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Robertson v. Anonymous Clinic

Court of Appeals of Indiana

November 7, 2016

Stephen W. Robertson, Commissioner, Indiana Department of Insurance, as Administrator of the Indiana Patient's Compensation Fund, Appellant/Intervenor,
v.
Anonymous Clinic [1], (Defendant Below) and Terri J. Rethlake, et al. (Plaintiffs below), Appellees. Stephen W. Robertson, Commissioner, Indiana Department of Insurance, as Administrator of the Indiana Patient's Compensation Fund, Appellant/Intervenor,
v.
Orthopedic and Sports Medicine Center of Northern Indiana; ASC Surgical Ventures, LLC;OSMC; John Doe Company; Medical Protective Corporation; Medical Insurance Services, Inc. (Defendants Below) and Joe and Linda Alcozar, et al. (Plaintiffs below), Appellees.

         Interlocutory Appeal from the St. Joseph Superior Court Cause Nos. 71D06-1405-CT-136, 71D06-1406-CT-181, 71D06-1406-CT-211, 71D06-1406-CT-257, 71D06-1406-CT-320, 71D06-1406-CT-300 The Honorable David C. Chapleau, Judge

         Appeal from the Elkhart Superior Court Cause No. 20D01-1410-CT-216 The Honorable Evan S. Roberts, Judge

          Attorneys for Appellant Anne L. Cowgur Geoffrey Slaughter Taft Stettinius & Hollister LLP Indianapolis, Indiana

          Attorneys for Appellee Anonymous Clinic David C. Jensen David J. Beach Louis W. Voelker Eichhorn & Eichhorn, LLP Hammond, Indiana

          Attorney for Appellee Orthopedic and Sports Medicine Center of Northern Indiana Lyle R. Hardman Hunt Suedhoff Kalamaros LLP South Bend, Indiana

          Attorneys for Appellees Terri J. Rethrake, et al. James A. Piatt Joseph N. Williams William N. Riley Riley Williams & Piatt, LLC Indianapolis, Indiana Douglas D. Small Foley & Small South Bend, Indiana

          Attorneys for Amici Curiae St. Mary's Health Services, Inc., and St. Mary's Medical Center of Evansville, Inc. Patrick A. Shoulders Steven K. Hahn Ziemer Stayman Weitzel Shoulders LLP Evansville, Indiana

          Bradford, Judge.

         Case Summary[2]

         [¶1] Beginning in 2012, patients around the country began suffering meningitis after being injected with preservative-free methylprednisolone acetate ("MPA"), a steroid purchased from New England Compounding Pharmacy, Inc., a/k/a the New England Compounding Center ("NECC"). It was soon discovered that some lots of MPA had become contaminated with fungus. This consolidated appeal concerns claims brought by injured patients (or those suing on their behalf) (collectively, "the Plaintiffs") against Anonymous Clinic in St. Joseph County and Orthopedic and Sports Medicine Center of Northern Indiana ("OSMC") and affiliated entities in Elkhart County (collectively, "the Defendants"). Plaintiffs contend that the Defendants were negligent in choosing to administer preservative-free MPA and in failing to properly evaluate NECC before using it as a supplier. Some of the Plaintiffs brought suit without using the procedures laid out in the Indiana Medical Malpractice Act ("the MMA"), and Defendants moved either for dismissal or summary judgment on the basis that Plaintiffs' claims were claims of medical malpractice.

         [¶2] Stephen W. Robertson, acting in his capacity as Commissioner of Indiana Department of Insurance, which administers the Indiana Patient's Compensation Fund ("the PCF") intervened, arguing that Plaintiffs' claims were of general negligence and therefore not subject to the provisions of the MMA. The trial courts ultimately agreed with Defendants and Plaintiffs (who had reversed their initial position) that Plaintiffs' claims were governed by the MMA. In this consolidated appeal, the PCF contends that the trial courts erred in concluding that Plaintiffs' claims are claims of medical malpractice. Plaintiffs, Defendants, and Amici Curiae (health-care providers facing similar claims in other cases), contend that Plaintiffs' claims are subject to the MMA as they involve actions informed by the exercise of professional medical judgment. Because we conclude that Plaintiffs' claims are subject to the MMA, we affirm the judgments of the trial courts and remand for further proceedings consistent with this opinion.

         Facts and Procedural History

          I. St. Joseph County Litigation

         [¶3] The St. Joseph Superior Court set forth the facts underlying the claims filed in St. Joseph County in its order dismissing Plaintiffs' claims:

PRELIMINARY DETERMINATIONS OF FACT
1. This proceeding arises as a result of an outbreak of fungal meningitis, fungal infections and other related complications that affected individuals in at least twenty states and caused, at a minimum, 64 deaths. The outbreak resulted in deaths and injuries to Hoosiers and Michigan residents who received treatment in Indiana. Indiana and Michigan were hit particularly hard. The [Centers for Disease Control] identified 93 cases of Hoosiers diagnosed with fungal infections linked to contaminated epidural injections, with 11 of those resulting in death. Michigan was the hardest hit state, with a case count of 264, and 11 of those resulting in death. There are many more individuals who received a contaminated injection who suffered injury from the injection, but who have not been identified as a "case" by the CDC.
2. Plaintiffs are individuals or their representatives who suffered injury or death as a direct result of being administered one or more contaminated epidural injections. ....
Plaintiffs also include the spouses of certain individuals who received such contaminated injections. Those plaintiffs who received services from [Anonymous Clinic] sought treatment of back pain and related spinal conditions. Such services included physical therapy, epidural injections, pain medications and surgery. Each of the patient-plaintiffs was a "patient", as defined by the MMA, of [Defendants] when they received their epidural steroid injections.
3. [Anonymous Clinic is a] qualified health care provider under MMA which was and is engaged in the business of providing health care and selling medical related products. The plaintiffs' complaints, filed before the St. Joseph Circuit and Superior Courts, each allege a claim arising out of the patient-health care provider relationship.
4. The intervening party in this litigation is the Patient's Compensation Fund (hereafter referred to as "PCF"). Under the provisions of the Indiana Medical Malpractice Act (hereafter referred to as "MMA"), the PCF is responsible for payment of a plaintiffs claim which is determined by trial or through settlement to be a recoverable claim and where the health care provider in question, through its insurer, had paid as required under the MMA.
5. Plaintiffs' proposed complaints filed with the IDOI ... pleaded factual allegations about the patient-health care provider relationship each plaintiff had with [Anonymous Clinic]. Each proposed complaint alleges that the plaintiff was "injected with a contaminated epidural product" when he or she was treated at [Anonymous Clinic].
6. Plaintiffs allege in 1998, Gregory Conigliaro and Barry Cadden co-founded the New England Compounding Pharmacy, Inc., known as New England Compounding Center ("NECC"), in Massachusetts. Other members of the Conigliaro and Cadden families came to be involved with NECC either as owners, officers or employees. Other related entities to NECC were established by the Conigliaros and Barry Cadden, including Medical Sales Management, Inc., Ameridose, LLC and Alaunus Pharmaceutical, LLC in the State of Massachusetts.
7. Plaintiffs allege NECC operated as a compounding pharmacy. Plaintiffs assert that compounding pharmacies are prohibited from mass production of pharmaceutical products but may only produce products that have a particular demand need, such as a drug for a patient who is allergic to an ingredient in a mass produced, FDA regulated product or a pharmaceutical product that is no longer manufactured.
8. Plaintiffs allege [Anonymous Clinic] purchased preservative-free methylprednisolone acetate ("MPA") from NECC. MPA is a steroidal product that can be injected into the area of the lumbar spine to provide pain relief to individuals who suffer with low back pain and related symptoms.
9. Plaintiffs allege there are particular safety and product quality risks associated with purchasing pharmaceuticals from a compounding pharmacy. The risk is heightened for those pharmaceutical products that are made without preservatives, due to the increased risk of their being or becoming contaminated.
10. Plaintiffs allege an outbreak of fungal meningitis, lumbar fungal infections and related injuries and complications arose in September, 2012. [CDC] was notified by the Tennessee Department of Health of a patient who developed fungal meningitis after receiving an epidural steroidal injection. Additional patients developing fungal meningitis were next identified in Massachusetts and the outbreak continued spreading to 19 states, including Indiana and Michigan. The outbreak was the result of patients receiving one or more contaminated injections from three different lots of MP A compounded by NECC (lot numbers 05212012@68, 06292012@29 and 08102012@51) or from another contaminated NECC medication.
11. Plaintiffs allege The Food and Drug Administration ("FDA") and the Massachusetts Department of Public Health ("MDPH") began investigating NECC, along with the involvement of other state and federal agencies. On September 26, 2012, NECC recalled the three lots of MPA found to be contaminated. The suspected lots contained 17, 676 dosage vials. Of this number, more than 14, 000 were used for injections. Only about 3, 000 doses were returned through the recall process.
12. Plaintiffs allege the investigation of NECC revealed black particulate matter in sealed, returned vials of MPA. Vials also contained a greenish black foreign matter and others a white filamentous material. Sterility analysis later confirmed the presence of "viable microbial growth" in all of the 50 vials tested.

Appellant's App. pp. 93-97 (record citations omitted).

         [¶4] A total of six claims against Anonymous Clinic were consolidated to address the threshold legal issue of whether the claims are claims of general negligence or are subject to the MMA. On May 15, 2015, in the consolidated action captioned In re Steroid Litigation, Anonymous Clinic filed a motion to dismiss all of the Plaintiffs' claims for lack of subject matter jurisdiction on that basis that MMA requirements had not been met.

         [¶5] On June 26, 2015, the PCF filed a response to the motion to dismiss, opposing it on the ground that the MMA did not apply to Plaintiffs' claims. Also on June 26, 2015, Plaintiffs reversed their earlier position and filed a response urging the trial court to conclude that their claims were covered by the MMA. On August 27, 2015, the St. Joseph Superior Court heard oral argument on Anonymous Clinic's motion to dismiss.

         [¶6] On October 12, 2015, the St. Joseph Superior Court granted Anonymous Clinic's motion to dismiss in part, concluding that Plaintiffs' claims were governed by the MMA. The St. Joseph Superior Court stayed proceedings until compliance with MMA procedures could be accomplished. On November 12, 2015, the PCF moved the St. Joseph Superior Court to certify the case for interlocutory appeal, which motion was granted on November 16. This court accepted jurisdiction.

         II. Elkhart County

         [¶7] The Elkhart Superior Court set forth the facts underlying the claims filed in Elkhart County in its order entering summary judgment in favor of OSMC:

FINDINGS OF FACT
1.Plaintiffs are residents of Indiana and Michigan.
2. OSMC operates medical clinics in Indiana.
3.Medical Protective provides medical malpractice insurance to OSMC.
4.Broadly, the medical malpractice insurance coverage policy requires Medical Protective to defend and indemnify OSMC "[i]n any claim based upon professional services, " subject to four exclusions:
a. Criminal acts and willful torts,
b. Claims that fall under OSMC's general liability policy,
c. Punitive damages, or damages above and beyond compensatory ...

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