Curry v. Hillcrest Clinic, Inc.

BISHOP, Judge. Appellant/Cross-Appellee, Lydia T. Curry (“Curry”), and Darlene Alston, Curry’s mother and next friend, filed an amended claim in the Health Claims Arbitration Office (“HCAO”) against Dr. Sheo P. Sharma (“Sharma”) and appellee/cross-appellant, Hillcrest Clinic, Inc. (“Hillcrest”), alleging ⁴⁷⁹ medical malpractice. After Hillcrest was served with process and failed to file a response, Curry moved for an order of default, which the Director of the HCAO (“Director”) entered against Hillcrest. Hillcrest failed to respond to the notice of order of default, and, upon Curry’s motion, the Director entered an award by default against Hillcrest.

Hillcrest filed a motion to strike the award by default, which, after a hearing, the HCAO panel chair (“Chairperson”) denied. At the conclusion of a panel hearing on the merits of Curry’s claim against Sharma, the panel concluded that Sharma was negligent, but that his negligence was not the proximate cause of Curry’s injuries. The Chairperson further ruled that, despite Hill-crest’s default, Sharma’s successful defense could inure to the benefit of Hillcrest. Judgment of no liability was entered as to both Sharma and Hillcrest.

Curry filed a notice of rejection with the Director. Curry also filed (1) an action to nullify the award in the Circuit Court for Baltimore County, along with (2) a motion to enter a default order against Hillcrest for willful failure to answer the claim and failure to satisfy a condition precedent to judicial review, and (3) a petition to vacate the panel award, in which she alleged that the panel exceeded its powers by allowing Sharma’s successful defense to inure to the benefit of Hill-crest. Hillcrest filed a motion to dismiss the action, alleging that Curry filed the notice of rejection prematurely and that the circuit court did not have jurisdiction over the case. The circuit court denied Curry’s and Hillcrest’s motions, granted Curry’s petition and vacated the panel award, and directed that the case proceed in the circuit court.

At the conclusion of a jury trial, the jury rendered a defendants’ verdict. Curry filed a timely notice of appeal to this Court, and Hillcrest filed a timely notice of cross-appeal. Issues Curry and Hillcrest raise three issues, which we reorder and restate as follows: I. Does the circuit court have jurisdiction to entertain an appeal from an award of the HCAO when the rejecting ⁴⁸⁰ party files a notice of rejection with the Director after the award is entered on the HCAO docket, but before the award is served on the rejecting party?

II

Did the circuit court err when it ruled that Sharma’s successful defense could not inure to the benefit of Hill-crest?

III

When a health care provider intentionally defaults at the HCAO level, is it precluded from litigating liability de novo in the circuit court, ie., does its failure to have the panel determine its liability mandate that a default judgment likewise be entered at the circuit court level? Facts This medical malpractice action arises out of Sharma’s failed attempt to abort Curry’s pregnancy while working at Hill-crest’s facility in Baltimore County. Although the particular facts of this case are tragic, and hotly disputed by the parties, they are not relevant to the disposition of this appeal. We shall, however, give a chronology of the HCAO and circuit court proceedings in order to provide a framework within which to discuss the issues.

The unique procedural history of this case cannot be understated. Curry filed her original claim with the HCAO on July 19, 1989. Curry later filed an amended claim, which was served on Hillcrest on March 5, 1990. In the amended claim Curry averred in count one: 1.

During the morning hours of March 29, 1988 [Curry], then 17 years old, presented herself at the defendant’s facility ... for the purpose of getting an abortion. [Curry] was pregnant carrying a 16/6—17]6 week old fetus. On being received at the clinic, the staff, under the direction and control of the defendant, [Sharma], did a sonogram and inserted a dilapan into [Curry]’s cervix which remained for approximately two hours. Thereafter the defendant, Sharma, removed the dilapan and attempted to dilate the cervix. Although the defendant had difficulty in this procedure, he nevertheless proceeded with the attempted abortion by ⁴⁸¹ inserting a suction catheter.

Because the patient was uncomfortable and was moving around on the table, the defendant stopped the procedure and sent the patient home with instructions that she report to the ... East Baltimore Medical Center the following morning for completion of the abortion. In the course of the attempted abortion at Hill-crest, the defendant, [Sharma], perforated his patient’s uterus and colon. Dr. Sharma and the staff at Hillcrest were fully aware that the attempted abortion had resulted in serious bodily harm to the plaintiff ... in the manner set out above.

Despite this the plaintiff was not told of the nature and extent of the harm inflicted by the defendants at the Hillcrest Clinic. On March 30, 1988 the plaintiff appeared at the East Baltimore Medical Center where she was admitted. At the East Baltimore Medical Center the claimant was examined, given medication and sonogram. The patient became tachycardic.

At John Hopkins Hospital, Dr. Karin Blackmore attempted, under anesthesia, a dilation and suction evacuation. During the course of this procedure it was suspected that the uterus and the colon had been cut at Hillcrest and thereupon Dr. Ira Horowitz of the GYN and Oncology Services was called for immediate consultation. The decision was made to perform an exploratory laparotomy. In the early morning hours of March 31, 1988 Dr. Horowitz, after diagnosing a perforated uterus and trauma to the rectosigmoid, completed the uterus evacuation, repaired the uterine defect, fashioned a Hartman’s Pouch and completed a rectosigmoid colostomy. [Curry] remained a patient in Johns Hopkins Hospital until April 12, 1988.... 2.

Under the standards of medical and obstetrical care, the defendants, [Sharma] and the Staff of Hillcrest Clinic, Inc., are charged with the responsibility of performing a safe and infection-free abortion and with the responsibility of follow-up care with particular reference to any complications that might develop during the abortion procedure. The defendants are also responsible for choosing, and properly advising their patients of, the proper method of abor ⁴⁸² tion and the proper facility wherein the abortion should be carried out that provides the least health hazard for her, based on physical condition and length of pregnancy. 3. It is further asserted that the defendants, having undertaken the obstetrical and gynecological care with regard to [Curry], had the responsibility to make themselves aware of any complications that might have developed during the abortion procedure, such as traumatizing the uterus and colon and thereafter of initiating and skillfully executing such medical procedures as were necessary to safeguard the life and health of their patient. In violation of the standards of medical and obstetrical care, the defendants jointly and severally were negligent in their failure to choose the proper method and facility for the abortion, in their failure to execute the abortion "without damage to the uterus and colon, and in [their] failure to skillfully initiate and execute proper remedial procedures once the complication was recognized or should have been recognized.

As a direct result, the claimant suffered severe and permanent damage. The defendants violated the standard of care: a. by attempting to perform a suction abortion on a patient who was l&k weeks pregnant; b. by cutting the uterus and colon while attempting a suction abortion; c. by not sending [Curry] for further treatment immediately instead of telling her to report for further care the next day knowing that he had damaged her uterus and colon; As a result of this violation of the standard of care, [Curry] had to have a colostomy. The clinic is liable under the doctrine of respondent superior for the actions of Dr. Sharma. 4. [Curry] claims damages for her permanent injuries, her past, present and future physical pain and mental anguish, medical expenses and economic loss. The negligence complained of occurred in Baltimore County where ⁴⁸³ venue is sought.

The amount in controversy exceeds $10,-000.00. 5. Defendant Sharma, maliciously, deliberately and falsely reported, or did so with such reckless disregard for the truth and Curry’s condition so as to constitute malice, to Drs. Brown and Blackmore of East Baltimore Medical Center/Hopkins, that he never inserted a suction catheter into Curry’s person, that he had not perforated Curry’s uterus and colon, that 16Jé weeks was within his safe “cutoff’ for performing a suction abortion but that because Curry was “moving around” she needed a saline abortion under hospital conditions. The Hopkins staff relied on this false information in their decision not to bring Curry in immediately rather than the next day.

Dr. Sharma made these false statements with the intent of covering up his actions and in so doing, compromised Curry’s recovery. Claimant therefore seeks punitive damages in an amount in excess of $10,000.00. The contents of counts two, three, and four are not relevant to this appeal. On April 26, 1990, and again on May 16, 1990, before the HCAO, Curry moved for an order of default, as Hillcrest had failed to file a response to the amended claim.

An order of default was entered on May 14, 1990 and notice of that order was mailed to all parties on May 21, 1990. On June 15, 1990, Curry moved for the entry of an award by default, which the Director entered on June 19, 1990. On July 6, 1990, an entity known as Hillcrest Clinic, P.A. filed a motion to strike the award by default. In that motion, Hillcrest argued that the party sued, Hillcrest Clinic, Inc., had ceased to exist and that, since January 1, 1988, its name was Hillcrest Clinic, P.A. Bonnie Bailey, Hillcrest’s administrator, asserted in an affidavit that Hillcrest’s resident agent was “misled” in keeping track of the suit papers by virtue of the fact that the suit was against Hillcrest Clinic, Inc., an “entity that no longer exists.” Curry opposed the motion and submitted State Department of Assessments and Taxation (“SDAT”) ⁴⁸⁴ documents indicating that no such name change had ever occurred.

Hillcrest filed a reply, which included a second affidavit of Ms. Bailey. Ms. Bailey affirmed that she was “shocked to learn that ... Hillcrest Clinic, Inc.[ ] was a corporation of record and that there was no record of Hillcrest Clinic, P.A.” According to Ms. Bailey, Hillcrest had long operated and held itself out to the public as Hillcrest Clinic, P.A., believing in good faith that its name had been changed. Ms. Bailey concluded that Hillcrest’s lawyer had either misunderstood or overlooked Hillcrest’s instruction to effect that change.

After a hearing on the motion to strike the order of default, the Chairperson denied Hillcrest’s motion by opinion and order in which she rejected Hillcrest’s assertions of good faith and equitable excuse for failure to plead: Dr. Ward’s [Hillcrest’s president’s] reliance on the name “Hillcrest Clinic, P.A.” to shield the entity from claims against Hillcrest Clinic, Inc. suggests neither ordinary diligence nor good faith. By necessary implication, Dr. Ward made a conscious decision not to respond to the claim because he thought that Hillcrest Clinic, P.A. would not have liability for a claim filed against Hillcrest Clinic, Inc. But even a cursory reading of the claim reveals that [Curry] asserted she was injured while being treated at Hillcrest Clinic by Sharma. Dr. Ward knew or should have known that Sharma was associated with Hillcrest and that [Curry] was a former patient who claimed to have had problems. Neither ordinary diligence nor good faith would permit resting on the belief that a name change, however effectuated, would cleanse Hillcrest of potential liability.

Regardless of when and how the corporate identity changed, any reasonable person would perceive that there was a potential liability problem arising from the treatment at Hillcrest. The only conclusion that can be drawn from Hillcrest’s admissions is that Hillcrest Clinic, P.A. was attempting to use a technicality to shield itself from claims. There is no legal or logical basis for a claim that a name change would absolve a corporate entity of potential liability. Even when ⁴⁸⁵ Hillcrest finally participated in this action, it was not candid about its status and maintained the facade that Hillcrest Clinic, P.A. was not liable for a judgement against Hillcrest Clinic, Inc. 6 ...

Hillcrest’s assertion that the default occurred because the summons and amended [claim] were temporarily lost is without merit. Dr. Ward received numerous pleadings during March and April 1990 in addition to being personally served with the Amended [Claim].... Dr. Ward also received a courtesy copy of the claim before it was served.... Further, other documents were mailed to the [clinic] address.

It defies reason to justify the striking [sic] default on the claim that Dr. Ward temporarily lost track of the summons and Amended [Claim] given the receipt of these other documents. The fact is, Hillcrest intentionally ignored repeated communications from the parties and HCAO. Hillcrest’s claim that it has a [sic] equitable excuse for failing to plead based on temporarily losing the summons and Amended [Claim], the ‘mistake’ as to corporate identity and the failure to receive the Notice of Order of Default is without objective factual support and provides no legal basis for striking the default. Hillcrest did not proceed in good faith as to the issue of corporate identity and did not respond with ordinary diligence. 7 ⁴⁸⁶ [Footnotes six and seven are as they appear in the quoted document] Following this ruling, thé case proceeded to a panel hearing, which took place from February 11 to February 15, 1991.

Hillcrest moved in limine to benefit from Sharma’s defenses on the merits under the “Lingan ” doctrine. The Chairperson held the motion sub cuña until after the evidence was taken and proposed panel instructions were submitted. On February 15, 1991, the Chairperson signed a Final Opinion and Order (“Final Order”) which reads: The Panel, after duly considering all of the evidence presented in the case made the following findings: 1) Defendant Sharma was not negligent in: a) attempting the abortion while Ms. Curry was 16.5 weeks pregnant; b) injuring the colon while attempting the abortion; c) failing to send Ms. Curry for further treatment immediately when he knew or should have known that he had damaged her uterus and colon. 2) Defendant Sharma was negligent in failing to carefully and fully inform the subsequent treating physicians. 3) The negligence was not the proximate cause of Ms. Curry’s injuries. Accordingly, JUDGEMENT OF NO LIABILITY IS ENTERED FOR DEFENDANT SHARMA.

Given that Defendant Hillcrest’s Motions in Limine to Benefit from Sharma’s Defenses and to Limit Damages were orally granted at the hearing and that the panel found that Ms. Curry’s injuries were not the proximate cause of negligence caused by Defendants, FINAL JUDGEMENT OF NO LIABILITY IS ENTERED FOR DEFENDANT HILLCREST. It is so ORDERED, this 15th, Day of February, 1991. ⁴⁸⁷ On that date the Chairperson also signed an Arbitration Panel Determination (“APD”) in which the Chairperson stated that there was a finding of “no liability as to Defendants” and that costs were to be “split evenly between the parties.” The Final Order was first entered on the HCAO docket on February 21,1991. Curry also received a copy of the order on that date. On February 22, 1991, Curry’s notice of rejection and notice of action to nullify HCA award (which Curry mailed the prior day) were entered on the dockets in the HCAO, and the circuit court, respectively.

The APD was entered on the HCAO docket on February 25, 1991, along with another copy of the Final Order. On February 27, 1991, the Director mailed the APD to all parties. In a cover letter, the Director informed counsel that the “Award of the panel is final and binding on all parties” and that the thirty day period for filing an appeal is “computed from the day you received this notice.” Curry received the Director’s service of the award on March 1, 1991. Curry’s circuit court complaint, which was filed along with the notice of action to nullify HCA award, contains four counts.

The allegations in count one were taken verbatim from count one of the amended claim. Curry alleged in count two that Sharma’s negligence was the direct and proximate cause of her injuries, and in count three that Hillcrest, “acting through its agents, servants and/or employees, was independently negligent ... over and above, or distinct from, the negligence of ... Sharma” and that that negligence was also the direct and proximate cause of Curry’s injuries. After the trial court ruled on Curry’s and Hillcrest’s motions and Curry’s petition (the rulings under review in this appeal), the case was tried before a jury.

At various points in the trial, Curry renewed her position that Hillcrest should not be allowed to defend on liability, i.e., was not entitled to de novo review on liability, but should only be allowed to contest damages. Further, Curry objected to the court’s refusal to give her proposed jury instructions on this issue. Hillcrest continued to assert that the default at the HCAO level did not carry over to the circuit court level. On a special verdict form ⁴⁸⁸ the jury concluded that Sharma was negligent, but that his negligence did not cause Curry’s injuries.

The jury also answered a separate question about Hillcrest’s independent negligence (as opposed to respondeat superior liability for Sharma’s actions) in the negative. Discussion I The Premature Notice of Rejection We address first Hillcrest’s contention that Curry filed the notice of rejection prematurely and, thus, the circuit court did not have jurisdiction to entertain the appeal. We shall conclude that, despite the premature nature of the notice, Curry substantially complied with the Health Care Malpractice Claims Act (“the Act”) and is therefore entitled to judicial review of the HCAO award. The Act provides: “Subject to § 3-2A-06 of this subtitle, the award of the panel shall be final and binding on the parties.” Md.Cts. & Jud.Proc.Code Ann. (hereinafter “CJ”) § 3-2A-05(i) (1989).

Under CJ § 3-2A-06(a), a party who wishes to obtain judicial review of an award must file a “notice of rejection ... with the Director and the arbitration panel and serve[ it] on the other parties or their counsel within 30 days after the award is served upon the rejecting party.... ” (Emphasis added). Hillcrest argues that, because the award was served on Curry on March 1,1991, Curry had from March 1 until March 31, 1991 to file a notice of rejection; thus, her February 22, 1991 notice of rejection was “fatally premature because the Director had not served the award on Curry by that date.” Curry, on the other hand, contends that (1) CJ § 3-2A-06(a) only sets an outside limit for filing the notice of rejection, ie., no later than 30 days after the award is served upon the rejecting party; (2) “Hillcrest deliberately maneuvered [Curry’s counsel] into this absurd position”; and, (3) in any event, Curry substantially complied with the provisions of CJ § 3-2A-06(a). We reject Curry’s first contention and hold that she did not comply strictly with CJ § 3-2A-06(a). The plain language of CJ § 3-2A-06(a) clearly requires that the notice of rejection be filed within thirty days after service of ⁴⁸⁹ the award.

We nevertheless conclude that Curry did comply substantially with that requirement and was therefore entitled to judicial review. It is therefore unnecessary to address Curry’s “quasi-estoppel” claim. We explain. In Wimmer v. Richards, 75 Md.App. 102 , 540 A.2d 827 , cert. denied, 313 Md. 506 , 545 A.2d 1344 (1988), Judge Rosalyn B. Bell, writing for this Court, surveyed the development of the strict compliance and substantial compliance standards as they relate to the procedure to obtain judicial review of awards under the Act.

In two early cases, Bishop v. Holy Cross Hospital, 44 Md.App. 688 , 410 A.2d 630 (1980) and Schwartz v. Lilly, 53 Md.App. 318 , 452 A.2d 1302 (1982), the claimants attempted to by-pass arbitration by filing their complaints with the circuit court before submitting them to the HCAO. We held in both cases that dismissal was warranted based on the litigants’ failure to utilize the arbitration process as required by the Act. Tranen v. Aziz, 59 Md.App. 528 , 476 A.2d 1170 (1984), aff'd, 304 Md. 605 , 500 A.2d 636 (1985), further tightened the standard of compliance by requiring litigants not only to submit the malpractice dispute to arbitration' but also to follow the special statutory procedures prescribed by the Act. In Tranen , appellants failed to file both a rejection of award and an action to nullify award as required by § 3-2A-06.

This Court held that strict compliance with the statutory scheme ... was required.... Erosion of the strict compliance standard announced in Tranen began in Mitcherling v. Rosselli, 61 Md.App. 113 , 484 A.2d 1060 (1984), aff'd, 304 Md. 363 , 499 A.2d 476 (1985). In that case, the appellant-claimant failed to send a Notice of Rejection to each of the members of the arbitration panel in violation of § 3-2A-06(a). This Court affirmed the refusal by the circuit court to dismiss the appeal, holding that the claimant had “substantially complied” with the statutory provisions.

We also noted that technical irregularities will not be permitted to deprive a party of an opportunity to assert his or her legal rights when the other party has not ⁴⁹⁰ been prejudiced. The Court of Appeals held that filing the notice with the Director constituted literal compliance and thus expressly declined to reach the question of substantial compliance. That same year, this Court decided two more cases consistent with the “substantial compliance” standard. In the first case, Osheroff v. Chestnut Lodge, Inc., 62 Md.App. 519 , 490 A.2d 720 cert. denied, 304 Md. 163 , 497 A.2d 1163 (1985), the claimant incorrectly filed a pleading in the circuit court entitled, “Action to Nullify HCA Award” instead of filing a “declaration” as required by Rule BY4.

We held that, despite the deficiencies in the pleadings, the document filed “substantially constituted” a declaration within the meaning of the Rules and the Act. In the second case, Brothers v. Sinai, 63 Md.App. 235 , 492 A.2d 656 (1985), aff'd sub nom. Cherry v. Brothers, 306 Md. 84 , 507 A.2d 613 (1986), we rejected a claim that filing copies of pleadings captioned for the HCAO in the circuit court warranted dismissal. Our decision was based on the fact that appellees were not prejudiced or misled by appellants’ failure to comply fully with the statutory procedures.

The Court of Appeals, affirming our decision, held that the papers appellees filed fully complied with the prescribed statutory procedures, stating, “we need not address the role, if any, the prejudicial effect of noncompliance plays in this statutory scheme.” In Ott v. Kaiser-Georgetown Community Health Plan Inc., 309 Md. 641 , 526 A.2d 46 (1987), the Court of Appeals resolved the uncertainty over substantial versus strict compliance and the role prejudice would play. In Ott , the claimant wished to reject an arbitration award in favor of a health care provider, and to invoke federal court jurisdiction. Instead of filing the complaint ... in the same court where notice of the action to nullify was originally filed, a complaint was filed in federal district court. The claimant also filed a one-page pleading in the correct state circuit court, which stated that a complaint had been filed in ⁴⁹¹ federal court.

The circuit court subsequently dismissed claimants’ action for failure to comply with Rule BY4. The Court of Appeals reversed