FAYETTE COUNTY NURSING HOME, LLC v. PRI X-RAY, LLC Et Al.

SECOND DIVISION
DOYLE, C. J.,
MILLER, P. J, and REESE, J.

NOTICE: Motions for reconsideration must be
physically received in our clerk’s office within ten
days of the date of decision to be deemed timely filed.
http://www.gaappeals.us/rules

June 2, 2017

In the Court of Appeals of Georgia
A17A0485. FAYETTE COUNTY NURSING HOME, LLC v. PRI DO-019
X-RAY, LLC et al.

DOYLE, Chief Judge.

This appeal arises from a breach of contract case filed by Fayette County

Nursing Home, LLC, d/b/a Southland Health & Rehabilitation & Clinical Health

Services (collectively “Southland”) against PRI X-Ray, LLC, and Georgia

Ultrasound, LLC, (collectively “PRI”) alleging PRI failed to defend and indemnify

Southland as required under the parties’ service contract against claims filed in

connection with the death of Lois Jorgenson. The trial court granted summary

judgment to PRI after finding that the claims alleged against Southland in Jorgenson’s

death did not fall under the indemnity provision of the service contract between the
parties. For the reasons that follow, we reverse the trial court’s order granting

summary judgment to PRI.

Summary judgment is proper when there is no genuine issue of
material fact and the movant is entitled to judgment as a matter of law.
A de novo standard of review applies to an appeal from a grant of
summary judgment, and we view the evidence, and all reasonable
conclusions and inferences drawn from it, in the light most favorable to
the nonmovant.1

So viewed, the record shows that Southland is a long-term nursing facility,

which provides residence, skilled care, treatment, and convalescent and rehabilitative

services. In 2011, Southland contracted PRI to perform various x-ray services at the

facility. The agreement between the parties contains the following relevant clauses.

All employees of PRI would be appropriately trained, follow pertinent regulations,

and “uphold the ethics of the profession.” All exams, including mobile x-ray,

ultrasound, and EKG services, performed by PRI would be “on the order of a duly

licensed and authorized physician” and would be “interpreted by a duly licensed and

1
(Citations omitted.) BBL-McCarthy, LLC v. Baldwin Paving Co., 285 Ga.
App. 494-495 (646 SE2d 682) (2007), citing OCGA § 9-11-56 (c); Britt v. Kelly &
Picerne, Inc., 258 Ga. App. 843 (575 SE2d 732) (2002); Phillips v. First Bank of Ga.,
257 Ga. App. 342 (571 SE2d 410) (2002).

2
qualified [r]adiologist.” Under services, PRI would “provide [Southland] with true

and accurate records of services provided for and inspection of charts, if necessary,

to assure compliance with physician orders and any and all state, federal, and/or fiscal

intermediary rules and regulations as they apply to mobile ultrasound services.” PRI

was also required to utilize licensed radiologists and cardiologists to interpret the

exams, and the contract noted that “[t]he [r]adiologist will dictate a report for each

examination and will promptly fax the full written report to [Southland].” Clause 5,

titled “Insurance,” stated the amount of insurance each party was required to

maintain.

Section 12 of the agreement covers “Indemnification and Cooperation In

Defense of Claims.” Clause 12.1 states that

PRI . . . covenants and agrees to fully defend, protect, indemnify[,] and
hold harmless [Southland], its officers, directors, agents, trustees, heirs,
employees, servants, affiliated organizations, subsidiaries, successors,
assigns[,] and representatives against each and every claim, worker’s
compensation claim, lien, demand[,] or cause of action and any liability,
costs, payment of benefits, expenses (including reasonable attorney fees
and expenses) damage[,] or loss or connection therewith that may be
made or asserted by any third parties, additional subcontractors hired by
PRI [,]. . . or employees of PRI . . . , including additional subcontrators
and their employees as contemplated by OCGA § 34-9-8 on account of

3
 personal injury, death, property damage[,] or worker’s compensation
claim caused by, arising out of or in any way incidental to, or in
connection with the independent contractor relationship between PRI
. . . and [Southland] or in the performance of laboratory services
hereunder; and PRI . . . agrees that it maintains, at PRI[‘s] . . . sole cost
and control, valid, ongoing workers’ compensation coverage for PRI .
. . for PRI . . . and all PRI[‘s] . . . employees, subcontractors[,] and
subcontractor’s employees throughout the length of time it takes PRI .
. . to perform the work or radiology services and to provide a valid
ongoing certificate of worker’s compensation insurance to [Southland].2

Clause 12.2 more fully articulated the reimbursement mechanism from PRI to

Southland for workers’ compensation claims, and Clause 12.3 defined the

cooperation practices between the parties to defense of medical malpractice or other

claims.

In 2013, Jorgenson broke her hip and underwent reparative surgery. Jorgenson

did not experience complications from surgery while at the hospital, and on May 22,

2013, she was discharged and sent to Southland for a 30-day rehabilitation stay.

When Jorgenson was admitted to Southland, it was noted that she had a bowel

movement on May 21, 2013, and she had a soft, flat, non-tender, abdomen that was

2
(Emphasis supplied.)

4
positive for bowel sounds. Southland’s records indicated that between May 25-29,

Jorgenson did not have a bowel movement, was given a laxative without results, and

began experiencing degrading function during rehabilitation exercises. On May 30,

after Jorgenson received additional treatment but continued to deteriorate,

Jorgenson’s treating physician ordered a chest x-ray and a kidney, ureter, and bladder

(“KUB”) x-ray to rule out an obstruction.

The KUB and chest x-rays were performed at 8:30 p.m. by PRI, and the films

were evaluated and interpreted by Dr. Farah Williams. Dr. Williams dictated her

findings, and they were faxed to Southland by 12:03 a.m. Dr. Williams’s practice also

contacted PRI directly and informed it of a “critical finding” in Jorgenson’s x-ray and

expressed that Jorgenson’s treating physician needed to know about the finding

immediately. Neither PRI, nor Dr. Williams, or her practice directly contacted

Southland or Jorgenson’s treating physician about the finding in the x-rays in order

to notify them of the critical finding.

At 12:03 a.m., a Southland nurse noted that she contacted via answering

service Jorgenson’s treating physician, but the complaint failed to state whether the

treating physician received the x-ray information until making rounds later that

morning at 11:30 a.m., when she requested Jorgenson be transferred to the hospital

5
to rule out a bowel perforation. Jorgenson underwent surgery for the perforation and

later died from sepsis.

Jorgenson’s estate filed a complaint against various parties, including

Southland, Williams, and Williams’s practice, but not naming PRI as a defendant.

The complaint alleged, inter alia, that Williams’s practice contacted PRI and informed

it that the KUB had a critical finding about which the treating physician should be

immediately informed. The report allegedly was sent to Southland from Williams’s

practice, but neither William nor her practice contacted Southland or the treating

physician to inform them of the critical finding; although PRI knew of the critical

finding and contacted Southland to ensure the report arrived, it did not explain to

Southland that there was a critical finding in the report or explain that the treating

physician should be immediately informed. The treating physician moved Jorgenson

to the hospital for treatment some 12 hours later. Based on these facts, Jorgenson

alleged claims of negligence, professional negligence, breach of contract, and

wrongful death.

Southland notified PRI of Jorgenson’s lawsuit, but PRI refused to indemnify

Southland against Jorgenson’s claims. Thereafter, Southland settled with Jorgenson,

6
and Southland filed the instant case against PRI for breach of contract based on the

failure to defend and indemnify Southland under the agreement.

The parties filed cross-motions for summary judgment. The trial court granted

summary judgment in favor of PRI, finding that PRI contracted with Southland to

provide mobile imaging services, not radiology services, and therefore, Jorgenson’s

injury did not arise out of a breach of PRI’s duties under the contract, which resulted

in a failure to trigger the duties to defend or indemnify Southland under the

agreement.

Southland argues that the trial court erred by granting summary judgment to

PRI. We agree.

As a matter of law, the scope of the written indemnification
provisions must be strictly construed against [Southland], the
indemnitee. In addition, it is well established in Georgia that contractual
indemnities do not extend to losses caused by an indemnitee’s own
negligence unless the contract expressly states that the negligence of the
indemnitee is covered.3

3
(Citations, footnotes, and punctuation omitted.) BBL-McCarthy, 285 Ga. App.
at 500 (2).

7
 Specifically, Southland challenges the trial court’s conclusion that Southland

failed to show that PRI’s actions proximately caused the patient’s injuries in order to

trigger the indemnity clause. In support of its argument, Southland relies primarily

on JNJ Foundation Specialists, Inc. v. D. R. Horton, Inc.4 Although that case is not

binding precedent, the propositions within that case upon which Southland relies are

based upon prior case law in this Court, including BBL-McCarthy, in which this

Court explained that “[s]imilar to our interpretation of the phrase ‘arising out of’ in

insurance policies, we construe this phrase in an indemnity clause to mean ‘had its

origins in’ or ‘grew out of’ and to encompass ‘almost any causal connection or

relationship.’”5 Thus, despite the trial court’s determination otherwise, in this case,

the origination of at least some of the claims against Southland arguably arose from

PRI’s communication between Southland and the radiologist PRI contracted to

interpret the films as required in Clause 1.7. Additionally, PRI contracted to “use”

certified radiologists under both Clause 1.2 and Clause 1.7. Based on the broad

language of the indemnity clause of 12.1, PRI was responsible for providing

indemnity for all claims “caused by, arising out of or in any way incidental to, or in

4
311 Ga. App. 269 (717 SE2d 219) (2011) (physical precedent only).
5
285 Ga. App. at 500-501 (2).

8
connection with the independent contractor relationship between PRI . . . and

[Southland] or in the performance of laboratory services hereunder.”6 This broad

language encompasses the communication between the radiologist and Southland

because PRI was responsible for acting as an intermediary between the radiologist

and Southland under the contract. The radiologist’s communication to Southland,

especially when the radiologist’s concern was known to PRI, is “incidental to” PRI’s

duties under the contract.7

Moreover, PRI specifically contracted to provide consultation to Southland

regarding “ancillary health matters and inspection of charts, if necessary, to assure

compliance with physician orders,”8 and its employees were required to be trained to

uphold ethical obligations of the profession.9 The contractual obligation of

“consultation with Southland . . . to ensure compliance with orders” is not limited to

the time period prior to the x-ray or ultrasound. When read in conjunction with the

6
See id. at 501 (2).
7
See id.; JNJ Foundation Specialists, Inc., 311 Ga. App. at 279-280 (4)
(physical precedent only).
8
Clause 1.6.
9
Clause 1.4.

9
broad duty to indemnify10 Southland in connection with the services under the

contract, Jorgenson’s claims are included, and PRI breached the indemnity agreement

by failing to provide a defense.11 Accordingly, we reverse the grant of summary

judgment to PRI.

Judgment reversed. Miller, P. J., and Reese, J., concur.

10
PRI agreed to “fully . . . indemnify and hold harmless . . . against each and
every claim . . . or cause of action and any liability, costs, payment of benefits,
expenses (including reasonable attorney fees and expenses), damage[,] or loss or
connection therewith that may be made or asserted by any third parties, . . . on
account of personal injury, death, property damage[,] or worker’s compensation claim
caused by, arising out of or in any way incidental to, or in connection with the
independent contractor relationship between PRI . . . and [Southland] . . . .”
11
See Lawyers Title Ins. Corp. v. New Freedom Mtg. Corp., 285 Ga. App. 22,
30 (2) (645 SE2d 536) (2007) (explaining that if “as here, an indemnification clause
requires indemnification of losses that arise out of certain specified events but does
not explicitly mention the indemnitee’s negligence, the clause still requires full
indemnification although the indemnitee’s negligence may have partially caused the
loss”) (punctuation omitted).

10