Case Information
*1 IN THE SUPREME COURT OF THE STATE OF NEW MEXICO Opinion Number: _____________
Filing Date: September 5, 2013
Docket No. 33,635
BRYANNA PEARL BAKER, LORRICE GORDON,
and PAUL CAMPOS, as Personal Representative of the Estate of CHERI WILSON, deceased,
Plaintiffs-Petitioners,
v.
STEPHANIE HEDSTROM, M.D.; SOUTHWEST PERINATOLOGY; WILLIAM RAMIREZ, M.D.; LEE C. CARUANA, M.D.; FAMILY PRACTICE ASSOCIATES, P.C.; MISBAH ZMILY, M.D.; MISBAH ZMILY, P.C.; CORDELL HALVERSON, M.D.; SAN MIGUEL HOSPITAL CORP., d/b/a ALTA VISTA REGIONAL HOSPITAL; THE BOARD OF REGENTS OF THE UNIVERSITY OF NEW MEXICO, as Trustees of the UNIVERSITY OF NEW MEXICO HEALTH AND SCIENCES CENTER; JOHN DOE #1-20, and JANE DOE #1-20; ABQ HEALTH PARTNERS, L.L.C.; LORETTA CONDER, M.D.; LORETTA CONDER, M.D., P.C., a corporation; OMKAR TIKU, M.D.; and OMKAR TIKU, P.C., a corporation,
Defendants-Respondents.
ORIGINAL PROCEEDING ON CERTIORARI
Abigail P. Aragon, Sarah M. Singleton, and Alan M. Malott, District Judges McGinn, Carpenter, Montoya & Love, P.A.
Tyler John Atkins
Randi McGinn
Albuquerque, NM
Law Offices of Felicia C. Weingartner, P.C.
Felicia C. Weingartner
Albuquerque, NM
The Kauffman Firm
Cid Dagward Lopez
Albuquerque, NM
The Vargas Law Firm, L.L.C.
Ray M. Vargas, II
Erin O’Connell
Albuquerque, NM
Law Office of Stephen Durkovich
Stephen G. Durkovich
Santa Fe, NM
for Petitioners
Hinkle, Hensley, Shanor & Martin, L.L.P.
Dana Simmons Hardy
William P. Slattery
Albuquerque, NM
Lorenz Law
Alice Tomlinson Lorenz
Albuquerque, NM
Sharp Law Firm
Lynn S. Sharp
Albuquerque, NM
Butt, Thornton & Baehr, P.C.
Emily A. Franke
W. Ann Maggiore
Albuquerque, NM
Miller Stratvert, P.A.
Jennifer D. Hall
Albuquerque, NM
Krehbiel Law Office, P.C.
Lorri Krehbiel
Albuquerque, NM
Allen, Shepherd, Lewis, Syra & Chapman, P.A.
Edward W. Shepherd
Albuquerque, NM
Serpe, Jones, Andrews, Callendar & Bell, P.L.L.C.
Melanie L. Frassanito
Houston, TX
for Respondents
OPINION
VIGIL, Justice.
{1}
This appeal concerns whether defendant professional corporations and a limited
liability company are “health care providers” as defined by the Medical Malpractice Act
(“MMA” or “the Act”), NMSA 1978, Sections 41-5-1 to -29 (1976, as amended through
2008), so as to be able to receive the benefits of the Act. Although the Court of Appeals
determined that Defendants do not literally meet the Act’s definition of “health care
provider,” it nonetheless held that the Defendants are health care providers under the Act
because a strict adherence to the plain language of the definition would conflict with
legislative intent.
Baker v. Hedstrom
,
I. FACTS AND PROCEDURAL HISTORY
{2} This appeal involves three consolidated cases– Baker v. Hedstrom , Gordon v. ABQ Health Partners, LLC , and Campos v. Conder –in which individual plaintiffs brought suits for damages caused by the medical malpractice of their doctors and the business organizations under which each doctor operated.
{3} In Baker , Plaintiff Bryanna Baker filed suit in the Fourth Judicial District Court against her doctors for medical malpractice after they failed to disclose the results of a test revealing that she had a medical condition that could be dangerous to both mother and child if she became pregnant. She subsequently became pregnant and suffered a heart attack that went undiagnosed for two days, resulting in a miscarriage and permanent heart damage. Baker also sued the professional corporations under which each doctor operated, which were formed under the Professional Corporation Act, NMSA 1978, Sections 53-6-1 to -14 (1963, as amended through 2001), claiming that the corporations were vicariously liable for the doctors’ acts under the doctrine of respondeat superior.
{4} In Gordon , Plaintiff Lorrice Gordon filed suit in the Second Judicial District Court, alleging that her doctor negligently performed an appendectomy that caused a small bowel obstruction for which she required additional surgery. She also sued the doctor’s employer, ABQ Health Partners, LLC, a foreign limited liability company organized under the laws of Delaware, the doctrine of respondeat superior.
{5} Finally, in Campos , Plaintiff Paul Campos, the personal representative of the estate of Cheri Wilson, filed suit in the First Judicial District Court against the doctor who had removed Wilson’s gall bladder and her primary care physician, who provided follow-up care, for malpractice after they allegedly failed to diagnose a bile leak caused during the gall bladder surgery. Wilson subsequently died due to the undiagnosed bile leak. Each doctor practiced under a professional corporation formed under the Professional Corporation Act, and Campos also sued these corporations under the doctrine of respondeat superior. {6} Baker moved for summary judgment on her claim against defendant business entities, arguing that they could not benefit from the damages cap under the MMA because they did not meet the MMA’s definition of “health care provider.” The district court denied Baker’s summary judgment motion and certified the issue of whether the defendant corporations were qualified health care providers for interlocutory appeal.
{7} In Gordon , Defendant ABQ Health Partners, LLC filed a motion to dismiss or stay, arguing that it was a qualified health care provider covered by the MMA and Gordon failed to comply with the requirements of the MMA. The district court denied the motion and certified the case for interlocutory appeal on whether ABQ Health Partners, LLC qualified as a healthcare provider.
{8} The district court in Campos found that the defendant corporations were qualified health care providers, but stayed the litigation in anticipation of an interlocutory appeal. Campos then applied for an interlocutory appeal on whether “the Legislature’s decision not to include professional corporations as ‘health care providers’ in the MMA is given binding force in district courts across the State of New Mexico.”
{9}
The Court of Appeals granted all three interlocutory appeals and consolidated them
because they each raised a similar question.
Baker
,
II. DISCUSSION
A.
Standard of Review and Rules of Statutory Construction
*5
{10}
Our task is to determine whether the Legislature intended Defendants to be eligible
to qualify as “health care providers” under the MMA so as to receive the Act’s benefits.
See
§ 41-5-3(A) (defining “health care provider”); § 41-5-5(C) (explaining that health care
providers that do not meet the qualifications under that “section shall not have the benefit
of any of the provisions of the [MMA]”). Whether the Legislature intended professional
medical organizations like Defendants to become qualified “health care providers” under the
MMA presents an issue of statutory construction, which is a question of law that this Court
reviews de novo.
See United Rentals Nw., Inc. v. Yearout Mech., Inc.
,
B. The Definition of “Health Care Provider” Includes Professional Medical
Organizations As Expressed in the Purpose of the Act and the Language in the Act
{12}
Plaintiffs argue that the plain meaning of the definition of “health care provider”
excludes Defendants. We first examine Plaintiffs’ interpretation in the context of the
Legislature’s purpose for enacting the MMA and, like the Court of Appeals, conclude that
their interpretation is irreconcilable with the Act’s purpose.
See Baker
,
Plaintiffs’ argument that the definition of “health care provider,” if interpreted literally, excludes Defendants. Although the language in the definition is ambiguous, our interpretation of this language supports our conclusion that the Legislature intended to cover professional medical organizations that qualify under the Act.
1. The Legislature’s Stated Purpose for Enacting the MMA Supports Including
Professional Medical Organizations as “Health Care Providers”
Plaintiffs ask this Court to conclude that the Legislature did not intend Defendants
*6
to be covered by the Act because “the plain language of the definition of a ‘health care
provider’” expressly excludes Defendants. The MMA defines “health care provider” as “a
person, corporation, organization, facility or institution licensed or certified by this state to
provide health care or professional services as a doctor of medicine, hospital, outpatient
health care facility, doctor of osteopathy, chiropractor, podiatrist, nurse anesthetist or
physician’s assistant.” Section 41-5-3(A). In Plaintiffs’ view, the term “health care provider”
only applies to “six categories of individuals ‘licensed or certified to provide health care or
professional services as a doctor of medicine . . . doctor of osteopathy, chiropractor,
podiatrist, nurse anesthetist [and] physician’s assistant,’ and two organizational entities
similarly licensed as a ‘hospital [or] outpatient facility.’” Plaintiffs argue that since “practice
group business entities and professional corporations do not fit into any of those eight
categories and were not specifically included by the Legislature in any other part of the
MMA,” they are not entitled to qualify as “health care providers” under the MMA.
We must examine Plaintiffs’ interpretation in the context of the statute as a whole,
including the purposes and consequences of the Act.
See N.M. Pharm. Ass’n v. State
, 1987-
NMSC-054, ¶ 8,
purpose for enacting the MMA was “to promote the health and welfare of the people of New
Mexico by making available professional liability insurance for health care providers in New
Mexico.” Section 41-5-2. “A major purpose of the Medical Malpractice Act was to meet a
perceived insurance crisis” in New Mexico.
Wilschinsky v. Medina
,
was triggered by the announced withdrawal of the insurance company underwriting the medical society’s professional liability program in which ninety percent of medical practitioners and health care institutions *7 participated. A result of this concern was the Medical Malpractice Act. . . . Availability of health care depends on providing incentives to persons to furnish health care services. If the practitioner must bear the cost of the patient’s injury, there is a powerful disincentive to furnishing services at all. This disincentive may be met by making professional liability insurance available.
Otero v. Zouhar
,
to encourage health care providers to opt into the Act by conferring certain benefits to them, which it then balanced with the benefits it provided to their patients. “[T]he Legislature made professional liability insurance available to health care providers but conditioned availability to that insurance on a quid pro quo: health care providers could receive the benefits of the MMA only if they became qualified health care providers under the MMA and accepted the burdens of doing so.” Christus St. Vincent Reg’l Med. Ctr. v. Duarte-Afara , 2011-NMCA- 112, ¶ 10, 267 P.3d 70. To be “qualified,” health care providers must establish certain financial responsibilities with the superintendent of insurance, which include paying a surcharge into the patient’s compensation fund and either filing proof of liability coverage with the superintendent of insurance or submitting a deposit to the superintendent to cover a maximum of three separate occurrences of malpractice. See § 41-5-5 (listing the qualifications requirements).
{18}
In exchange, the Act limits the health care provider’s liability to $200,000, and any
judgments in excess of that amount are paid out of the patient’s compensation fund. Section
41-5-6(D); § 41-5-25(G). The other benefits to qualified providers are a cap on damages
($600,000, excluding punitive damages and medical care costs in excess of that amount),
Section 41-5-6(A) & (B); the prohibition of monetary awards for future medical expenses
(they must be paid out as they accrue rather than in advance), Section 41-5-6(B) & (C) &
Section 41-5-7(D); the requirement that plaintiffs submit malpractice claims to the medical
review commission for permission to sue the provider in district court, Section 41-5-14(D);
a rule that the demands for damages in complaints submitted to district court cannot specify
a requested dollar amount (only “such damages as are reasonable”), Section 41-5-4; and a
three-year statute of limitations, Section 41-5-13,
held unconstitutional on other grounds by
Jaramillo v. Heaton
,
{19} In exchange for the burdens placed on patients who receive medical care from qualified health care providers, the Act provides the following benefits to them: the ability to recover from the patient’s compensation fund, Section 41-5-25(G); assurance that future medical costs will be covered, Section 41-5-7(B); assistance in retaining a medical expert, Section 41-5-23; and the ability to seek punitive damages outside of the MMA, Section 41-5- 7(H) & Section 41-5-6(A). By providing benefits and imposing burdens, the Legislature created a system that
inspires widespread participation to ensure that patients would have adequate access to
health care services and that they would have a process through which they can recover for
any malpractice claims.
See Cummings v. X-Ray Assocs. of N.M., P.C.
,
{21}
In light of the Act’s purpose, we can discern no reason why the Legislature would
intend to cover individual medical professionals under the Act while excluding the business
organizations that they operate under to provide health care. We agree with Defendants that
“[t]here is nothing in the statute indicating that the legislature wanted to impair or eliminate
the ability of physicians to practice under the umbrella of a professional entity.” Were we
to accept Plaintiffs’ interpretation, we would be forcing individual providers to choose
between either being fully protected by the MMA by operating as a sole proprietorship or
limiting their exposure to other types of liability besides malpractice by practicing under the
umbrella of a business entity. Defendants assert that “[t]here is simply no principled basis
for forcing physicians to choose between having the protection of a corporate form and
having the protection of the MMA.” We agree. Forcing individual medical professionals to
choose between two options that each leave them exposed to a certain level of personal
liability acts as a disincentive to practice medicine at all, which is exactly what the
Legislature was trying to address by incentivizing participation in the MMA. Thus, covering
individuals without offering the same benefits to the companies that they form or operate
under disturbs the balanced scheme originally set up by the Legislature that was intended to
attract enough health care providers to service the needs of patients in New Mexico and, in
turn, ensure that the patients were protected when claims for medical malpractice arise.
*9
Plaintiffs’ interpretation conflicts with both the Legislature’s stated purpose and its goal to
assure that providers of health care are adequately covered in New Mexico. “We will not
construe a statute to defeat [its] intended purpose.”
Padilla v. Montano
,
2. The Definition of “Health Care Provider” Demonstrates that the Legislature
Intended to Cover, Not Exclude, Professional Health Care Organizations {22} Not only is Plaintiffs’ plain meaning interpretation of the definition of “health care provider” incompatible with the purpose of the MMA, it also ignores a key term in the definition that renders the definition ambiguous. We resolve this ambiguity in Defendants’ favor.
{23}
Plaintiffs argued to the Court of Appeals that “the plain meaning of Section 41-5-
3(A) encompasses two distinct and discrete groups: persons licensed as (1) doctors, (2)
doctors of osteopathy, (3) chiropractors, (4) podiatrists, (5) nurse anesthetists, and (6)
physician assistants
and
corporations, organizations, facilities, or institutions licensed or
certified as (1) hospitals or (2) outpatient health care facilities.”
Baker
,
term “professional services.”
See
§ 41-5-3(A) (“‘[H]ealth care provider’ means a person,
corporation, organization, facility or institution licensed or certified by this state to provide
health care
or professional services
. . . .” (emphasis added)). Plaintiffs offer no explanation
for the Legislature’s inclusion of this term. Yet, “the legislature is presumed not to have used
any surplus words in a statute; each word is to be given meaning.”
Helman
, 1994-NMSC-
023, ¶ 32. This Court must interpret a statute so as to avoid rendering the Legislature’s
language superfluous.
Katz v. N.M. Dep’t of Human Servs., Income Support Div.
, 1981-
NMSC-012, ¶ 18,
[A]ny type of personal service to the public which requires, as a condition precedent to the rendering of such service, the obtaining of a license or other legal authorization and which, prior to the passage of the Professional Corporation Act and by reason of law, could not be performed by a corporation. The term includes, but is not necessarily limited to, the personal services rendered by certified public accountants, registered public accountants, chiropractors , optometrists, dentists, osteopaths , podiatrists , architects, veterinarians, doctors of medicine , doctors of dentistry, physicians and surgeons , attorneys-at-law and life insurance agents.
Section 53-6-3(A) (emphasis added) (citation omitted). The Professional Corporation Act further defines a “professional corporation” as “a corporation which is organized under the Professional Corporation Act for the sole and specific purpose of rendering professional service and which has as its shareholders only individuals who themselves are licensed or otherwise legally authorized within this state to render the same professional service as the corporation.” Section 53-6-3(B).
{28}
Defendants assert that the Legislature’s inclusion of “professional services” in the
MMA’s definition of “health care provider” indicates an attitude favorable toward
incorporation by professionals, including medical professionals. We agree. The Legislature
enacted the Professional Corporation Act in 1963–thirteen years before it enacted the MMA.
Since we presume that the Legislature was aware of its own prior enactments, we must
presume that its use of the Professional Corporation Act’s term was purposeful.
See Citation
Bingo, Ltd. v. Otten
,
entities because business entities cannot be licensed by the State to provide health care or
professional services
as
doctors of medicine, doctors of osteopathy, chiropractors,
podiatrists, nurse anesthetists, or physician’s assistants. Plaintiffs are correct that there is no
state mechanism by which professional organizations such as Defendants are licensed or
certified to provide such health care. However, we reject Plaintiffs’ conclusion that because
of this, Defendants would not be eligible to qualify as “health care providers” under the Act.
We refuse to parse the Legislature’s words in such a literal and mechanical manner.
See
Cummings
,
be of concern to the Legislature. Indeed, any procedure to license or certify the corporation
or organization to provide professional services would be redundant since, under the doctrine
of respondeat superior, the legal organization as the passive tortfeasor is only liable to the
extent of the legal liability of the individual medical professional who is the active tortfeasor.
See Harrison v. Lucero
,
C. The Legislature Intended the MMA to Cover Professional Medical
Organizations Sued Under the Doctrine of Respondeat Superior All of the defendant professional medical organizations in these cases were sued for vicarious liability of their employees under the doctrine of respondeat superior. See Restatement (Third) of Agency: Respondeat Superior § 2.04 (2006) (“An employer is subject to liability for torts committed by employees while acting within the scope of their employment.”). When individual professionals operate under the umbrella of a legal business entity, they also become employees of that entity. See Restatement (Third) of Torts: Apportionment of Liability § 7 cmt. j (2000) (explaining that the employer and the employee are treated as one entity for purposes of assigning liability). Because corporations act through their employees, corporations may be held vicariously liable for the negligence of their employees who injure someone while in the course and scope of their employment. See Restatement (Third) of Agency § 2.04.
{33} Plaintiffs’ argue that the MMA covers individuals but excludes the professional medical organizations for which they are employed. Although these covered individuals may be sued for acts of malpractice, the fact that the professional medical organizations are not covered by the Act leads to absurd results that the Legislature could not have intended and also conflicts with the doctrine of respondeat superior language as it is used in the MMA. 1. The Definition of “Health Care Provider” Must Be Interpreted So As to Avoid
Absurd Results
{34}
The MMA only covers claims for medical malpractice.
See
§ 41-5-3(C) (defining
“malpractice claim” as “any cause of action arising in this state against a health care provider
for medical treatment, lack of medical treatment or other claimed departure from accepted
standards of health care which proximately results in injury to the patient, whether the
patient’s claim or cause of action sounds in tort or contract, and includes but is not limited
to actions based on battery or wrongful death”); § 41-5-4 (explaining when a patient or his
representative may file a malpractice claim under the Act);
see, e.g.
,
Trujillo v. Puro
, 1984-
NMCA-050, ¶ 9,
medical professional to be eligible to opt into the MMA, but it did not intend the business organizations that they formed to be eligible. This interpretation leads to absurd results. If a doctor who has formed a limited liability company for the reasons described above commits medical malpractice, the injured patient can sue: (1) the doctor in his or her individual capacity, (2) the legal organization formed by the doctor as his or her employer, or (3) both. If the MMA only covered a doctor in his or her individual capacity, but not the doctor’s legal business organization, under the doctrine of respondeat superior, the patient could simply circumvent the provisions that the Legislature intended to benefit the individual doctor by directly suing the doctor’s company for malpractice in district court. Defendants argue that this “end run around the MMA” effectively divests individual medical professionals from the Act’s protection. We agree. One of the doctors in the consolidated cases before us operates under a professional
corporation that she formed and of which she is the sole member. There is no dispute that
she may qualify as a health care provider under the Act, in her individual capacity. Plaintiffs,
however, argue that her corporation cannot qualify as a health care provider–even though
it is also being sued vicariously for
her
alleged malpractice. Under Plaintiffs’ theory, the
*14
doctor’s patients can sue her corporation in district court for the same alleged malpractice
for which she is covered by the MMA. Plaintiffs can sue the corporation without complying
with any of the provisions of the Act, and the doctor would not receive any benefits to which
she is entitled in her individual capacity. The Legislature could not have intended to strip
individual medical professionals of the MMA’s protections simply because they choose to
operate as a business corporation, professional corporation, limited liability corporation, or
any other legal form of business organization.
See State v. Padilla
,
2. The Doctrine of Respondeat Superior Provisions in the MMA Reflect the
Legislature’s Intent to Cover Professional Medical Organizations like Defendants Who Are Sued Under that Doctrine {37} The language in the Act provides further support that the Legislature intended to cover professional medical organizations being sued under the doctrine of respondeat superior. The MMA recognizes that a claim may be brought against a health care provider under the doctrine of respondeat superior in Section 41-5-16(C), which provides:
In instances where applications are received employing the theory of respondeat superior or some other derivative theory of recovery, the director shall forward such applications to the state professional societies, associations or licensing boards of both the individual health care provider whose alleged malpractice caused the application to be filed, and the health care provider named a respondent as employer, master or principal. Also, the selection of the panel that hears the merits of a malpractice claim before the
medical review commission is different when the doctrine of respondeat superior is implicated. See § 41-5-17(E) (“In those cases where the theory of respondeat superior . . . is employed, two of the panel members shall be chosen from the individual health care provider’s profession and one panel member shall be chosen from the profession of the health care provider named a respondent employer, master or principal.” (emphasis added)). These provisions lend support to the interpretation that the Legislature intended that medical malpractice claims made against the employer under the doctrine of respondeat superior be brought under the Act. Plaintiffs’ argument that none of the provisions in the Act apply to Defendants leads us to conclude that, in Plaintiffs’ view, the doctrine of respondeat *15 superior provisions in the Act only apply to hospitals and outpatient facilities as employers. However, the language utilized by the Legislature demonstrates that it did not intend the application of these provisions to be so limited. The Legislature could have specifically mentioned hospitals and outpatient facilities when it referred to the third panel member in Section 41-5-17(E), just as it did in Section 41-5-5(B), which specifically references the different qualifications for hospitals and outpatient facilities. Instead, it used the much broader term “profession” of the health care provider-employer in Section 41-5-17(E). We therefore conclude that the Legislature intended that the provisions in the Act addressing medical malpractice claims brought under the doctrine of respondeat superior apply not only to hospitals and outpatient facilities but also to the professional medical organizations that also employ the types of providers listed in Section 41-5-3(A) and may be sued by patients under the doctrine of respondeat superior.
III. CONCLUSION We hold that legal organizations offering the professional medical services listed in
Section 41-5-3(A) are eligible to qualify as “health care providers” under the Act and thus are entitled to the MMA’s benefits when they are sued for medical malpractice. We therefore affirm the Court of Appeals’ order to reverse the district court’s denial of Defendant’s motion to dismiss in Gordon and affirm the orders of the district courts in Baker and Campos .
{41} IT IS SO ORDERED .
____________________________________ BARBARA J. VIGIL, Justice WE CONCUR:
____________________________________
PETRA JIMENEZ MAES, Chief Justice
____________________________________
RICHARD C. BOSSON, Justice
____________________________________
EDWARD L. CHÁVEZ, Justice
____________________________________
CYNTHIA A. FRY, Judge
Sitting by designation