The opinion of the Court was delivered by
This appeal concerns the concurrent duties of a health maintenance organization (HMO) and the physicians who contract with the HMO to deliver medical services.
Traditionally the prohibition on the corporate practice of medicine stemmed from a perceived need to protect the public from the commercial exploitation of the practice of medicine. “It has been said to be against public policy to permit a ‘middleman’ to intervene for profit in establishing the professional relationship between members of the medical profession and members of the public.” Michael A. Dowell, The Corporate Practice of Medicine Doctrine Must Go,' HealthSpan, Nov. 1994, at 7, available in WESTLAW, HealthSpan Database, *4.
Ever-increasing complexity and costs have brought about vast changes in the delivery of medical services. Today, most would not recognize Norman Rockwell’s portrait of the family doctor. The 1973 Health Maintenance Organizations Act,
N.J.S.A
26:2J-1 to -30 (HMO Act), authorized the creation of corporate HMOs. The HMO Act states that such organizations “shall not be deemed to be practicing medicine” and exempts such organizations from licensure relating to the practice of medicine.
N.J.S.A
26:2J-25c. Although it grants immunity to certain HMO employees, the HMO Act does not confer immunity from medical mal
[A] potential exists for HMOs to be held liable for medical malpractice based on one or more of several tort theories: (1) vicarious liability on the basis of respondeat superior or ostensible agency; (2) corporate negligence based upon negligent selection and negligent control of the physician; and (3) corporate negligence based upon the corporation’s independent acts of negligence, e.g. in the management of utilization control systems. Contract law might also be utilized to hold HMOs liable for malpractice based on breach of contract or breach of warranty. See Oakley and Kelley, HMO Liability for Malpractice of Member Physicians: The Case of IPA Model HMOs, 23 Tort and Insurance Law Journal 624, 626 (1988).
[Raglin v. HMO Illinois, Inc., 230 Ill.App.3d 642, 172 Ill.Dec. 90, 93,595 N.E.2d 153 , 156 (Ill.App.Ct.1992).]
This case implicates the first and third of those theories. A physician-provider who has been found guilty of medical malpractice seeks contribution from his HMO on the basis of its independent breach of contractual duty to a patient-subscriber of the HMO. We hold that such a claim may be asserted but is procedurally barred in the circumstances of this case.
I
In May 1982 Carey Dunn, a Philadelphia Navy Yard worker, experienced swelling and pain in his scrotal area. A private physician treated him, and his condition improved with antibiotics. Later that year Dunn joined the Health Care Plan of New Jersey (HCP). Dr. Martha Brumbaugh became Dunn’s primary physician at HCP. The “official description of benefits” under the plan said (emphasis added):
This Plan is a group-practice prepayment plan, sometimes called a Health Maintenance Organization or HMO. It offers more than health insurance alone * * *.
* * * * * * * *
Plan members receive health care from a large number of well qualified, highly trained physicians. When a new member joins HCP he or she will select a “primary physician” or “family doctor” from the HCP Medical Staff. This doctor becomes the member’s personal physician and assumes responsibility for coordinating the member’s total health program.
2/14/83 • Scrotal scan revealed mass. Dr. Praiss ordered no further tests to determine if the mass was cancerous, but scheduled a return appointment.
2/22/83 • Dr. Joel Marmar (another SJUA physician) examined Dunn and told him to note any change in the size of the mass through self-examination. Dr. Marmar ordered no further tests and scheduled no return appointments. Neither the scrotal scan results nor the SJUA physicians’ evaluations reached Dr. Brumbaugh, who had no further contact with Dunn.
11/28/83 • Dunn, complaining of a “full feeling” in his chest, saw Dr. Brumbaugh, who ordered medication and various tests.
12/83 • Oncological tests disclosed testicular cancer that had spread to the liver.
After extensive chemotherapy, Dunn died on April 30, 1985.
Carey Dunn’s widow, Linda Dunn, sued HCP, Dr. Brumbaugh, Dr. Marmar, Dr. Praiss, and SJUA. She asserted claims of medical malpractice against the individual physicians, and against HCP as their principal. She also asserted independent claims against HCP, including breach of contract based on Dr. Brumbaugh’s failure to review and follow up the urologists’ reports. Dr. Marmar and SJUA asserted cross-claims for contribution and indemnification against their codefendants.
The case was tried to a jury in June and July 1990. At the end of plaintiffs case, HCP moved to dismiss all claims against it, both the claims based on
respondeat superior
and the claims of inde
After the trial court dismissed plaintiffs claims against HCP, plaintiffs counsel asked the court whether Dr. Marmar’s cross-claims against HCP would be dismissed.
[Plaintiffs Counsel]: I'm just assuming this dismisses that cross-claim and all facts alleged by Dr. Marmar against the HCP as well? I assume it’s all inclusive, they are not still going forward to prove facts that it was HCP and not they that didn’t fail to discharge the responsibility?
The Court: I didn’t consider the cross-claim.
[Dr. Marmar’s counsel]: I would state for the record, I have no evidence that HCP ivould have done anything deemed negligent. I ivould not submit any evidence on that. The only thing seems to me, if counsel for the plaintiff is correct, ultimately that there was some vicarious responsibility, your Honor’s comments today, they would share in that liability that we ultimately bear in this case I think takes care of that.
The Court: M I say, they may be bound if, you have to look at * * * [Pappas v. Santiago, 66 N.J. 140 (1974) ], they were invited if they want to continue and the law says they can continue in the participation of the trial where you are continuing along with the theory of damages because quite conceivably if there is an award and they have been let out and there’s a tort feasor still remaining, they may be on the rug for damages, so they still have a right to participate in the trial if they want to.
[Dr. Marmar’s counsel]: I understand.
[Emphasis added.]
The trial court did not further address the cross-claims but instead asked HCP whether, pursuant to
Pappas v. Santiago,
66
N.J.
140, 145,
The ease proceeded to trial against Dr. Marmar. The jury returned a verdict in favor of plaintiff in the sum of $2,904,240.54,
Plaintiff appealed, claiming that HCP had been improperly dismissed as a party, and that HCP was not only liable as Dr. Marmar’s principal but also had direct liability for breach of contract. Dr. Marmar cross-appealed (1) the trial court’s denial of certain expert testimony on the liability issues and (2) various damage issues, most notably the issue in
Tenore v. Nu Car Carriers, Inc.,
67
N.J.
466, 482,
The Appellate Division held that HCP was vicariously liable for Dr. Marmar’s actions on a theory of respondeat superior or agency, and that it was therefore not necessary to analyze plaintiffs contract theory. It affirmed the liability judgment but remanded for retrial on damages only because of trial errors:
Plaintiff has requested that we overturn the trial judge’s determination to dismiss plaintiffs claims against the HMO. Plaintiff has couched her argument in terms of a contractual duty based upon the [HMO’s] promotional literature. We need not analyze the contractual theory advanced by plaintiff, since it is apparent to us that Health Care Plan of New Jersey is responsible for Dr. Marmar’s actions on theories of respondeat superior or agency.
#❖***##*
* * * We therefore hold that under these circumstances both Dr. Marmar (and South Jersey Urologic Associates) and the HMO are responsible to plaintiff for such damages as may be assessed by reason of Dr. Marmar’s actions.
Sjí ijs í}í }J: sfc ifc # í¡!
The liability judgment is affirmed; the Health Care Plan of New Jersey is deemed responsible on a principal-agent basis for the acts of Dr. Marmar; the damage judgment for decedent’s pain, suffering, and related losses is remanded to the Law Division for consideration whether there should be a comprehensive damage trial; the wrongful death and loss of consortium damage judgments are reversed and the matter is remanded to the Law Division for retinal on these latter issues.
[256 N.J.Super. 180, 193, 195, 202,606 A.2d 862 (App.Div.1992).]
On remand to the Law Division, Dr. Marmar sought to include a trial of “the pending crossclaims between Dr. Marmar and HCP” in that proceeding. HCP insisted that there were no pending cross-claims and urged the court to resolve the asserted cross-claims after the damages trial because the cross-claims involved a “question of law.” The trial court agreed with HCP and directed a trial on damages, after which it would consider any cross-claims. HCP elected not to participate in the damages trial.
Prior to retrial, Dr. Marmar settled with plaintiff for $2,904,-160.54, $80.00 less than the original jury verdict. Plaintiff as-' signed to Dr. Marmar any remaining rights that she had. The trial court then ordered argument to determine whether any issues concerning HCP remained. Dr. Marmar claimed that he had a valid cross-claim against HCP. Dr. Marmar’s counsel made the following offer of proof: “[W]e say there is fault and we will prove that because we have witnesses who will show what they [HCP] didn’t do and they should have done and that they were absolutely actively negligent.” He argued that liability as between Dr. Marmar and HCP had never been tried on the merits because under Rule 4:37-2 the cross-claims had been automatically dismissed when plaintiffs claims were dismissed. Because the dismissal of HCP on vicarious-liability grounds had been reversed, the cross-claims must be reinstated.
HCP countered that Dr. Marmar’s cross-claims were dismissed not because the court rule triggered such dismissal, but because Dr. Marmar had acknowledged having no proof of HCP’s indepen
Dr. Marmar appealed from the dismissal of his cross-claims. The Appellate Division remanded to determine whether any viable claims against HCP, if proven, could have been independent proximate causes of plaintiffs injuries and death. If so, damages should be apportioned between HCP and Dr. Marmar. If any of the cross-claims against HCP led only to vicarious responsibility, they would be dismissed (because Dr. Marmar and SJUA had agreed to indemnify HCP for any losses occasioned by the SJUA physicians’ negligence). The court said that “[i]t would be inequitable to reinstate plaintiffs claims against the HMO (which in turn provide a basis for an indemnification claim against Dr. Marmar) without permitting the doctor and the urologic group to show that there is a valid basis to claim contribution against HCP.” 271
N.J.Super.
311, 320,
The Appellate Division determined that plaintiff had no viable negligence claim directly against HCP and noted that Dr. Marmar had conceded that he had “no evidence that HCP would have done anything deemed negligent.” Therefore, the court said, Dr. Mar-mar preserved his cross-claims against HCP, but those cross-claims “solely encompassed the right to assert contribution for plaintiffs contractual claim or claims based on agency or
respondeat superior.”
271
N.J.Super.
at 322,
The Appellate Division further decided that Dr. Mannar’s contribution claim may be based on HCP’s alleged breach of contract with Carey Dunn:
We can * * * see no reason not to apportion responsibility based upon any civil wrong, including a breach of contract, that proximately causes a personal injury. A person who is injured as a result of the breach of a defendant’s contractual duty should have no less legal recourse than a person injured as a result of the breach of a general duty of reasonable care.
[271 N.J.Super. at 324,638 A.2d 875 .]
II
There are two issues in this ease: (1) Can there be contribution between a party whose breach of contract is the proximate cause of personal injury and another party whose negligence is a proximate cause of the same injury? and (2) If so, did Dr. Marmar adequately preserve the right to assert such a cross-claim?
A.
The common-law doctrine that forbade contribution between joint tortfeasors was based on the same theory as that of contributory negligence, that “[a]ny fault kept a claimant from recovering under the system,”
Ostrowski v. Azzara,
111
N.J.
429, 436,
In
Blazovic v. Andrich,
124
N.J.
90, 98,
In
Adler’s Quality Bakery, Inc. v. Gaseteria, Inc.,
32
N.J.
55, 77,
A common thread that runs through most of those decisions is a concept of fault, whether based on the failure to insure that a product fulfills its warranty
(Suter, supra,
81
N.J.
150,
In the context of this case in which the breach of contractual duty appears to parallel closely the fault-based duty of care imposed on a health-care provider, it is appropriate to allow for contribution. In another case the issue might be less clear. For example, assume that an HMO contract had authorized five days of hospital care for an appendectomy, but the HMO refused to cover more than three days. The relationship between that breach of contract and a concurrent act of malpractice might be more difficult to assess. In this case the alleged failure of the HMO is more like a negligent act than an intentional breach of a contract.
We therefore agree with the Appellate Division that it is appropriate in this case to apportion responsibility based on a breach of contract that is alleged to have proximately caused personal injury. Our jurisprudence has taken a pragmatic approach when giving effect to the conceptual differences between a breach of contract and a breach of a duty of reasonable care.
See Pickett v. Lloyd’s,
131
N.J.
457, 470,
The refusal to allow contribution among wrongdoers was a common-law doctrine based on a premise that has been altered by decades of changing legislative policy. Our common law evolves consonant with changes in statutory policy.
Renz v. Penn Central Corp.,
87
N.J.
437, 456,
B.
Although there may be contribution between one whose breach of contractual duty is a proximate cause of personal injury
We emphasized, however, that a party does not have full rein to assert the claim for contribution or setoff without first providing affected parties fair and timely notice. “A litigation strategy that features surprise to the adversary is no longer tolerated.”
Id.
at 597,
C.
Dr. Marmar insists that pursuant to
Rule
4:37-2 his cross-claims were automatically reinstated when the plaintiffs case against the dismissed defendant was reinstated. However, in this ease the normal procedure under
Rule
4:37-2(e) (that would adjudicate contribution claims only after “the close of all the
When plaintiff appealed the dismissal of her claim against HCP, Dr. Marmar did not cross-appeal the dismissal of his cross-claims for contribution. When Dr. Marmar, after the remand, settled the claim through his insurance .company for substantially the full amount of the first verdict, he did seek to preserve the cross-claim for contribution against HCP. However, it was not until after the case had in effect been tried (because, after all, a settlement disposes of a case as does a trial) that Dr. Marmar first presented an expert report asserting HCP’s independent breach of duty for failure to monitor the SJUA physicians’ treatment of Carey Dunn. Had that “finger-pointing” occurred at the proper stage, it might have aided plaintiffs cause, in that a professional health-care provider agreed with her.
HCP’s rather cavalier attitude in agreeing to be bound by any judgment on the remand exposed it to great peril. We acknowledge that the original trial counsel for Dr. Marmar did not articulate or abjure a claim for contribution on the contractual theory now stated (and assigned to it by plaintiff). However, the underlying factual basis for either claim is largely the same insofar as HCP is concerned: Did it have a duty to coordinate the care among its physicians? Recall how Dr. Marmar’s counsel phrased its offer of proof on the remand: “[W]e have witnesses
Ill
We reinstate the judgment of the trial court not because, as it thought, the Appellate Division had foreclosed its consideration of a cross-claim for contribution, but because we believe that the time to assert that claim had passed. At the time of the first trial Dr. Marmar did not stake out his position setting forth any independent claim of contributory breach of duty. In his first appeal, Dr. Marmar did not cross-appeal from the dismissal of his claim for contribution. Not until after the case had been settled, and thereby disposed of, did Dr. Marmar present the report of his expert, Dr. C. David Spencer, stating that “the coordination of care with and by the primary care physician which was emphasized in [HCP’s] * * * literature did not occur in regard to the critical steps in Mr. Dunn’s case.” Given the trial court’s view of the Appellate Division’s mandate, an earlier report would probably not have changed its view. Still, we are satisfied that the interests of justice require that such factual claims be presented at the early stages of litigation.
We reverse the judgment of the Appellate Division and reinstate the trial court’s dismissal of Dr. Mannar’s cross-claims against HCP.
For reversal and reinstatement Chief Justice WILENTZ, and Justices HANDLER, POLLOCK, GARIBALDI, STEIN and COLEMAN — 7.
Opposed — -None.