Josephina Augila on behalf of Pedro Aguila v. Anonymous Physicians 1 & 2 (mem. dec.), 45A03-1609-CT-2069

Background

Six patients (and many others) filed proposed medical-malpractice complaints alleging unnecessary surgeries and negligent credentialing by Anonymous Hospital and associated physicians; review panels were convened by the Indiana Department of Insurance.
Panel chair G. Anthony Bertig set deadlines for evidentiary submissions; the Hospital missed all six panel deadlines, and the physicians missed submissions in four of six cases.
Patients moved for preliminary determination and default judgment based on the Hospital’s failure to timely submit to the panels; the trial court initially entered default, later set it aside to permit responses, then re-entered default, and finally granted the Hospital’s Rule 60(B)(1) motion to vacate the default.
The Hospital filed its panel submissions the day before a court hearing and attributed delays to (1) the death of the spouse of the Hospital’s primary attorney; (2) prioritizing discovery responses after consultations with Patients’ counsel; and (3) perceived flexibility of panel deadlines.
Patients argued the Hospital’s delay was egregious, prejudicial (one-year delays), and that the Hospital should not be allowed to present evidence or litigate merits in support of relief.
The trial court balanced prejudice to Patients against the Hospital’s right to a defense, credited equitable considerations (including prior counsel’s death and communications about priorities), and concluded vacatur of default was within its discretion.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether trial court abused discretion by vacating default under Ind. Tr. R. 60(B)(1)	Vacatur was improper because Hospital’s failures were egregious, prejudicial, and remediable only by default	Excusable neglect due to attorney’s spouse’s death, priority discussions with Patients’ counsel, flexible panel deadlines, and meritorious defenses	No abuse: court acted within broad equitable discretion and properly balanced prejudice vs. right to defend
Whether Hospital was barred from presenting evidence at 60(B)(1) hearing that could have been submitted before default	Evidence was inadmissible because it could have been presented earlier	Rule 60(B)(1) does not bar such evidence; only 60(B)(2) has that restriction; much evidence already in record	Rejected Plaintiffs’ bar argument; court may consider such evidence under 60(B)(1)
Whether Hospital improperly argued merits rather than equitable grounds in seeking relief	Hospital focused on merits to relitigate rather than show equitable justification	Some merits discussion is necessary to show meritorious defense; equitable arguments were also presented	Court properly considered both merits (meritorious defense) and equitable reasons as part of 60(B)(1) analysis
Whether Plaintiffs were required to seek lesser sanctions before default	Plaintiffs argue lesser sanctions unnecessary; default appropriate given tardiness	Hospital notes Plaintiffs did not seek lesser sanctions like panel adjudication without Hospital submissions	Not outcome-determinative; Plaintiffs’ failure to pursue lesser sanctions was relevant and court acted within discretion

Key Cases Cited

Brimhall v. Brewster, 864 N.E.2d 1148 (Ind. Ct. App. 2007) (Rule 60(B) relief reviewed for abuse of discretion)
Baxter v. State, 734 N.E.2d 642 (Ind. Ct. App. 2000) (abuse of discretion standard defined)
Kmart Corp. v. Englebright, 719 N.E.2d 1249 (Ind. Ct. App. 1999) (excusable neglect inquiries are fact-specific)
Coslett v. Weddle Bros. Constr. Co., Inc., 798 N.E.2d 859 (Ind. 2003) (doubts about default propriety resolved in favor of defaulted party)
Baker & Daniels, LLP v. Coachmen Indus., Inc., 924 N.E.2d 130 (Ind. Ct. App. 2010) (reinstatement of case is equitable)
Munster Cmty. Hosp. v. Bernacke, 874 N.E.2d 611 (Ind. Ct. App. 2007) (vacatur of dismissal for failure to prosecute reversed as abuse of discretion)
Whelchel v. Cmty. Hosps. of Ind., Inc., 629 N.E.2d 900 (Ind. Ct. App. 1994) (movant must show meritorious defense to obtain relief from default)
Ross v. Bachkurinskiy, 770 N.E.2d 389 (Ind. Ct. App. 2002) (warning that failure to comply with discovery deadlines can justify default)