CC of Baltimore Co. v. Patient First Corp.

GRAEFF, J. This case arises from an agreement between Patient First Corporation (“Patient First”), appellee, and the Board of Trustees of the Community College of Baltimore County (“CCBC”), appellant, pursuant to which Patient First allowed CCBC students to gain “supervised clinical experience” as phlebotomists at Patient First centers in the Baltimore area. The agreement contained an indemnification provision, which provided that CCBC would indemnify Patient First for any liability arising from negligent acts of CCBC students. On January 13, 2007, a CCBC student phlebotomist at a Patient First clinic accidentally stuck herself with a needle and then drew blood from a child using the contaminated needle. As a result of the ensuing lawsuit by the child’s family, Patient First was required to pay $10,000 to settle the case.

Patient First sought to enforce the indemnification provision of the agreement to recover its payment, as well as the attorneys’ fees incurred in defending the negligence action. The circuit court found that CCBC breached the agreement by failing to indemnify Patient First for its costs. It awarded $87,097.08, consisting of $10,000 paid toward the ⁷³ settlement of the lawsuit and the remainder toward attorneys’ fees. On appeal, CCBC presents two questions for our review, which we have rephrased slightly, as follows: 1.

Did the circuit court err in determining that the indemnification provision of the agreement required CCBC to indemnify Patient First for its defense of the negligence action? 2. Did the circuit court abuse its discretion in allowing testimony regarding the reasonableness of Patient First’s attorneys’ fees, and in awarding attorneys’ fees based on that testimony? For the reasons set forth below, we shall affirm the judgment of the circuit court. FACTUAL AND PROCEDURAL BACKGROUND On September 12, 2003, CCBC and Patient First entered into an Agreement for Clinical Program — Venipuncture (the “Agreement”).

Pursuant to the Agreement, Patient First would provide a “supervised clinical experience” for students in CCBC’s venipuncture program, and CCBC would maintain “professional liability insurance that covers the Venipuncture Students and [CCBC] faculty in the Program in the amounts of $1,000,000 per occurrence and $3,000,000 in the aggregate.” The Agreement, which was drafted by CCBC, also contained a section entitled “Indemnification,” which provided, in pertinent part, as follows: 7.1 [CCBC] will defend, indemnify, and hold [Patient First] harmless from any and all losses, claims, liabilities, damages, costs and expenses (including reasonable attorneys’ fees) which arise out of the negligent acts or omissions of [CCBC], its agents, employees, or Venipuncture Students in connection with this Agreement.... The obligations of [CCBC] under this subparagraph 7.1 are subject to and limited by its liability under Section 5-301 et [s]eq. [a]nd 5-519, Courts and Judicial Proceedings, Annotated Code of Maryland, as amended. ⁷⁴ It is further understood and agreed that [CCBC] is not waiving or relinquishing in any manner any defenses that may be available to [CCBC] including, but not limited to, government sovereign immunity or breach of contract or otherwise, nor is [CCBC] relinquishing any defenses that may become available to it at any time during the term of this Agreement, but that [CCBC] is free to assert all defenses that may be available to it at law or in equity. On January 13, 2007, Morgan Ebaugh, a CCBC student working as a student phlebotomist at a Patient First clinic pursuant to the Agreement, drew blood from a six-year-old patient, Dimitris Politis (“Dimitris”), after she first stuck herself with the needle she was using. Ms. Ebaugh subsequently tested positive for Hepatitis C. Dimitris was then tested for a year, but he did not test positive for Hepatitis C. On December 14, 2009, Susan Politis, Dimitris’ mother, filed suit, individually and as parent and next friend of Dimitris, against Patient First, Patient First’s affiliates, and Ms. Ebaugh.

The complaint asserted that Ms. Ebaugh “acted as an actual and/or apparent agent, servant and employee of’ Patient First. It further asserted that the defendants, including both Patient First and Ms. Ebaugh, owed a duty of care, which included “the performance of a simple blood draw without injury and the protection of the Plaintiffs from contaminated needles.” On March 16, 2011, the parties reached a settlement agreement, in which Patient First agreed to pay $10,000 toward the $50,000 agreed upon. Pursuant to the Agreement, Patient First requested that CCBC indemnify it for Ms. Ebaugh’s negligence and reimburse Patient First for the $10,000 in settlement funds, as well as its attorneys’ fees in defending the lawsuit. CCBC refused Patient First’s request for indemnification.

Patient First subsequently filed suit for breach of contract, alleging that CCBC’s “failure to indemnify Patient First as required by Paragraph 7.1 of the Agreement constitutes a ⁷⁵ breach of the Agreement.” 1 Patient First sought $88,937.39 in damages, consisting of the $10,000 settlement payment and $78,937.39 in costs and attorneys’ fees. On August 25, 2011, CCBC filed its answer to Patient First’s Amended Complaint, generally denying liability for breach of contract. Although CCBC admitted that the student was negligent, it asserted in its answer that “[t]he contract does not indemnify [Patient First] against its own negligence,” and “[t]o construe the contract to indemnify [Patient First] for its own negligence would violate public policy.” On June 25, 2012, both parties filed motions seeking summary judgment. In its motion, CCBC argued that Patient First was “not entitled to indemnification for its own admitted negligence,” asserting that Patient First was negligent in supervising Ms. Ebaugh at the time she performed the needle stick on Demitris.

It contended that it would be “against public policy to uphold Patient First’s breach of contract claim for indemnification for its own admitted negligence and the costs of defending itself from a claim based on that negligence.” Patient First argued that “the plain language of the Agreement require[d] CCBC to indemnify Patient First,” noting that it was undisputed that Ms. Ebaugh was a Venipuncture Student under the Agreement, that she was negligent, and that Patient First incurred losses, costs, and expenses in defending the lawsuit that resulted from Ms. Ebaugh’s negligence. It disagreed with CCBC’s argument that it was not entitled to indemnification because of negligence in supervising Ms. Ebaugh, asserting that Paragraph 7.1 of the Agree ⁷⁶ ment “does not except circumstances where Patient First is allegedly negligent.” On August 24, 2012, the court denied both motions, noting that, although it was undisputed that Ms. Ebaugh “performed a negligent act” while working as a student phlebotomist at Patient First, it was not “sufficiently clear as to whether there was negligence or not in supervision of [Ms.] Ebaugh at the time she was negligent in performing a vein puncture.” The court concluded that, because there was “a dispute of material facts,” and due to the “absence of specifics sufficient to allow [it] to conclude that either party is correct in its assertions,” summary judgment was not proper. On January 11, 2013, Patient First filed a motion in limine to “exclude any evidence or legal argument by [CCBC] that Patient First’s claims are barred because of its own negligence.” It asserted that CCBC “could not point to any facts that constituted Patient First’s negligence other than its alleged failure to supervise [Ms.] Ebaugh — which was not required by the parties’ Agreement.” It argued that any negligence on its part was not relevant, and in any event, CCBC could not prove that it was negligent, asserting that expert testimony is required to establish negligence, and CCBC had “failed to identify any expert.” Patient First argued that, without expert testimony that it was negligent, CCBC should be excluded from introducing evidence or legal argument in that regard. 2 Trial began on April 10, 2013. Melanie Mendoza, the Medical Director of the Patient First facility where Ms. Ebaugh performed the needle stick on Dimitris, ordered blood work to be performed on Dimitris during his visit on January 13, 2007. 3 She informed Ms. Politis that someone would come to draw the blood, and she left the room to see other patients.

Dr. Mendoza’s expectation was that a “lab person” who was a ⁷⁷ Patient First employee would come to the room and draw Dimitris’ blood. Because the results of the blood test were taking a while, Dr. Mendoza returned to the examination room to check with Ms. Politis regarding whether blood had been drawn. Ms. Politis informed Dr. Mendoza that, during the blood draw, the phlebotomist stuck herself with the needle she was attempting to use on Dimitris. Dr. Mendoza went to the lab, where she learned that Ms. Ebaugh was the person who attempted Dimitris’ blood draw.

Prior to visiting the lab, Dr. Mendoza was unaware that there was a student phlebotomist working that day. When Dr. Mendoza asked what had happened during the blood draw, Ms. Ebaugh told her that she used a butterfly needle and “grazed herself’ with the needle. She saw blood on the needle, so she threw it away and used a second needle to attempt once again to draw Dimitris’ blood, but she was unsuccessful. Dr. Mendoza returned to the room and told Ms. Politis what she learned from Ms. Ebaugh.

Ms. Politis told Dr. Mendoza that she only saw Ms. Ebaugh use one needle. Dr. Mendoza then checked the needle box in the examination room and found only one needle inside. After Dr. Mendoza informed Ms. Ebaugh that she had observed only one needle in the needle box, Ms. Ebaugh admitted that she had used the same needle that she stuck herself with on Dimitris. At Dr. Mendoza’s direction, Ms. Ebaugh obtained a blood test.

She tested positive for Hepatitis C. Dr. Mendoza did not know whether Dimitris was tested for Hepatitis C. On cross-examination, Dr. Mendoza agreed that performing a blood draw on a six-year-old child “is much more difficult than doing a blood draw on an adult,” and it required experience. Dr. Mendoza felt confident when she ordered the blood draw that “whoever draws the blood knows what they are doing drawing the blood.” It was her understanding that student phlebotomists working at Patient First were supervised by Patient First lab technicians when they performed ⁷⁸ blood draws, and “the lab techs and nurses and medical assistants are there to supervise them and help them.” Dr. Mendoza testified that she was not responsible for supervising Ms. Ebaugh. 4 Lisa Baldwin, Director of Training for Patient First, signed the Agreement. She explained that, under the Agreement, Patient First did not agree to supervise or observe “each and every needle stick.” With respect to supervision of CCBC students, Ms. Baldwin explained Patient First’s policies and practices as follows: [W]hen we got a student from [CCBC], we would have the student observe the person that was working with them for phlebotomy sticks and then we would ... observe the student while they performed the phlebotomy sticks. Once the student was deemed competent, then we would allow the student to then go and perform venipunctures and they were to come back to us if they had any issues, and they could go to the medical assistants, the nurses, lab.

Based on the indemnification provision of the Agreement contained in Paragraph 7.1, Ms. Baldwin understood that if a CCBC student “had any issues or caused any problems, that the school would be held responsible and deal with all of those issues.” 5 Stephen McCoy, Vice President and General Counsel for Patient First, testified that, after being served with the complaint filed by Ms. Politis in January 2010, Patient First retained counsel, Hancock, Daniel, Johnson, & Nagle, P.C. (the “Hancock Firm”), to defend it in the litigation. After the ⁷⁹ Politis litigation was resolved via settlement in January 2011, the firm sent Patient First a bill for $87,097.08, which included $10,000 for Patient First’s portion of the settlement and $77,097.08 for attorneys’ fees and costs. Mr. McCoy stated that the amount Patient First was billed and paid was “slightly less” than the amount sought as damages in Patient First’s complaint.

Patient First paid the bill. On cross-examination, Mr. McCoy agreed that the complaint in the Politis litigation alleged that Patient First was negligent in supervising Ms. Ebaugh. Accordingly, the settlement funds, attorneys’ fees, and costs associated with the litigation were expended in order to defend against the allegation that Patient First’s negligence caused Dimitris’ damages. In the settlement agreement reached in the Politis litigation, Patient First did not admit liability and denied all allegations of negligence.

At the conclusion of Patient First’s case, CCBC moved for judgment on the grounds alleged in its motion for summary judgment. The court denied CCBC’s motion. CCBC’s first witness was Lane Miller, Coordinator of Allied Health for CCBC. As coordinator, Mr. Miller oversaw the phlebotomy program, and one of his duties included setting up clinical assignments for students.

He was responsible for contacting local healthcare providers to inquire whether they would participate in a program providing clinical experience to CCBC phlebotomy students. He contacted Patient First regarding a potential partnership and met with Ms. Baldwin. Before the Agreement was signed, Mr. Miller met with Ms. Baldwin twice, during which they discussed the type of supervision that would be provided to CCBC students. The first few days of the clinical externship, CCBC students would shadow Patient First staff, and then, once the student was accomplished and the site supervisor was confident with that student, “the student would then begin to do their own blood draws with the direct supervision from Patient First.” After the supervisor observed the student, “the student could then work independently.” ⁸⁰ Mr. Miller and Ms. Baldwin also discussed “hard sticks,” which referred to blood draws for “any children under the age of ten, any elderly patient and any obese patient because it’s typically harder to get a successful draw from those patients.” Mr. Miller’s understanding from his conversations with Ms. Baldwin was that CCBC students would not do a hard stick, or “if a decision was made that a hard stick was to be drawn by our [student], that they would have a direct supervisor over their shoulder in case there [were] any complications.” This understanding was not put in writing.

Mr. Miller believed that the supervision arrangement he described at trial was what was meant by the term “supervised clinical experience” in Paragraph 1.1 of the Agreement. On cross-examination, he clarified that it was not his understanding that Patient First promised that a Patient First employee would observe “each and every needle stick.” Students participating in the CCBC program were required to work 80 hours and perform at least 100 successful needle sticks. Ms. Ebaugh was scheduled to work at Patient First Monday through Friday, from 5:00 p.m. to 10:00 p.m., and one weekend shift. At the time of the Politis incident, Ms. Ebaugh had completed 25-30 hours at Patient First.

After the incident, Ms. Ebaugh sent an e-mail to Mr. Miller stating that she did not wish to continue with the phlebotomy program. She did not respond to his requests that she come in and discuss the incident. Michelle Jancewski, Director of Health and Human Services and Workforce Development at CCBC, supervised Mr. Miller when he was in charge of the phlebotomy program. With respect to CCBC’s Agreement with Patient First, her understanding was that Patient First “would supervise the student so that the student and patient were safe,” and that CCBC students would not perform difficult needle sticks.

She understood that Patient First employees would supervise CCBC students performing ordinary needle sticks. She acknowledged, however, that CCBC admitted, in response to Patient First’s request for admissions, that “Patient First had no ⁸¹ contractual obligation to [CCBC] to personally observe the students during needle sticks.” She also acknowledged that, during her deposition as a corporate designee of CCBC, she agreed that the Patient First clinical sites came up with then-own guidelines for supervision, depending on the patient. Charles Andrews, an adjunct faculty member at CCBC, testified that he taught phlebotomy courses at the college, and Ms. Ebaugh was one of his students. In his experience as a preceptor, he had never allowed a venipuncture student to do a blood draw on a six-year-old child.

Melissa Hopp, CCBC’s Vice President of Administrative Services, testified that, pursuant to the Agreement, CCBC obtained professional liability insurance for its students participating in the program. After the Politis lawsuit was filed, CCBC notified the insurer, and the “[insurance kicked in to defend [Ms.] Ebaugh.” As a result of the lawsuit, Ms. Hopp received a letter from Patient First asking CCBC to indemnify it for its costs in defending the lawsuit. Ms. Hopp spoke with Patient First’s counsel, and she advised that they would not indemnify Patient First. She explained that indemnification was not required because “we judged that they were negligent” in their supervision of Ms. Ebaugh, “and they were asking us to pay for their negligence.” It was her understanding that, pursuant to the Agreement, Patient First was to “supervise [CCBC] students, to observe and instruct them and to prevent those students from committing errors or ... from being unsafe.” At the conclusion of CCBC’s case, counsel for CCBC read into evidence Patient First’s answer to a question in CCBC’s first set of interrogatories, in which CCBC asked if Ms. Ebaugh was under supervision by any agent, servant, or employee of Patient First Corporation at the time of the incident alleged in the lawsuit filed by Susan Politis.

Patient First responded: “At the time of the Politis incident, [Ms.] Ebaugh was under the general supervision of Dr. Mendoza.” Prior to issuing its ruling, the court heard closing argument from the parties. Patient First argued that the indemnifica ⁸² tion provision in Paragraph 7.1 clearly applied because the Politis lawsuit against Patient First was based on Ms. Ebaugh’s negligence. With respect to CCBC’s argument that Patient First was negligent in supervising Ms. Ebaugh, it argued that there was “no sufficient allegation in the Politis Complaint that stands alone as a negligence claim against Patient First independent of [Ms.] Ebaugh’s actions in sticking the child with the same needle.” Patient First contended