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Torts: Hospital Liability as Enterprise Under Vulnerable Adult Statute

Posted by Ted A. Schmidt | Jun 29, 2022 | 0 Comments

Fadely v. Encompass Health Valley of the Sun Rehabilitation Hosp., No. 1 CA-CIV 21-0478 (App. Div. I, June 28, 2022) (J. Weinzweig)

Plaintiff was cared for and treated by defendant hospital and rehabilitation center following back surgery.  She suffered a spinal compression while in their care allegedly due to the neglect of the  doctors' treating her there. She did not sue the treating doctors claiming the hospital was vicariously responsible for their conduct.  The defendant sought a dismissal claiming it was not responsible for the conduct of the doctors and could not form an “enterprise” with them under the Adult Protective Services Act [APSA] (aka Vulnerable Adult Statute), A.R.S. § 12-2101(A)(1). The trial court denied the motion and awarded plaintiff $1.7 million in compensatory damages under the statute finding the hospital liable for the doctors' conduct under an apparent agency theory or on the basis that the doctors and hospital were part of an “enterprise” under the statute. The Arizona Court of Appeals affirmed in part, reversed in part and remanded.

It was error for the trial court to find the treating doctors were apparent agents of the hospital applying a respondeat superior theory rather that apparent agency theory. “[A]pparent agency, . . . hinges on principles of estoppel. An apparent agency is created only when (1) a principal ‘intentionally or inadvertently' leads one party ‘to believe an agency exists,' and (2) the party justifiably relies on the principal's representations.” There was no evidence presented here that the hospital did anything to lead plaintiff to believe the doctors were its agents.

Here, the hospital argued that because the doctors were immune from civil liability for damages A.R.S. § 46-455(B) under the APSA and they  could not be in “enterprise” with the hospital to create liability for the hospital under the act. The court of appeals found the plain language of the statute defeated this argument.
The APSA defines an “enterprise” as “any group of persons associated in fact although not a legal entity” involved in caring for “a vulnerable adult.” A.R.S. § 46-455(Q). While the Act does not define person, the  “legislature generally defines “person” as “a corporation, company, partnership, firm, association, or society, as well as a natural person.” A.R.S. §§ 1-215(29); -211(A). Thus while the legislature in 2003 exempted most doctors from liability under the statute it did no exempt hospitals.

Further the trial court did not abuse its discretion in precluding the hospital's expert from testifying that a nonparty at fault (the doctor who authored the discharge summary from the hospital where the surgery occurred)  was responsible for plaintiffs' injury. The “expert” in question did not have the requisite experience working in a hospital, assessing acute care patients or transferring patients to rehabilitation.

Where plaintiff failed to prove defendant's neglect caused her to incur certain medical bills, the bills should not have been admitted into evidence.

Finally, the trial court properly awarded plaintiff post-judgment on its Rule 68 sanction of prejudgment interest for defendant's failure accept an offer of judgment.
“A judgment creditor is entitled to an award of prejudgment inters on a liquidated claim.”  Because the interest was easily calculated it was an appropriate award.

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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