-212. Thus, the supreme court’s decision did

not extinguish Franciscan’s indemnification claim, it revived it.

[24] The trial court on remand concluded that because Franciscan tendered payment

to settle the medical malpractice suit with the Shaughnessys, Lake Imaging’s

duty to indemnify Franciscan was triggered. Accordingly, the trial court held

that Franciscan was entitled to judgment on its claim as a matter of law. As

Lake Imaging does not contest this holding, we affirm the trial court’s entry of

summary judgment in Franciscan’s favor.

CONCLUSION

[25] Based on the foregoing, we hold that the trial court properly declined to apply

the PSS’s two-year limitations period and properly entered summary judgment

in favor of Franciscan on its indemnification claim.

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[26] Affirmed.

[27] Bailey, J. and Tavitas, J. concur

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