Osheroff v. Chestnut Lodge, Inc.

GILBERT, Chief Judge. Raphael J. Osheroff was a claimant before the Health Claims Arbitration Office (HCAO). 1 An arbitration panel acting for the HCAO ultimately found in Osheroff’s favor. It issued a determination of award in the amount of $250,- ⁵²² 000. The health care providers, against whom the award was handed down, Chestnut Lodge, Inc., Manuel Ross, M.D., and C. Wesley Dingman, M.D., filed a notice of rejection of the arbitration award with the HCAO and in the Circuit Court for Montgomery County. 2 Osheroff then filed certain pleadings with the HCAO and circuit court. 3 The health care providers-defendants filed a motion raising preliminary objection.

They asserted that the circuit court should dismiss the appeal because: 1) it lacked jurisdiction, since Osheroff had failed to file a “declaration” as required by the health claims arbitration statute and the Maryland Rules; 2) Osheroff had failed to furnish service, in accordance with the Maryland Rules, of the pleadings filed in the circuit court; and 3) the award filed by the HCAO was invalid because of irregularities alleged to have transpired at the HCAO. The circuit court responded after a hearing by dismissing Osheroff’s appeal of the HCAO award. The circuit court found that Osheroff had failed to file a “declaration” as mandated by Courts Art. § 3-2A-06(b) and Rule BY4. The court further found that HCAO had improperly made the award in the first instance. 4 Distressed by the action of the circuit court, Osheroff has journeyed to this Court.

He poses two questions for our review. We address the issues in the order in which they were put to us, adding such facts as may be necessary to the discussion. I. Did the Circuit Court for Montgomery County correctly determine that Osheroff had failed to file a declaration, ⁵²³ and that the result of that failure precluded that court from acquiring jurisdiction to hear the appeal from HCAO? Resolution of this issue requires examination of the language of the statute and the Maryland Rules which govern health claim arbitration proceedings, as well as the interaction between them.

Actions alleging medical malpractice are regulated in this State by Courts Art. §§ 3-2A-01 through 3-2A-09 and by Subtitle BY of the Maryland Rules of Procedure. The statute requires that all health claim actions for a sum in excess of $5,000 5 must initially proceed through non-binding arbitration before a panel selected from a pool of individuals offered by the HCAO. Courts Art. § 3-2A-03(c); and see Group Health Assoc. Inc. v. Blumenthal, 295 Md. 104, 114-15 , 453 A.2d 1198, 1205 (1983).

Once the arbitration process has concluded, any party to the proceeding may, for any reason, reject the panel’s determination of liability, damages, or both, and invoke court review. Courts Art. § 3-2A-06(a). The rejecting party must notify in writing the director of the HCAO and the other parties of the rejection no later than 30 days after the award is served on the rejecting party. Courts Art. § 3-2A-06(a).

The notice of rejection is of no effect unless the rejecting party also files “an action in court to nullify the award.” The action to nullify must be filed in accordance with Md.Rule BY4. After the notice to nullify has been filed in court, subsequent proceedings are controlled by the Maryland Rules. Courts Art. § 3-2A-06(b). Once the rejecting party has filed a notice to nullify the award, the claimant before the HCAO becomes the judicial plaintiff, irrespective of whether he or she is the rejecting party.

Md.Rule BY3. The rules make pellucid that when a notice to nullify has been filed with the court, the onus is upon the plaintiff to file a ⁵²⁴ “declaration” (now styled “complaint”) 6 in the court within 30 days of the date the notice of rejection was filed. Md.Rule BY4(a). Osheroff admits that he never filed in the circuit court a document entitled “declaration.” Notwithstanding that fact, he contends that the pleadings he filed entitled, “Action to Nullify HCA Award” and “Amended Action to Nullify HCA Award,” substantially complied with all the requirements of Md.Rule BY4.

He asserts that the pleadings he filed serve as the functional equivalent of a declaration. We agree with Osheroff that mere misappellation of a pleading should not ordinarily provide the predicate for a dismissal without leave to amend. 7 Osheroff’s initial pleading was entitled, “Action to Nullify HCA Award.” It was filed on January 31, 1984, well within 30 days from the receipt of the arbitration award. Within 7 days thereafter, Osheroff filed an “Amended Action to Nullify HCA Award.” Appended to that action, as with the original pleading, was the “Amended Arbitration Panel Determination” and a copy of the “Amended Statement of Claim,” he had previously filed with the HCAO. The amended action to nullify included a prayer for a jury trial.

The health claims arbitration statute was enacted as a legislative remedy to a perceived medical malpractice insurance crisis. Its constitutionality is settled. See Tabler v. Medical Mutual Ins. Society, 301 Md. 189, 191-92 , 482 A.2d 873, 874-77 (1984); Attorney General v. Johnson, 282 Md. 274 , 385 A.2d 57 , appeal dismissed, 439 U.S. 805 , 99 S.Ct. 60 , 58 L.Ed.2d 97 (1978).

The act sets out procedural ⁵²⁵ requirements which must be observed before judicial review of a malpractice claim may be obtained. A litigant’s failure to tread any of the prescribed steps along the path of arbitration may result in dismissal of an action. See, e.g., Tranen v. Aziz, 59 Md.App. 528 , 476 A.2d 1170 , cert. granted, 301 Md. 471 , 483 A.2d 754 (1984); Bailey v. Woel, 55 Md.App. 488 , 462 A.2d 91 (1983), aff'd, 302 Md. 38 , 485 A.2d 265 (1984); Schwartz v. Lilly, 53 Md.App. 318 , 452 A.2d 1302 (1982). In short, the arbitration act is a condition precedent to judicial review of a medical malpractice claim.

Group Health Ass’n v. Blumenthal, 295 Md. 104, 114-15 , 453 A.2d 1198, 1205 (1983) (quoting Attorney General v. Johnson, 282 Md. 274, 283-84 , 385 A.2d 57, 63 (1978)). It must be borne in mind that the statute is strictly construed so as to effectuate the legislative purpose of screening malpractice claims before they reach the courts. Upon completion of the arbitration process and the filing of the correct and timely notice of rejection with the parties and court, the statutory screening process is terminated. All further proceedings are conducted in court and