VIRGINIA:
In the Supreme Court of Virginia held at the Supreme Court
Building in the City of Richmond, on Friday, the 31st day of
October, 2008.
Pamela E. Mayfield-Brown, Appellant
against Record No. 071167
Circuit Court No. L06-3008
Sue K. Sayegh, M.D., F.A.C.O.G., et al., Appellees.
Upon an appeal from a judgment rendered by the Circuit
Court of the City of Norfolk.
Dominique Clark, et al., Appellants,
against Record No. 072312
Circuit Court No. CL06-3679
Margarita de Veciana, M.D., Appellee.
Upon an appeal from a judgment rendered by the Circuit
Court of the City of Norfolk.
Melvin L. Wright, Administrator of the
Estate of Anne A. Wright, Deceased, Appellant,
against Record No. 071175
Circuit Court No. L05-2396
David F. Silver, M.D., et al., Appellees.
Upon an appeal from a judgment rendered by the Circuit
Court of the City of Norfolk.
Upon consideration of the record, briefs, and argument of
counsel, the Court is of the opinion that there is reversible error
in the judgments of the circuit court.
In these consolidated appeals, each appellant asserts that the
trial court erred in holding that Eastern Virginia Medical School
Academic Physicians and Surgeons Health Services Foundation ("EVMS
Health Services Foundation") and/or its employees and agents are
entitled to charitable immunity. EVMS Health Services Foundation
has a stated purpose and organization very similar to that of the
University of Virginia Health Services Foundation discussed in the
recently decided case of University of Va. Health Servs. Found. v.
Morris, 275 Va. 319, 657 S.E.2d 512 (2008). Applying the analysis
concerning charitable immunity that we articulated in Morris, this
Court holds that the EVMS Health Services Foundation and/or its
employees and agents are not entitled to charitable immunity.
EVMS Health Services Foundation dedicates substantial
resources to the billing and collection of fees. It engages in
systematic billing and collection practices similar to those
employed by the University of Virginia Health Services Foundation.
EVMS Health Services Foundation contracts with several outside
collection agencies, including a law firm, which regularly seek
legal redress for payments owed to the EVMS Health Services
Foundation for services rendered.
The amount of EVMS Health Services Foundation’s charity work
as compared to its income is small. For example, in 2003, its
financial statements show that EVMS Health Services Foundation
collected slightly more than 49% of the $67,868,935 amount billed
to nonindigent patients, resulting in total net patient revenue of
2
$33,302,698. EVMS Health Services Foundation’s financial
statements show it forgave $1,984,722 in billings for indigent
services. Therefore, by treating indigent patients, EVMS Health
Services Foundation failed to receive approximately $973,886 in
collections. Moreover, EVMS Health Services Foundation’s 2003
financial statements also show an indigent care reimbursement from
the Commonwealth of $787,464. Thus, taking into account the
Commonwealth’s reimbursement, EVMS Health Services Foundation’s
actual shortfall in 2003, as a result of providing medical care to
indigent patients, was $186,422.
EVMS Health Services Foundation, as does University of
Virginia Health Services Foundation, pays a large portion of its
excess revenues to its clinicians. EVMS Health Services Foundation
does not distribute excess revenues based upon need or societal
benefit. Excess revenues are required to be paid to the clinical
departments that earned the revenues, after deducting their pro
rata share of expenses. Each clinical department distributes the
funds in accordance with a predetermined 70/20/10 distribution
formula. According to the formula, 70% is paid to the clinicians,
20% to Eastern Virginia Medical School ("EVMS") for the use of the
Dean and the remaining 10% to EVMS for the use of the department
chairs.
EVMS Health Services Foundation receives no charitable
donations from individual donors. EVMS Health Services Foundation
3
has never reported to the federal government receipts of any
contributions from private benefactors, and it is forbidden from
soliciting or accepting such contributions absent the consent of
EVMS.
Upon consideration of the above-referenced factors, it is
clear that the manner in which EVMS Health Services Foundation
actually conducts its affairs is like a profitable commercial
business. See Morris, 275 Va. at 340, 657 S.E.2d at 522. EVMS
Health Services Foundation is, therefore, not immune from tort
liability under the doctrine of charitable immunity.
Accordingly, the judgments of the trial court granting the
special pleas of charitable immunity in Pamela E. Mayfield-Brown v.
Sue K. Sayegh, M.D., F.A.C.O.G., et al., Dominique Clark, et al. v.
Margarita de Veciana, M.D., and Melvin L. Wright, Administrator of
the Estate of Anne A. Wright, Deceased v. David F. Silver, M.D., et
al. are reversed, and the cases are remanded for further
proceedings consistent with this order.
This order shall be published in the Virginia Reports and
shall be certified to the said circuit court.
A Copy,
Teste:
Patricia L. Harrington, Clerk
4