August, 2003I. TEXAS SUPREME COURT DOES NOT RECOGNIZE CAUSE OF ACTION FOR PARENTS' LOSS OF CONSORTIUM RESULTING FROM NON-FATAL INJURY TO CHILD In Roberts v. Williamson, decided on July 03, 2003, the Texas Supreme Court in a 6-3 decision, declined to recognize a common law cause of action for parents' loss of consortium as a result of a non-fatal injury to a child. Additionally, the Court reconciled §§ 33.012 and 33.013 of the Texas Civil Practice and Remedies Code, in determining that settlement credits are not to be applied when apportioning damages between liable defendants.
This case arose as the result of the birth of Courtnie Williamson at the Laird Memorial Hospital in Kilgore, Texas. The day after her birth, Courtnie began suffering from severe acidosis, a medical condition which resulted in severe complications including damage to her heart and brain. Dr. Karen Roberts, the only consulting pediatrician at the hospital, had been advised of Courtnie's situation. Dr. Roberts arrived at the hospital 45 minutes later after being advised and began treating Courtnie. Courtnie was later placed on a pediatric ventilator but the ventilator was not functioning and Courtnie did not receive oxygen for several minutes. As a result of her medical complications, Courtnie suffered from a weakened left side, requires braces to walk, had significant scarring and is developmentally delayed. Courtnie's parents, Lainie and Casey Williamson, sued the hospital, Dr. Roberts, Dr. Mark Miller( the on-call physician), and Dr. Roger Fowler (the attending physician) as a result of the alleged medical malpractice. The Williamsons' later went to trial against Dr. Roberts and the Dr. Miller. The hospital, Dr. Fowler, and another treating physician who was not sued had previously settled with the Williamsons for $486,750. After the trial, the jury apportioned the responsibility as follows: 85% to the settling parties, 15% to Dr. Roberts and 0% to Dr. Miller. The jury awarded $3,010,0001 in damages including $75,000 to Mr. and Mrs. Williamson for the loss of parental consortium in the past and $1 for loss of parental consortium in the future. The Court entered a judgment against Dr. Roberts for $451,500.15, or 15% of the entire award-with no deductions for settlement. Dr. Roberts filed her appeal in the Sixth Court of Appeals complaining that Texas law does not permit a parent to recover for loss of consortium as the result of a non-fatal injury of a child and that the trial court erred in not applying a settlement credit before apportioning damages. Dr. Roberts also argued in the appeal that the Williamsons' expert, a pediatric doctor, was not qualified to testify regarding neurological defects of Courtnie. The Williamsons argued in a cross appeal that the trial court erred in apportioning ½ of the ad litems fees against the Williamsons.
In a case of first impression, the Supreme Court declined to extend Texas common law to claims of parents for loss of consortium due to negligent injuries to their child. Although other Courts of Appeal had acknowledged such a cause of action, the Supreme Court noted that while recognizing such a cause of action would appear to be a sympathetic and logical extension of consortium rights of children as to parents, the Court also noted that other states have declined to recognize any reciprocal right of parents to claim a loss of consortium as to a child. The Court stated
The Court then stated that in order to recognize a new cause of action, the Court must perform a cost-benefit analysis to assure the expansion of liability is justified. The Court further noted that although courts have generally been willing to tolerate more uncertainty in the calculation of damages when necessary to compensate the primary tort victim, courts should be more troubled about measuring the intangible losses to secondary victims. The Court concluded that there was no compelling social policy which compelled them to recognize a parents' right to damages for the loss of parental consortium as a result of a non-fatal injury to child. The Court concluded that common law was best served by the result that they reached in this case. Three justices, including Justice Jefferson, Justice O'Neal and Justice Schneider dissented to the Court's decision. In particular, the dissent pointed out that Texas law allows adult children to claim a loss of consortium when their parent dies as a result of negligence. The dissent went through a lengthy discussion of the evolution of loss of consortium causes of action.
The Court held that Dr. Roberts could not take advantage of the settlement reached with the other defendants and was therefore responsible for her percentage of negligence as to the entire award made by a jury.
The Supreme Court observed that §§ 33.012 and 33.013 are not to be read in conjunction with each other, but instead were to be considered separately. The Court noted that the Plaintiffs' total recovery is limited to the amount of the damages found by the jury reduced by the amount of the settlement. That limit, however, is independent of the §33.013 limitation on a particular Defendant's percentage of responsibility. Therefore, the Court concluded that §33.012 only applied to Plaintiff's recovery and §33.013 only applied to a Defendant's responsibility. The Court then declined to reduce the amount of the award by the jury by the amount of settlement before applying the percentage of credit and therefore Dr. Roberts was liable for 15% of the total amount awarded by the jury (less the $75,001 awarded for the loss of parental consortium.) The Court essentially abolished the long standing practice of taking a settlement credit before applying percentage of responsibility. However this decision is now essentially obsolete due to the changes in the law under the recent Tort Reform Act which specifically set forth that a defendant will no longer be able to claim a credit for any amount of settlement obtained by a plaintiff.
The Court determined that a board certified pediatrician designated by the Williamsons could testify about or give an opinion about Courtnie's neurological injuries that she suffered as a result of the alleged malpractice. Although the doctor was not a neurologist or neurosurgeon, he testified during trial that he had experience in treating children with neurological injuries, had studied the effects of pediatric neurological injuries, and had extensive experience in advising parents about the effects of those injuries. The Court noted that although the doctor was not a neurologist, the record reflected that he had experience and expertise regarding the specific causes and effects of Courtnie's injuries. Therefore, the Court concluded that the doctor was qualified to testify regarding the neurological injuries suffered by Courtnie. In essence, the Court concluded that you don't need quid pro quo in regards to experts, (ie a neurosurgeon commenting about a neurosurgeon's alleged negligence); rather an expert need only demonstrate his knowledge and expertise in the field.
The trial court awarded $21,405.69 in ad litem fees for the ad litem that had been appointed on behalf of Courtnie. The trial court ordered that the liability for the fee be evenly split between the Williamsons and Dr. Roberts. The Williamsons had contested the splitting of the fee as they argued that they had been successful at trial against Dr. Roberts. In apportioning the costs evenly between the Plaintiffs and Defendants, the trial court concluded that it would be "fair" given the fact that Dr. Roberts had only been found 15% liable. The Supreme Court concluded that merely stating that it would be "fair" was not good cause and there was nothing else within the record to substantiate the trial court's ruling. Therefore, the Court found that it was an abuse of discretion to apportion half of the ad litem's fees against the Williamsons, and reversed the trial court's ruling on that issue.
The Texas Supreme Court, in a 6-3 decision, made abundantly clear that there is no cause of action for loss of parental consortium that arise as the result of a non-fatal injury to a child. This decision will affect any and all pending cases involving claims of loss of parental consortium as to a non-fatally injured child- such as in the context of allegations of medical malpractice resulting from the birth of a child and the resulting injuries to that child. II. Although a policy contains an exclusion for bodily injury due to breach of professional standard of care, a CGL insurer is obligated to defend an action where patients allege that the physicians' association was both negligent in administering care and in failing to secure cabinets which allowed an employee to contaminate anesthetic in the process of stealing drugs. However, because of these alternative theories a fact issue exists as to whether there was coverage and precludes summary judgment on the insurer's duty to indemnify. In Utica v. American Indemnity and Texas Property & Casualty Insurance Guaranty, 2003 WL 21468776 Tex., 2003, American Indemnity (CGL) and Texas Property & Casualty Insurance Guaranty (IGA) for insolvent professional liability insurer settled suits against physicians' professional association. These claims were brought by patients injured from the administration of anesthetics contaminated by a Hepatitis C infected employee while he was stealing them. The CGL insurer, American Indemnity, brought action against IGA and the predecessor CGL insurer, Utica, seeking reimbursement and judgment declaring respective rights and obligations of the three insurance companies. The IGA cross-claimed against Utica and counter-claimed against the plaintiff CGL insurer American Indemnity. American Indemnity and Texas Property & Casualty Insurance Guaranty reached a settlement. The 201st Judicial District Court, Travis County, F. Scott McCown, J., then entered summary judgment for the IGA and the plaintiff CGL insurer that Utica National Insurance Company had a duty to defend under its general liability policy and a duty to indemnify. Utica appealed. The Waco Court of Appeals affirmed. On petition for review, the Supreme Court, Phillips, C.J., held that: (1) The Utica CGL policy excluded coverage only when plaintiff's injury was caused by breach of a professional standard, and (2) a fact issue as to whether professional services exclusion applied precluded summary judgment on the coverage issue. The Supreme Court affirmed the decision in as to Utica's duty to defend but reversed as to whether Utica had the duty to indemnify under the exclusion.
In late 1991 and early 1992, Mid-Cities Surgi-Center (the surgical center) employed a scrub technician who stole fentanyl, an anesthetic, from the surgical center. He removed fentanyl from the glass ampules with a a syringe and injected himself with the drug. Using the same syringe, he then injected saline solution back into the ampules to hide his theft. Because he was infected with Hepatitis C, his use of a dirty syringe allegedly contaminated the ampules. After his crime was discovered, he pleaded guilty to stealing the drugs and went to prison. A number of patients who received fentanyl injections before the crime was discovered subsequently tested positive for Hepatitis C. Some of these patients brought claims against Mid-Cities Anesthesiology, P.A., a professional association of ten doctors who practiced anesthesia at the surgical center, and the association's member anesthesiologists (hereinafter collectively called the doctors' association). The patients alleged numerous negligent actions against the doctors' association and its members, including negligence in "failing to properly secure anesthesia narcotics" and in "exposing patients to contaminated medication." The association's professional liability insurer originally assumed defense of the suit, but later became insolvent. The Texas Property and Casualty Insurance Guaranty Association (TPCIGA) then assumed its obligations. TPCIGA first tendered the suit for a defense and coverage to American Indemnity Co., the association's general liability insurer at the time of litigation. American Indemnity originally denied coverage, arguing that its policy was not yet effective when the patients became infected. The defense was then tendered to Utica National Insurance Company, the general insurer at the time of the infection. Utica also refused to assume the defense, arguing that its policy exclusion for any injury caused by the rendition of professional services precluded any possible coverage. TPCIGA and American Indemnity settled the case against the doctors' association for approximately one million dollars. American Indemnity then filed this suit against Utica and TPCIGA, seeking reimbursement from Utica for the settlement costs and a judgment declaring the respective rights and obligations of all three insurance companies for defense of the underlying suit. TPCIGA filed a cross-claim against Utica for its defense and settlement costs and a counter-claim against American Indemnity for defense costs. American Indemnity and TPCIGA were able to settle their claims against each other, but both companies proceeded against Utica. All three parties moved for summary judgment. The trial court denied Utica's motion and granted TPCIGA's and American Indemnity's motions, holding that Utica breached its obligation to defend and was therefore liable for defense costs. The trial court also held that Utica's professional services exclusion did not preclude coverage of the claims, and further granted summary judgment to American Indemnity and TPCIGA for the full cost of their settlement, together with attorneys' fees and pre- and post-judgment interest. The court of appeals affirmed the judgment
The Court states the well settled position that a liability insurer is obligated to defend a suit if the facts alleged in the pleadings would give rise to any claim within the coverage of the policy. Utica's policy generally covered liability for "those sums that the insured becomes legally obligated to pay as damages because of 'bodily injury,' 'property damage,' 'personal injury,' or 'advertising injury,' to which this insurance applies." The policy contained several exclusions, including one which specified that the policy "does not apply" to any "[b]odily injury ... due to rendering or failure to render any professional service ... [including but] not limited to ... [a]ny health service or treatment." The Court agreed with the argument of TPCIGA and American Indemnity that this exclusion would only preclude coverage when the plaintiff's injury is caused by the breach of a professional standard of care. Thus, while a claim for the doctors' negligent administration of the anesthesia would be excluded from Utica's policy, the negligence in failing to secure the cabinets does not implicate a professional standard of care. Utica did not dispute that its general liability policy could cover a claim for the negligent failure to store or secure drugs. However, Utica argued that its policy precluded coverage for a claim of negligent storage because the doctors later rendered a professional service by injecting the patients with the anesthetic. Utica asserted that (1) the injection of fentanyl was a health service, and therefore a professional service as defined by the policy, and (2) the injection was a but-for cause of the infection--without the injection, the patients could not have been infected with Hepatitis C. Thus because the professional service was a but-for cause of the injury, Utica argues that coverage is excluded even if that professional service were rendered with all due care. Because the policy excluded injury "due to" the rendition of professional services, the Court concluded that language can be reasonably read to preclude coverage only when the plaintiff's injury is caused by the breach of a professional standard of care. The Court found that the "due to" language of this exclusion was significant in relation to other exclusions in the policy which used the words "arising out of." Because the policy used different wording "arising out of" versus "due to" in parallel exclusions the Court reasoned that the "due to" language requires a more direct type of causation tying the insured's liability to the manner in which the services were performed. Further, the Court noted under Utica's interpretation of the policy exclusion the doctors' association would necessarily have a gaping hole in its coverage because the general policy would exclude any harm related to the provision of professional services. If the doctors were also not negligent in their provision of medical services, then the professional liability policy would not provide coverage either. Thus, the doctors' association would have no insurance coverage for any claim related to its professional services but unrelated to any fault in the provision of those services. The Court stated it was unlikely this standard policy was intended to provide so little coverage. The Court then held that because the injured patients alleged both negligent administration of the drug and that the doctors' association was negligent in failing to secure the cabinets, Utica had a duty to defend the claim and was liable for defense costs. However, the Court noted that merely because Utica had a duty to defend the underlying suit, did not mean that it was obligated to indemnify its insured for the settlement. Even if a liability insurer breaches its duty to defend, the party seeking indemnity still bears the burden to prove coverage if the insurer contests it. The Court noted that both parties argued the indemnity question could be decided as a matter of law. However, the Court then held that the coverage determination depends on a factual resolution of whether the patients' infection was caused by the doctors' breach of a professional standard of care. Because the injured patients alleged both professional and general liability, a determination by the finder of fact that the infection was caused by the breach of a professional standard of care would negate Utica's duty to indemnify. If, however, the professional services were rendered with due care, then the exclusion would not apply. Therefore, the Court remanded the case to the trial court as to whether Utica had a duty of indemnification.
While of no groundbreaking significance, this decision specifically examines the important differences between exclusion language such as "due to" as opposed to "arising out of." Under this analysis, "due to" language is restrictive and requires a much more specific causation than the broader term "arising out of". As the negligence claims here would cover both professional and non-professional acts, an exclusion for harm "due to" the provision of professional services would not extinguish the duty to defend. Further, the Court's opinion contains a concise discussion regarding both interpretation of policy language, and the interrelation of general liability and professional liability policies. III. CAN AN EMPLOYEE HAVE MORE THAN ONE EMPLOYER FOR PURPOSES OF THE "EXCLUSIVE REMEDY PROVISION OF THE WORKER'S COMPENSATION ACT In Wingfoot Enterprise d/b/a Tandem Staffing v. Alvarado (decided on September 18, 2002), The Supreme Court concluded that an employee can have more than one employer for purposes of the exclusive remedy provision of the Worker's Compensation Act.
Tandem is in the business of providing temporary general labor to various industrial companies. Tandem entered into an oral agreement with Web Assembly, Inc. to provide temporary workers. The agreement provided that Tandem had the sole responsibility for all aspects of hiring, screening, and terminating employees sent to Web. In addition, Tandem was responsible for paying the employees' salaries, unemployment taxes, social security taxes and for withholding federal income taxes. There was no express agreement regarding Workers Compensation Coverage for the temporary employees. There was evidence, however, that Web assumed Tandem's fees were sufficient to cover the cost of Workers Compensation. Tandem gave its employees details about their job assignment at Web and provided basic safety equipment and training. Web supervised the specific tasks performed by the temporary employees, but Tandem retained the right to determine which employees would perform a particular task for Web, could substitute a different employee to perform a particular task, and could reassign an employee to another task. Tandem hired Marleny Alvarado and assigned her to do manual assembly work at Web's manufacturing facility. Web assigned Alvarado to operate a stamping machine. Two days after Alvarado began working at Web's facility, the tips of three of her fingers were severed while she was operating the machine. Tandem maintained Workers Compensation Insurance for Alvarado and its other employees. Web also had coverage for its employees. Alvarado applied for, and received benefits under Tandem's policy, but subsequently sued Tandem alleging that Tandem was negligent and grossly negligent in failing to train and supervise her, warn her of danger, and provide her a safe workplace. Alvarado also filed suit against Web. Tandem moved for Summary Judgment arguing, among other things, that the Texas Workers Compensation Act's exclusive remedy provision barred Alvarado's claims because Tandem was Alvarado's employer at the time she was injured. The trial court granted Tandem's motion for Summary Judgment. Alvarado appealed the trial court's ruling. The Supreme Court granted Tandem's Petition in order to resolve differing view among the Courts of Appeals as to whether a general employer that provides Workers Compensation Coverage for an employee is precluded from relying on the exclusive remedy provision of the Workers Compensation Act if the employee was injured while the details of the employees' work were under the control and supervision of another entity.
The Court noted that the question that it must decide is whether, for purposes of Workers Compensation, a general employer like Tandem remained a "employer" within the meaning of the Act and thus whether the exclusive remedy provision can apply to both the general employer and one who has become an employer by controlling the details of the worker's work at the time of an injury. The Court noted that neither the definition of "employer" and "employee" under the Act, nor the exclusive remedy provision expressly foreclose the possibility that there may be more than one employer. The Court gave weight to what it considered to be the Labor Code's overall scheme for Workers Compensation and for protecting workers in concluding that the Act permits more than one employer for Workers Compensation purposes.
The Court reasoned that temporary workers move from one client company to another and may not know who will be directing their work from day to day. The only constant in their work is that they are employed their general employer. They look to that general employer for payment of wages and work assignments. The Court noted that the purposes underlying the Workers Compensation Act and its definitions of "employer" and "employee" indicate that the general employer is and should be, and "employer" of a temporary worker even if a client company directs the details of that employee's work when the employee is injured. In further support of that proposition, the Court noted that an employee should not be placed in the position of trying to determine, perhaps at his peril, which of two entities was his or her employer on any given day or at any given moment during a day. In reaching the conclusion, the Court explained that it could find nothing in the Texas Workers Compensation Act that would preclude applying its definitions to both a general employer that provides temporary workers, and that employer's client a company when the general employer, its client, and the employee fit within the express definitions of the Act. The Court concluded that the purposes of the Act are promoted in giving effect to definitions of "Employer" and "employee" when they fit both a provider of temporary workers and its client.
The Court's decision in this case is a consequence of its interpretation of the Acts underlying purpose to provide prompt remuneration to employees who sustain injuries in the course and scope of their employment. The Court's conclusion that an employee may have more than one employer for purposes of the exclusive remedy provision of the Act is consistent with the purpose of the Workers Compensation Act. Please feel free to call any of our partners or associates with any questions that you may have at 361-881-9217 or fax us at 361-882-9437. |
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Volume IV, No. 2
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