Present: Carrico, C.J., Compton, Lacy, Hassell, Keenan, and
Koontz, JJ., and Poff, Senior Justice
DAVID T. SCHWARTZ, M.D., ET AL.
OPINION BY
v. Record No. 960395 CHIEF JUSTICE HARRY L. CARRICO
February 28, 1997
WILLIAM BROWNLEE
FROM THE CIRCUIT COURT OF THE CITY OF ALEXANDRIA
Alfred D. Swersky, Judge
In this medical malpractice case, William Brownlee
(Brownlee) was diagnosed as suffering from prostate cancer, and
David T. Schwartz, M.D. (Dr. Schwartz), removed Brownlee's
prostate gland in an operation which resulted in the successful
excision of the cancer. Following this type of surgery, a
patient normally suffers temporarily from incontinence, but
Brownlee encountered serious difficulties during his post-
operative treatment by Dr. Schwartz and became totally
1
incontinent.
In an amended motion for judgment filed below, Brownlee
sought damages from Dr. Schwartz, a licensed health care
provider, and his wholly owned corporation, Metropolitan Medical
Care, Inc. (MMC), a non-health care provider (the defendants).
Brownlee alleged that he had sustained injuries as a result of
Dr. Schwartz's post-operative negligence while acting as the
agent of MMC.
1
Both sides to this controversy recognize that a small
percentage of prostatic surgery patients may suffer total
incontinence despite the absence of negligence on the part of the
physician in performing the surgery. Brownlee claims here,
however, that his total incontinence resulted from the post-
operative negligence of Dr. Schwartz and not as an incident of
the surgery.
In a trial before a jury, the trial court ruled as a matter
of law that Dr. Schwartz was the agent of MMC "during the
relevant times" and instructed the jury accordingly. The jury
returned a verdict in favor of Brownlee against Dr. Schwartz and
MMC jointly and severally in the sum of $1,850,000.
The trial court ordered a remittitur of the verdict against
Dr. Schwartz to $1 million, the medical malpractice cap
established by Code § 8.01-581.15. However, the court refused to
order a remittitur in favor of MMC and entered judgment against
it in the full amount of the verdict.
The defendants filed a petition for appeal, which this Court
refused. Later, this Court granted the defendants' petition for
rehearing and awarded them this appeal.
In their petition for appeal, the defendants assigned three
errors, the first alleging that Brownlee had "failed to prove a
proximate cause relationship between the negligence alleged and
his injury to a reasonable degree of medical certainty or
probability." The gist of the defendants' argument on this point
is that Brownlee's counsel failed to incorporate the phrase
"reasonable degree of medical certainty" or "reasonable degree of
medical probability" into the questions posed to Brownlee's
expert witnesses.
However, in their petition for rehearing, the defendants
made no mention of their first assignment of error or of any
deficiency in the proof of causation, relying solely on the two
remaining assignments of error in requesting that "this Court
grant the Petition for Rehearing and grant a writ in this case."
In our opinion, the failure to include the first assignment of
error in the petition for rehearing constitutes an abandonment of
that assignment of error. We will consider, therefore, only the
two remaining assignments of error. They are as follows:
2. The trial court erred when it denied defendant
MMC's Motion to Dismiss as to it as a matter of law and
instead directed a verdict for the plaintiff on the
issue of whether Dr. Schwartz's performance of medical
services was as an agent of MMC.
3. The trial court erred when it allowed a
judgment in excess of the Virginia Medical Malpractice
Cap to stand as to MMC, Dr. Schwartz's wholly owned
corporation.
a. MMC's liability, which was
predicated wholly on a theory of
respondeat superior[,] cannot be
greater than that of Dr. Schwartz,
MMC's alleged agent.
b. Plaintiff is limited to the
malpractice cap for damages arising
from a single indivisible injury,
even when there are multiple
defendants jointly and severally
liable for same, where at least one
of the defendants is a "health care
provider" as defined in the
Virginia Code.
c. The trial court[']s refusal to
remit as to MMC violates the
mandate of Va. Code § 8.01-581.15.
Agency.
The defendants argue that there was a conflict in the
evidence concerning the agency question and, therefore, that the
question should have been submitted to the jury for decision.
The defendants' position is stated succinctly in their reply
brief, as follows:
Dr. Schwartz and MMC maintained [that] Dr. Schwartz was
not acting as MMC's agent at the time he rendered
services to Brownlee. . . . There was admittedly
significant evidence to the contrary. This issue
should have been submitted to the jury.
However, while there may have been a conflict in the
positions taken by the parties with respect to the agency
question, there was no conflict in the facts with respect to that
question. When "[t]here is no substantial conflict in the facts
and circumstances disclosed by the evidence," it becomes "a
question of law to be decided by the court whether [one party]
was the agent of [another]." Creech v. Massachusetts Bonding
Co., 160 Va. 567, 576, 169 S.E. 545, 548 (1933).
Here, the following facts were undisputed. Dr. Schwartz was
MMC's president and sole shareholder. 2 MMC leased from landlords
and paid the rent on and otherwise managed the three offices Dr.
Schwartz occupied in his medical practice. MMC billed Dr.
Schwartz's patients for services rendered and collected his fees
for those services. All the income Dr. Schwartz earned from his
medical practice was assigned to MMC. The only income Dr.
Schwartz received was in the form of rent paid to him by MMC for
one of the offices he occupied in his practice. MMC paid all the
expenses of Dr. Schwartz's practice, including the cost of
advertisements "designed to solicit patients for [his] medical
2
MMC is an S corporation chartered in Delaware. "An S
corporation is a small business corporation for which an election
under Subchapter S of the Internal Revenue Code . . . is in
effect. I.R.C. § 136(a)(1)." Durando v. United States, 70 F.3d
548, 549 n.2 (9th Cir. 1995). An S corporation gives a small
business the advantage of providing limited liability for
shareholders without the disadvantage of corporate taxation. Id.
at 551.
practice" as well as the cost of his medical supplies,
automobile, legal work, licensing, continuing education, and
membership in professional associations. MMC deducted all these
expenses on its tax returns.
The defendants cite Hadeed v. Medic-24, Ltd., 237 Va. 277,
288, 377 S.E.2d 589, 594-95 (1989), for the proposition that in
the context of medical malpractice, the crucial factor for
determining whether a physician is the agent of another is the
power of control. The defendants then argue that MMC did not
control Dr. Schwartz, he controlled MMC. Therefore, the
defendants conclude, it was for the jury to say whether Dr.
Schwartz was the agent of MMC, acting within the scope of the
agency at the time he rendered post-operative treatment to
Brownlee.
We disagree with the defendants. As the defendants
themselves point out, it is the power of control that is crucial
to the determination whether an agency relationship existed
between Dr. Schwartz and MMC. The evidence shows that the
extensive authority Dr. Schwartz indisputably granted to MMC over
his affairs, including MMC's dominion over the purse strings,
clearly vested MMC with the power of control sufficient to
support the trial court's finding, as a matter of law, that an
agency relationship did exist between Dr. Schwartz and MMC at the
time Dr. Schwartz rendered post-operative treatment to Brownlee.
Hence, the trial court did not err in its finding.
Remittitur.
The defendants argue that the trial court erred in refusing
to order a remittitur of the verdict against MMC to $1 million,
the medical malpractice cap established by Code § 8.01-581.15.
That Code section reads as follows:
In any verdict returned against a health care provider
in an action for malpractice where the act or acts of
malpractice occurred on or after October 1, 1983, which
is tried by a jury or in any judgment entered against a
health care provider in such an action which is tried
without a jury, the total amount recoverable for any
injury to, or death of, a patient shall not exceed one
million dollars.
In interpreting this section, the definitions found in
§ 8.01-581.1 shall be applicable.
Code § 8.01-581.1 defines the term "health care provider" in
pertinent part as
a person, corporation, facility or institution licensed
by this Commonwealth to provide health care or
professional services as a physician or hospital,
dentist, pharmacist, registered or licensed practical
nurse, optometrist, podiatrist, chiropractor, physical
therapist, physical therapy assistant, clinical
psychologist, [or a] health maintenance organization.
The defendants concede that MMC "did not fall within the
definition of health care provider in § 8.01-581.1 effective at
3
the time of Brownlee's injury." Nevertheless, the defendants
say, "because MMC was jointly and severally liable with Dr.
Schwartz, a health care provider subject to protection of The
Cap, for a single and indivisible injury, . . . Brownlee's total
recovery against all defendants is limited to what he is allowed
to recover against Dr. Schwartz."
3
A 1994 amendment to Code § 8.01-581.1, effective subsequent
to Brownlee's injury, added a definition of "health care
provider" to include "a corporation, partnership, limited
liability company or any other entity, except a state-operated
facility, which employs or engages a licensed health care
provider and which primarily renders health care services."
Quoting Bulala v. Boyd, 239 Va. 218, 389 S.E.2d 670 (1990),
the defendants say that "'a single limit . . . applie[s] to an
indivisible injury to a plaintiff, even though it was caused by
the concurring negligence of two or more defendants.'" Id. at
228, 389 S.E.2d at 675. However, unlike the present situation,
where one defendant is a health care provider and the other is
not, both the defendants in Bulala were health care providers.
Therefore, Bulala is inapposite.
Further, quoting Fairfax Hospital System v. Nevitt, 249 Va.
591, 457 S.E.2d 10 (1995), which involved joint tortfeasors, the
defendants state that "'in any judgment entered against a health
care provider, the quantum of the recovery for a medical
malpractice injury cannot exceed the aggregate amount capable of
recovery.'" Id. at 598, 457 S.E.2d at 14. The defendants also
quote from Nevitt to the effect that it is "'wholly immaterial'"
that one of the tortfeasors was not a health care provider. Id.
However, Nevitt presented a different issue. That case involved
the interplay between Code § 8.01-581.15, which contains the
medical malpractice cap, and Code § 8.01-35.1, which provides
that the amount recovered against one tortfeasor shall be reduced
by the amount paid in settlement by another tortfeasor. The
issue in Nevitt was whether the amount paid in settlement by one
tortfeasor should be deducted before or after the medical
malpractice cap was applied to an excessive verdict against the
other tortfeasor. It was in this context, differing
substantially from the present situation, that we said it was
"wholly immaterial" that the settling tortfeasor was not a health
care provider.
The most analogous case is Taylor v. Mobil Corp., 248 Va.
101, 444 S.E.2d 705 (1994). There, the negligent physician had
allowed his license to lapse. Yet, he and his employer, a non-
health care provider, both claimed entitlement to the protection
of the medical malpractice cap from a $4 million verdict returned
against them. The trial court ordered a remittitur of the
verdict to $1 million with respect to both defendants. We said
that "[s]ince [the physician] was not licensed in the
Commonwealth when he rendered the services to [the patient], he
was not a health care provider within the purview of the
statute," id. at 109, 444 S.E.2d at 709, and we held that "the
trial court erred in its application of the medical malpractice
cap to the verdict," id. at 110, 444 S.E.2d at 710.
Taylor is clear authority for the proposition that one who
is unlicensed as a health care provider in this Commonwealth,
whether principal or agent, is not entitled to the protection of
the medical malpractice cap. MMC was not licensed as a health
care provider in this Commonwealth. Hence, it is not entitled to
the protection of the cap.
The defendants argue, however, that "the only theory on
which MMC could conceivably have been held liable for any injury
to Brownlee is upon the derivative liability arising from the
respondeat superior doctrine." Under the common law, the
defendants continue, the amount of a judgment against a principal
cannot be greater than the amount of the judgment against the
agent tortfeasor. Hence, the defendants conclude, the trial
court erred in refusing to order a remittitur of the verdict
against MMC to $1 million. We have no quarrel with the
defendants' argument that, at common law, the liabilities of
principals and agents are coterminous. That view has been
recognized in Virginia. In Monumental Motor Tours v. Eaton, 184
Va. 311, 35 S.E.2d 105 (1945), we said that when a master and
servant are sued together and the master's liability rests solely
upon the servant's negligence, "a verdict which in terms finds
for the servant and against the master or is silent as to the
servant and finds against the master, is . . . predicated upon a
misapprehension of the law." Id. at 314-15, 35 S.E.2d at 106
(quoting Barnes v. Ashworth, 154 Va. 218, 229, 153 S.E. 711, 713
(1930)).
The common law continues in full force in Virginia except
as altered by the General Assembly. Code § 1-10. The General
Assembly may abrogate the common law, but its intent to do so
must be plainly manifested. Wackwitz v. Roy, 244 Va. 60, 65, 418
S.E.2d 861, 864 (1992). "Statutes in derogation of the common
law are to be strictly construed and not to be enlarged in their
operation by construction beyond their express terms." Blake
Construction Co. v. Alley, 233 Va. 31, 34, 353 S.E.2d 724, 726
(1987) (quoting C. & O. Railway Co. v. Kinzer, 206 Va. 175, 181,
142 S.E.2d 514, 518 (1965)).
We are of opinion that in the enactment of Code § 8.01-
581.15, the General Assembly has abrogated the common law and
that its intent to do so is plainly manifested. By making the
medical malpractice cap applicable only to licensed health care
providers and denying the protection of the cap to non-health
care providers, the General Assembly has provided in medical
malpractice cases an exception to the rule that the liabilities
of principals and agents are coterminous.
In the medical malpractice context, the exception is a rule
of reason. The General Assembly enacted the medical malpractice
cap for the purpose of enabling licensed health care providers to
secure medical malpractice insurance at affordable rates. See
Etheridge v. Medical Center Hospitals, 237 Va. 87, 93-94, 376
S.E.2d 525, 527-28 (1989). It would not serve that purpose to
extend the protection of the cap to non-health care providers,
and we will not ascribe to the General Assembly an intent to make
such an extension. Rather, as indicated supra, we think it was
the legislative intent, clearly manifested, to except such non-
health care providers from the protection of the cap.
For the reasons assigned, we will affirm the judgment of the
trial court.
Affirmed.