Schmidt, Sethi & Akmajian Blog

Civil Procedure—Dismissal of Agent Effect on Claim Against Principle

Posted by Ted A. Schmidt | Jul 11, 2018 | 0 Comments

Koepff v. Physician Group of Arizona, Inc., __Ariz. Adv. Rep. __, No. CV-17-0222-PR (July 9, 2018) (J. Bales)
Plaintiffs sued their surgeon alleging negligence arising out of his surgical care and sued the hospital where the surgery took place for both vicariously liablity based upon the doctor's negligence and independently negligent in the administration of its bariatric surgery program, including its hiring, selection, and credentialing.
Thereafter plaintiffs entered into a settlement agreement with the surgeon requiring plaintiffs to dismiss with prejudice their claims against the surgeon as well as their vicarious liability claims against the hospital, but  expressly preserving their claims against the hospital for its independent negligence. The trial court granted the hospital's motion to dismiss all of plaintiffs' claims on the basis the dismissal of the claims with prejudice against the surgeon effectively eliminated the claims against the hospital. The Arizona Court of Appeals affirmed. The Arizona Supreme Court reversed and vacated.
The Supreme Court  found that while the plaintiffs needed to prove the dismissed surgeon's negligence to establish the causation and damages elements for their claims against the hospital, “those claims are not properly characterized as vicarious liability claims. Plaintiffs do not attempt to hold otherwise faultless defendants liable for [the surgeon's] negligent surgical care, but rather assert that the Hospital breached a separate duty of care in its administration of the surgery program.”
Plaintiffs' claims for negligent credentialing, hiring, and supervision are based on the hospital's independent negligence and thus were preserved in the settlement agreement with the surgeon which released the hospital only from claims based on vicarious liability. 
Finally the court ruled that issue preclusion did not apply here because “Plaintiffs' claim against [the surgeon] was not actually litigated, nor did Plaintiffs agree that their settlement with him would preclude their independent negligence claims against the Hospital. In fact, the settlement and dismissal documents state just the opposite, expressly preserving those claims. Furthermore, the parties' agreement did not manifest an intent to conclusively establish the doctor's negligence or lack thereof – the agreement stated only that ‘no past or present wrongdoing on the part of [the surgeon] is implied or should be inferred by' the settlement. Thus, Plaintiffs are not barred from bringing their claims for negligent hiring, credentialing, and supervision against the Hospital.”

About the Author

Ted A. Schmidt

Ted's early career as a trial attorney began on the other side of the fence, in the offices of a major insurance defense firm. It was there that Ted acquired the experience, the skills and the special insight into defense strategy that have served him so well in the field of personal injury law. Notable among his successful verdicts was the landmark Sparks vs. Republic National Life Insurance Company case, a $4.5 million award to Ted's client. To this day, it is the defining case for insurance bad faith, and yet it is only one of several other multi-million dollar jury judgments won by Ted during his career. He is certified by the State Bar of Arizona as a specialist in "wrongful death and bodily injury litigation".


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