BRUCE DIXON, INDIVIDUALLY, AND AS ADMINISTRATOR OF THE ESTATE OF PAMELA DIXON, AND AS GUARDIAN OF MINOR CHILD C.D., AND CORTNEY DIXON APPELLANTS
LAKE CUMBERLAND REGIONAL HOSPITAL, LLC D/B/A LAKE CUMBERLAND REGIONAL HOSPITAL, LIFEPOINT OF LAKE CUMBERLAND, LLC AND JOHN HUSTED, M.D. APPELLEES
FROM PULASKI CIRCUIT COURT HONORABLE JEFFREY T. BURDETTE,
JUDGE ACTION NO. 10-CI-01363
FOR APPELLANTS: Ann B. Oldfather Sheldon L. Haden Megan J.
Hastings Louisville, Kentucky
FOR APPELLEES: Bradley R. Hume B. Todd Thompson Millicent A.
Tanner Chad Owens Probst Louisville, Kentucky John G.
Prather, Jr. Somerset, Kentucky David S. Ragland Nicholas R.
Hart Katherine T. Watts Louisville, Kentucky
BEFORE: KRAMER, CHIEF JUDGE; JONES AND MAZE, JUDGES.
Dixon (in his individual capacity and as the administrator of
the estate of his late wife, Pamela Dixon) and his two
children (hereinafter collectively referred to as "the
Estate") appeal the Pulaski Circuit Court's
dismissal of a portion of their claims against Lake
Cumberland Regional Hospital, LLC. For the reasons set forth
below, we reverse in part, affirm in part, and remand.
Dixon ("Pam") died at her home on January 13, 2010,
less than a week after having been discharged from Lake
Cumberland Regional Hospital ("the Hospital")
following gastric bypass surgery. Dr. John Husted performed
Pam's initial surgery on December 17, 2009, and an
additional surgery on December 20, 2009, after Pam
Pam's death, the Estate filed suit against the Hospital,
Dr. Husted, and Dr. Paul Wooldridge, a radiologist who
performed and interpreted some of Pam's CT scans. Prior
to trial, the circuit court granted summary judgment to the
Hospital on the Estate's vicarious liability claims after
concluding that it would be impossible for the Estate to
demonstrate that Dr. Husted acted as either an actual or
ostensible agent of the Hospital. The trial court also
granted judgment in favor of the Hospital on the Estate's
theory that the Hospital was jointly liable with Dr. Husted
because they were involved in a "joint enterprise"
with one another. The trial court also dismissed the
Estate's negligent credentialing claim against the
Hospital on the basis that Kentucky does not recognize the
existence of such a cause of action.
Hospital remained in the case on other theories of
negligence. Those claims, as well as the Estate's claims
against Dr. Husted and Dr. Wooldridge, were tried before a
jury. The jury awarded the Estate $10, 658, 265.42 in
compensatory damages. It allocated sixty percent (60%) of the
fault to the Hospital and forty percent (40%) to Dr.
Husted. The Hospital paid its
portion of the judgment, $6, 394.959.25. Dr. Husted's
medical malpractice insurer paid its maximum coverage
obligation, $825, 000, toward Dr. Husted's portion of the
judgment. Dr. Husted still owes $3, 438, 306.17,
 plus accruing interest on his portion
of the judgment.
appeal, the Estate challenges the trial court's decision
to grant the Hospital summary judgement on its vicarious
liability claims as well as the trial court's dismissal
of the Estate's negligent credentialing claim against the
Hospital. The Estate is not seeking a new trial on
compensatory damages. It is requesting that we vacate and
remand the question of vicarious liability for a jury to
determine if Dr. Husted acted as an actual or ostensible
agent. If a jury found in the Estate's favor on the
vicarious liability issue, the Estate would be able to
collect Dr. Husted's portion of the verdict directly from
the Hospital. The Estate also requests a trial on the
negligent credentialing question so that the jury can
determine whether punitive damages are warranted against the
The Hospital & Dr. Husted
to 2008, the Hospital did not have a separate bariatric
program in place. Sometime in 2008, the Hospital began taking
steps to recruit a bariatric surgeon to the Somerset area.
With the assistance of a professional recruiter, the Hospital
located Dr. Husted, a board certified bariatric surgeon with
an active practice in California. The Hospital brought Dr.
Husted to the area and discussed its plans for a bariatric
program with him. Eventually, Dr. Husted reached an agreement
with the Hospital for him to relocate to Somerset, Kentucky.
Husted and a representative for the Hospital entered into a
written Recruiting Agreement on April 28, 2008. As part of
the Recruiting Agreement, Dr. Husted agreed to engage in the
"full-time practice of medicine as a Bariatric/General
Surgeon in the Community" on or before August 1, 2008.
In return, the Hospital agreed to provide Dr. Husted with: 1)
a net collectable revenue guarantee with repayment
forgiveness; 2) a net collectable revenue guarantee bonus; 3)
a marketing expense reimbursement; 4) relocation expenses; 5)
a sign on bonus; and 6) practice management consulting.
Section 6 of the Recruiting Agreement provides that nothing
about it "shall be deemed to create any type of
employment, agency, servant, partnership, or joint venture
between the physician and hospital." This section goes
on to explain that the physician shall "employ his/her
own means and methods and exercise his/her own independent
medical judgment in his/her practice of medicine and in the
performance of all professional services for his/her
patients, including physician's selection of hospitals
for admission of, or service for, his/her patients."
accordance with the terms of the Recruiting Agreement, Dr.
Husted set about relocating to Somerset. Ultimately, he
leased office space from the Hospital. Around the time of Dr.
Husted's arrival, the Hospital began setting up a
comprehensive bariatric center that it named the
"Commonwealth Bariatric Center" (hereinafter
referred to as the "Bariatric
Center"). In a program
overview, the Hospital stated that the Bariatric Center's
purpose was to "provide long-term comprehensive care
for the patient who participates in surgical weight
loss." Cathi Roskind, RN,  CBN,  served as the Bariatric Center's
Husted named his practice the "Cumberland Center for
Obesity Surgery." Dr. Husted outfitted his office and
hired his own staff. Dr. Husted's office was located in
the same building as the Bariatric Center. The two offices
shared an outside entryway and vestibule, but had separate
Bariatric Center extensively advertised itself (as well as
Dr. Husted) throughout the community. In several
advertisements the Bariatric Center referred to Dr. Husted as
"our physician." In others, the Bariatric Center
touted the "combined experience" of its staff,
including Dr. Husted. Almost all of the advertisements
featured Dr. Husted's photograph and credentials. The
Bariatric Center's trifold informational brochure stated
that the "bariatric surgeon" was "housed
within our complex." The advertisements urged
prospective patients to call the Bariatric Center to register
to attend a free weight loss seminar with Dr. Husted. These
seminars generally consisted of an educational PowerPoint
presentation followed by a question and answer session. The
slides informed attendees that the Bariatric Center was a
"health care service provided by Lake Cumberland
Hospital, " introduced Dr. Husted as the "Medical
Director, Bariatric Surgery, Somerset, Kentucky, " and
informed attendees that Dr. Husted "was recruited by
Lake Cumberland Regional Hospital to build a new bariatric
program in Somerset." The presentation made no mention
of the Cumberland Center for Obesity Surgery (the name of Dr.
Husted's practice) or identified Dr. Husted's office
as being separate from the Bariatric Center.
Bariatric Center gave seminar attendees a patient packet,
which they were asked to complete and return to the Bariatric
Center along with a copy of their insurance card. The
cover-page of the packet featured Dr. Husted's picture
along with the following text:
Thank you for selecting Commonwealth Bariatric Center for
your weight loss surgery consideration. You are beginning one
of the most important health related decisions of your life;
one that should greatly improve your quality of life and
well-being. Our center offers a comprehensive bariatric
program to include highly trained and knowledgeable
surgeons, a certified bariatric nurse for educational
support, a bariatric dietician, physical therapy,
psychologists for psychological evaluation required by
insurance and a caring, well organized office team. We offer
Internet support (led by clinical professionals) as well as
monthly support meetings as a free service to our patients,
as we understand the importance of an on-going support
the packet was received by the Bariatric Center, its staff
would verify the patient's insurance availability. The
Bariatric Center staff would then contact the patient to
schedule a consultation appointment. During the consultation,
the patient would meet with the surgeon, clinical
psychologist (who was housed in Dr. Husted's office for
at least part of the time), dietician, and bariatric
education nurse. After receiving insurance pre-approval, the
patient would be scheduled for surgery and a pre-op
appointment. At the pre-op appointment, the patient would
meet with the surgeon and bariatric education nurse and be
pre-registered for surgery. This process included an EKG, lab
work, and a chest x-ray.
the beginning, Dr. Husted and his staff worked closely with
Nurse Roskind and other Bariatric Center staff in
coordinating their various responsibilities. For example, in
a September 2008 memorandum, Nurse Roskind asked Dr. Husted
to approve a "schedule of dates" for patient
consult days, surgery day, monthly support meetings, vacation
time, office holiday closing schedule, and a community
information seminar schedule through the end of the year. At
the bottom of the memorandum, she indicated that she would
need to meet with Dr. Husted again in the near future to
discuss several additional matters.
correspondence also revealed that there was confusion
regarding the role of the Bariatric Center and Dr. Husted
fairly early on. In an email from November of 2008, Nurse
Roskind noted that there was "a lack of a defined
patient process, " which was currently being addressed.
This comment appears to have arisen from concerns regarding
who was responsible for calling and scheduling patients. At
the end of the email, Nurse Roskind recapped that there had
been discussion at the last meeting that Dr. Husted and the
Bariatric Center were "not competing against each other.
The common goal should be the same, to get the patient
through the process and to surgery as efficiently and
seamlessly as possible."
February of 2009, Nurse Roskind outlined several changes
aimed at streamlining the "patient process." She
indicated that going forward Gayla Ellison, a Bariatric
Center employee, would schedule all surgeries. Nurse Roskind
also instructed that: "all patients enter through [the
Bariatric Center], no exceptions." She explained that if
a patient called Dr. Husted's office directly seeking a
consult, his staff should take the patient's information
and give it to Ms. Ellison so that the Bariatric Center could
mail the patient a packet. Nurse Roskind further directed
that the contact information on Dr. Husted's individual
website was to be changed to reflect the Bariatric
Center's contact information "to decrease
duplication of efforts and patient confusion." Agenda
minutes from January of 2009 and May of 2009 refer to Dr.
Husted as the Bariatric Center's "Bariatric Surgery
husband, Bruce, testified that Pam had struggled with her
weight for a number of years. To the best of Bruce's
recollection, Pam had been considering weight loss surgery
for approximately a year. Documents produced during discovery
show that Pam completed the Bariatric Center's ten-page
patient information packet on April 6, 2009. Pam explained on
the form that she was seeking weight loss surgery because:
"I am beginning to have a lot of health problems, I have
tried for years to lose weight. I faithfully go to a gym
which helps me feel better, but I cannot seem to lose
weight." Pam indicated that she was referred to the
Bariatric Center by Drs. Rachel and Tommy Shelton, whom she
described as "my husband's family."
fifth section of the Bariatric Center's patient
information packet reads as follows:
□ JOHN HUSTED, ...