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Dixon v. Lake Cumberland Regional Hospital, LLC

Court of Appeals of Kentucky

April 28, 2017



          BRIEF FOR APPELLANTS: Ann B. Oldfather Sheldon L. Haden Megan J. Hastings Louisville, Kentucky

          BRIEF 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



          JONES, JUDGE

         Bruce 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.

         I. Background

         A. Overview

         Pamela 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 experienced complications.

         Following 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.

         The 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.[1] 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, [2] plus accruing interest on his portion of the judgment.

         In this 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 Hospital individually.

         B. The Hospital & Dr. Husted

         Prior 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.

         Dr. 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."

         In 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").[3] 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, [4] CBN, [5] served as the Bariatric Center's program director.

         Dr. 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 interior entrances.

         The 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.

         The 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 system.

(Emphasis added).

         Once 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.

         From 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.

         Internal 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."

         In 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 Medical Director."

         C. Pam Dixon

         Pam's 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."

         The fifth section of the Bariatric Center's patient information packet reads as follows:



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