NASHVILLE, Tenn. (Legal Newsline) - The Tennessee Supreme Court last week overturned the rulings of two lower courts that dismissed vicarious liability claims against a Memphis-area hospital.
In the Court's opinion, filed Oct. 20, it found that a Shelby County circuit court and the state's appeals court "erred" in dismissing the claims filed by a patient, Joann Abshure, and her husband.
At issue is a vicarious liability claim against the hospital based on the conduct of an emergency room physician.
Following Abshure's emergency colostomy operation in May 2001, the couple filed a medical malpractice suit in circuit court against Methodist Healthcare-Memphis Hospitals and Drs. Jeremiah Upshaw and Luther C. Ogle III.
Upshaw had performed a colonoscopy as an outpatient procedure prior to Abshure's emergency colostomy. Ogle had treated Abshure in the hospital's emergency room before the colostomy procedure.
Among other things, the complaint broadly alleged that the hospital was "vicariously liable for the conduct of its agents."
After filing the lawsuit, Abshure voluntarily dismissed it in August 2002.
Less than one year later, in June 2003, the Abshures again filed suit in circuit court against Methodist Hospital, Ogle and Upshaw.
The defendants, in response, filed timely answers denying liability.
In December 2003, Upshaw moved for a summary judgment on the ground that the Abshures had been provided a reasonable opportunity to present expert testimony on negligence and causation and had failed to do so. Ogle likewise moved for a summary judgment in September 2004.
Before the trial court acted on the pending motions for summary judgment, the Abshures again decided to voluntarily dismiss their claims against Upshaw and Ogle.
After the plaintiffs voluntarily dismissed their claims against both physicians for the second time, the hospital sought the dismissal of the vicarious liability claims on the ground that the plaintiffs' claims against its apparent agent, the emergency room physician, were barred by operation of law.
In July 2005, the trial court entered an order dismissing the Abshures' claims against Upshaw and Ogle.
The appeals court affirmed the dismissal of the vicarious liability claims against the hospital.
The state's high court then granted the application filed by the patient and her husband to determine whether their vicarious liability claims against the hospital should be dismissed
under the facts of the case.
Justice William C. Koch, Jr., who authored the Court's 16-page opinion, wrote that "the central issue" in the case was whether the Abshures' complaint against Methodist Hospital asserting vicarious liability for the conduct of the hospital's agents, including Ogle, must be dismissed because the Abshures' direct claims against Ogle became barred after they filed their complaint against Methodist Hospital.
Koch noted that "it has long been recognized" in Tennessee that a principal may be held vicariously liable for the negligent acts of its agent when the acts are "within the actual or apparent scope of the agent's authority."
The Court, in its opinion, wrote that the appeals court reasoned that the Abshures' second voluntary dismissal of their claims against Ogle was "the substantive equivalent of a covenant not to sue" and, therefore, that the Abshures should be barred from suing the hospital under the "third instance" of nonliability.
The Court said it could not concur with the appeals court's conclusion.
Koch wrote, "The limitation on a principal's liability that arises 'when the injured party extinguishes the agent's liability by conferring an affirmative, substantive right upon the agent that precludes assessment of liability against the agent' applies to settlements between the plaintiffs and agents.
"This record does not reflect that the Abshures reached a settlement with Dr. Ogle when they voluntarily dismissed their claims against him. To the contrary, it appears that the Abshures gratuitously dismissed these claims."
The appeals court, the Court said, also held that the Abshures should not be permitted to pursue vicarious liability claims against Methodist Hospital because their right of action against Ogle "had been extinguished by operation of law."
Koch wrote for the Court, "While we agree that the Abshures' claims against Dr. Ogle have been extinguished by operation of law, we do not agree that their vicarious liability claims against Methodist Hospital should also be extinguished.
"The Abshures filed a proper vicarious liability claim against Methodist Hospital before their claims against Dr. Ogle were extinguished by operation of law. Accordingly, the subsequent procedural bar of their claims against Dr. Ogle does not prevent the Abshures from pursuing their timely filed vicarious liability claim against the hospital."
The Court, in its ruling, ordered that the case be remanded to the trial court "for further proceedings consistent with this opinion."
From Legal Newsline: Reach Jessica Karmasek by e-mail at email@example.com.