Alaska SC, clarifying 'savings statute,' gives medical service provider a second chance at suit

By Jessica M. Karmasek | Mar 19, 2013

ANCHORAGE, Alaska (Legal Newsline) -- The Alaska Supreme Court ruled earlier this month that the state's so-called "savings statute" does not require timely notice of an initial complaint.

In 2005, appellant American Marine Corporation d/b/a American Hyperbaric Center provided appellee Crystal Sholin hyperbaric oxygen therapy treatments.

Sholin was insured by Public Employees Local 71 Trust Fund, administered by Zenith Administrators Inc.

American Hyperbaric asserts, but the Trust Fund disputes, that a Zenith representative gave American Hyperbaric oral authorization before Sholin was provided the treatments.

In June 2005, Zenith sent American Hyperbaric notice denying coverage for the treatments. American Hyperbaric requested reconsideration, and Zenith sent a second denial.

Sholin appealed the denial to the Trust Fund, and the appeal was denied.

In March 2006, American Hyperbaric sent Zenith a letter demanding payment for the treatments.

In February 2008, the medical service provider filed a complaint for breach of contract against Sholin and the Trust Fund, but did not serve either defendant.

In December of that year, the state's Third Judicial District Court dismissed the case for lack of service under Alaska Civil Rule 4(j).

Nearly a year later, American Hyperbaric refiled its complaint under Alaska's savings statute, AS 09.10.240, and properly served Sholin and the Trust Fund.

The Trust Fund moved for summary judgment, arguing that the medical service provider's claims were time-barred.

The parties agreed that American Hyperbaric's first complaint was filed within the statute of limitations, but its second complaint was not.

The Trust Fund argued that American Hyperbaric should not be allowed to rely on the savings statute when no effort at service had been made and the Trust Fund had no actual notice of the initial lawsuit until after the statute of limitations expired.

American Hyperbaric argued that the savings statute does not require notice of the initial complaint.

The lower court acknowledged that the savings statute requires only commencement of the initial suit, but ruled that plaintiffs still must be diligent in providing notice to defendants.

The court granted summary judgment to the Trust Fund, dismissed American Hyperbaric's claims, and entered final judgment in favor of the Trust Fund.

American Hyperbaric appealed.

The state's high court said although Rule 4 "contemplates diligence in procuring service of process," it adds no condition to the commencement of an action.

"Accordingly, the statute's plain meaning requires only the filing of an initial complaint, not notice or service of the filing," Justice Daniel Winfree wrote in the court's March 8 opinion.

The court concluded that AS 09.10.240's purpose supports its plain meaning -- mere filing of the initial action without notice or service of process is "sufficient."

Although the lower court found equitable tolling requirements to be "important in construing" the savings statute, the high court disagreed.

"The equitable tolling doctrine is applicable 'when a plaintiff has multiple legal remedies available' so that '[c][/c]ourts will not force a plaintiff to simultaneously pursue two separate and duplicative remedies,'" Winfree wrote in the seven-page ruling. "In contrast, AS 09.10.240 allows a plaintiff to commence a second action pursuing the same remedy for the same cause of action.

"While both toll a statute of limitations, they apply in distinct situations. Accordingly, we refuse to graft the equitable tolling doctrine's common-law requirements onto AS 09.10.240's statutory requirements."

Because it concluded that AS 09.10.240 does not require timely notice of the initial complaint, the court reversed the lower court's order granting summary judgment and remanded the case.

From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.

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