The Texas Supreme Court had a pretty heavy opinion day on Thursday and handed down a couple of cases of potential interest to health care providers. Providers prevailed in both actions, thus maintaining a winning streak in the Supreme Court that must stretch back years.
Utica National Insurance Co. of Texas v. American Indemnity Co., ___ S.W.3d ___ (Tex., No. 02-0090, July 9, 2004): majority opinion;
dissenting opinion.
Mid-Cities Surgi-Center employed a scrub technician who stole fentanyl, an anesthetic, from the surgical center. Apparently using the same syringe, the technician removed fentanyl from the glass ampules in which it was stored, injected himself with the drug, then injected saline solution back into the ampules to hide his theft. He then re-sealed the ampules with super glue and re-wrapped them with cellophane to further hide his crime. Because the technician was infected with Hepatitis C, his use of a dirty syringe allegedly contaminated the ampules. A number of patients who received fentanyl injections, including the four plaintiffs in this lawsuit, subsequently tested positive for Hepatitis C. Plaintiffs sued Mid-Cities Anesthesiology, P.A., a professional association of ten doctors who practiced anesthesia at the surgical center, and the association's member anesthesiologists. The patients alleged numerous negligent actions against the doctors' association and its members, including negligence in "failing to properly secure anesthesia narcotics" and in "exposing patients to contaminated medication." The association's professional liability insurer originally assumed defense of the suit, but later became insolvent. The Texas Property and Casualty Insurance Guaranty Association (TPCIGA) then assumed its obligations.
TPCIGA tendered the suit for a defense and coverage to the Association's general liability insurer at the time of the litigation, American Indemnity, which denied coverage because it was not the insurer at the time the infections occurred. TPCIGA then tendered the suit to the Association's general liability insurer at the time the plaintiff's became infected, Utica National, which denied coverage based upon an exclusion in its policy for "[b]odily injury . . . due to rendering or failure to render any professional service." After TPCIGA and American Indemnity settled the claims, they brought suit against Utica National for defense and settlement costs. The trial court granted motions for summary judgment by TPCIGA and American Indemnity, holding that Utica National's exclusion for professional services did not preclude coverage and awarded judgment against the defendant for the defense costs and full settlement costs, with attorney's fees and pre- and post-judgment interest. The Court of Appeals in Austin affirmed.
Held: Reversed in part and remanded. The policy excludes coverage only when the insured has breached the standard of care in rendering those professional services. In this case, the allegations in the pleadings raised both the possibility that the treating doctors were negligent in their administration of the drug and the possibility that the doctors' association was negligent in the storage of that drug. Because the plaintiffs alleged both professional and non-professional negligence, the general liability insurer had a duty to defend the underlying suit in this case under the eight-corners doctrine. But because a fact issue exists about whether the patients' injuries were caused at least in part by the doctors' rendition of professional services, in which event Utica National's policy would not cover the doctors' association, the Supreme Court remanded the indemnity claims to the trial court for further proceedings.
Justice Hecht dissented in an opinion joined by Justice Owen. The essence of his opinion is set out in the following passage: "I cannot see how it is remotely possible for a physician to be negligent in preserving the purity of medications administered to patients by himself and those with whom he associates and yet not be in breach of a professional standard of care. Thus, I would hold that the patients' claims were for professional liability, against which Utica had no obligation under its CGL policy to defend or indemnify. The Court does not foreclose this result but remands for fact findings. If I am correct C if the association and its members could not have been negligent without violating a professional standard of care C the outcome will eventually be the same."
Martinez v. Val Verde County Hospital District, ___ S.W.3d ___ (Tex., No. 03-0611, July 9, 2004): opinion.
Kaelyn Martinez, age 3, underwent a tonsillectomy at the Val Verde Regional Medical Center. Kaelyn’s parents, Marcus Martinez and Mary Koog, filed suit a little over two years after the operation, individually and on behalf of Kaelyn, against the Val Verde County Hospital District (which operates as the Medical Center) and others. The Hospital District is a governmental unit immune from suit under the Texas Tort Claims Act,
Tex. Civ. Rem. & Pract. Code § 101.001 et seq., but Martinez and Koog invoked the Act's exception for liability based upon the use of tangible property,
id. § 101.021(2).
The Act requires that a governmental unit receive notice of any claim against it within six months of the incident giving rise to the claim unless it already has actual notice.
Id. § 101.101. The Hospital District first received notice of the claims of Kaelyn and her parents six months and twenty-two days after Kaelyn’s surgery, and Martinez and Koog did not contend that the Hospital District had actual notice before then. Accordingly, the Hospital District filed a plea to the jurisdiction, asserting that because it did not receive notice as
required by the Act, its immunity from suit was not waived, and the court lacked subject matter jurisdiction of the claims against it. The trial court sustained the plea and ordered the case dismissed with prejudice.
The parents argued (1) that the notice requirements of the Act are not jurisdictional and therefore the trial court had subject matter jurisdiction of their claims, and (2) that the notice provision of the Act should be tolled if the claimant is a minor, unless the statute clearly states that its time limits are not tolled during a claimant's minority. The court of appeals held that Kaelyn’s minority did not toll the six-month period for giving notice. The court also ruled that notice is not a condition of the Act’s waiver of immunity that should be raised in a plea to the court's jurisdiction but instead is an affirmative defense that should be raised by motion for summary judgment. The court therefore reversed the trial court’s dismissal for want of jurisdiction and remanded the case for further proceedings.
Held: Affirmed. As to the appellants' tolling argument, the Supreme Court, per Justice Hecht, observed, "One can believe, as the court of appeals did, that it is unfair to require a minor who cannot sue to give the notice required by the Tort Claims Act, but the State is not required to waive immunity from suit at all. The fairness or wisdom of the waiver is not our province to decide."
