FILED
Nov 07 2016, 9:04 am
CLERK
Indiana Supreme Court
Court of Appeals
and Tax Court
ATTORNEYS FOR APPELLANT ATTORNEYS FOR APPELLEE
Anne L. Cowgur ANONYMOUS CLINIC
Geoffrey Slaughter David C. Jensen
Taft Stettinius & Hollister LLP David J. Beach
Indianapolis, Indiana Louis W. Voelker
Eichhorn & Eichhorn, LLP
Hammond, Indiana
ATTORNEY FOR APPELLEE
ORTHOPEDIC AND SPORTS MEDICINE
CENTER OF NORTHERN INDIANA
Lyle R. Hardman
Hunt Suedhoff Kalamaros LLP
South Bend, Indiana
ATTORNEYS FOR APPELLEES TERRI J.
RETHRAKE, ET AL.
James A. Piatt
Joseph N. Williams
William N. Riley
Riley Williams & Piatt, LLC
Indianapolis, Indiana
Douglas D. Small
Foley & Small
South Bend, Indiana
ATTORNEYS FOR AMICI CURIAE ST.
MARY’S HEALTH SERVICES, INC., AND
ST. MARY’S MEDICAL CENTER OF
EVANSVILLE, INC.
Patrick A. Shoulders
Steven K. Hahn
Ziemer Stayman Weitzel Shoulders LLP
Evansville, Indiana
Court of Appeals of Indiana | Opinion 71A03-1512-CT-2199 | November 7, 2016 Page 1 of 28
IN THE
COURT OF APPEALS OF INDIANA
Stephen W. Robertson, November 7, 2016
Commissioner, Indiana Court of Appeals Cause No.
Department of Insurance, as 71A03-1512-CT-2199
Administrator of the Indiana Interlocutory Appeal from the St.
Patient’s Compensation Fund, Joseph Superior Court
The Honorable David C. Chapleau,
Appellant/Intervenor, Judge
v. Cause Nos.
71D06-1405-CT-136,
71D06-1406-CT-181,
Anonymous Clinic1, (Defendant 71D06-1406-CT-211,
Below) and Terri J. Rethlake, et 71D06-1406-CT-257,
71D06-1406-CT-320,
al. (Plaintiffs below), 71D06-1406-CT-300
Appellees.
Stephen W. Robertson, Court of Appeals Cause No.
71A03-1512-CT-2199
Commissioner, Indiana
Department of Insurance, as Appeal from the Elkhart Superior
Court
Administrator of the Indiana
Patient’s Compensation Fund, The Honorable Evan S. Roberts,
Judge
Appellant/Intervenor, Cause No. 20D01-1410-CT-216
v.
Orthopedic and Sports Medicine
Center of Northern Indiana;
ASC Surgical Ventures, LLC;
1
Although some plaintiffs in the St. Joseph cases refer to the defendant as “ABC Clinic” to retain
anonymity, we shall refer to the defendant as “Anonymous Clinic” in an effort to reduce the potential
for confusion. As it happens, there is an actual “ABC Clinic” in South Bend, which is a spay/neuter
clinic operated by Pet Refuge. See http://petrefugeabcclinic.com/ (last visited on October 26, 2016).
Court of Appeals of Indiana | Opinion 71A03-1512-CT-2199 | November 7, 2016 Page 2 of 28
OSMC; John Doe Company;
Medical Protective Corporation;
Medical Insurance Services, Inc.
(Defendants Below) and Joe and
Linda Alcozar, et al. (Plaintiffs
below),
Appellees.
Bradford, Judge.
Case Summary 2
[1] Beginning in 2012, patients around the country began suffering meningitis after
being injected with preservative-free methylprednisolone acetate (“MPA”), a
steroid purchased from New England Compounding Pharmacy, Inc., a/k/a the
New England Compounding Center (“NECC”). It was soon discovered that
some lots of MPA had become contaminated with fungus. This consolidated
appeal concerns claims brought by injured patients (or those suing on their
behalf) (collectively, “the Plaintiffs”) against Anonymous Clinic in St. Joseph
County and Orthopedic and Sports Medicine Center of Northern Indiana
(“OSMC”) and affiliated entities in Elkhart County (collectively, “the
Defendants”). Plaintiffs contend that the Defendants were negligent in
choosing to administer preservative-free MPA and in failing to properly
2
We heard oral argument in this case on October 19, 2016. We would like to commend all counsel on
the high quality of their written and oral advocacy.
Court of Appeals of Indiana | Opinion 71A03-1512-CT-2199 | November 7, 2016 Page 3 of 28
evaluate NECC before using it as a supplier. Some of the Plaintiffs brought suit
without using the procedures laid out in the Indiana Medical Malpractice Act
(“the MMA”), and Defendants moved either for dismissal or summary
judgment on the basis that Plaintiffs’ claims were claims of medical
malpractice.
[2] Stephen W. Robertson, acting in his capacity as Commissioner of Indiana
Department of Insurance, which administers the Indiana Patient’s
Compensation Fund (“the PCF”) intervened, arguing that Plaintiffs’ claims
were of general negligence and therefore not subject to the provisions of the
MMA. The trial courts ultimately agreed with Defendants and Plaintiffs (who
had reversed their initial position) that Plaintiffs’ claims were governed by the
MMA. In this consolidated appeal, the PCF contends that the trial courts erred
in concluding that Plaintiffs’ claims are claims of medical malpractice.
Plaintiffs, Defendants, and Amici Curiae (health-care providers facing similar
claims in other cases), contend that Plaintiffs’ claims are subject to the MMA as
they involve actions informed by the exercise of professional medical judgment.
Because we conclude that Plaintiffs’ claims are subject to the MMA, we affirm
the judgments of the trial courts and remand for further proceedings consistent
with this opinion.
Facts and Procedural History
Court of Appeals of Indiana | Opinion 71A03-1512-CT-2199 | November 7, 2016 Page 4 of 28
I. St. Joseph County Litigation
[3] The St. Joseph Superior Court set forth the facts underlying the claims filed in
St. Joseph County in its order dismissing Plaintiffs’ claims:
PRELIMINARY DETERMINATIONS OF FACT
1. This proceeding arises as a result of an outbreak of
fungal meningitis, fungal infections and other related
complications that affected individuals in at least twenty states
and caused, at a minimum, 64 deaths. The outbreak resulted in
deaths and injuries to Hoosiers and Michigan residents who
received treatment in Indiana. Indiana and Michigan were hit
particularly hard. The [Centers for Disease Control] identified 93
cases of Hoosiers diagnosed with fungal infections linked to
contaminated epidural injections, with 11 of those resulting in
death. Michigan was the hardest hit state, with a case count of
264, and 11 of those resulting in death. There are many more
individuals who received a contaminated injection who suffered
injury from the injection, but who have not been identified as a
“case” by the CDC.
2. Plaintiffs are individuals or their representatives
who suffered injury or death as a direct result of being
administered one or more contaminated epidural injections.
….
Plaintiffs also include the spouses of certain individuals
who received such contaminated injections. Those plaintiffs who
received services from [Anonymous Clinic] sought treatment of
back pain and related spinal conditions. Such services included
physical therapy, epidural injections, pain medications and
surgery. Each of the patient-plaintiffs was a “patient”, as defined
by the MMA, of [Defendants] when they received their epidural
steroid injections.
3. [Anonymous Clinic is a] qualified health care
provider under MMA which was and is engaged in the business
of providing health care and selling medical related products.
The plaintiffs’ complaints, filed before the St. Joseph Circuit and
Court of Appeals of Indiana | Opinion 71A03-1512-CT-2199 | November 7, 2016 Page 5 of 28
Superior Courts, each allege a claim arising out of the patient-
health care provider relationship.
4. The intervening party in this litigation is the
Patient’s Compensation Fund (hereafter referred to as “PCF”).
Under the provisions of the Indiana Medical Malpractice Act
(hereafter referred to as “MMA”), the PCF is responsible for
payment of a plaintiff’s claim which is determined by trial or
through settlement to be a recoverable claim and where the
health care provider in question, through its insurer, had paid as
required under the MMA.
5. Plaintiffs’ proposed complaints filed with the IDOI
… pleaded factual allegations about the patient-health care
provider relationship each plaintiff had with [Anonymous
Clinic]. Each proposed complaint alleges that the plaintiff was
“injected with a contaminated epidural product” when he or she
was treated at [Anonymous Clinic].
6. Plaintiffs allege in 1998, Gregory Conigliaro and
Barry Cadden co-founded the New England Compounding
Pharmacy, Inc., known as New England Compounding Center
(‘‘NECC”), in Massachusetts. Other members of the Conigliaro
and Cadden families came to be involved with NECC either as
owners, officers or employees. Other related entities to NECC
were established by the Conigliaros and Barry Cadden, including
Medical Sales Management, Inc., Ameridose, LLC and Alaunus
Pharmaceutical, LLC in the State of Massachusetts.
7. Plaintiffs allege NECC operated as a compounding
pharmacy. Plaintiffs assert that compounding pharmacies are
prohibited from mass production of pharmaceutical products but
may only produce products that have a particular demand need,
such as a drug for a patient who is allergic to an ingredient in a
mass produced, FDA regulated product or a pharmaceutical
product that is no longer manufactured.
8. Plaintiffs allege [Anonymous Clinic] purchased
preservative-free methylprednisolone acetate (“MPA”) from
NECC. MPA is a steroidal product that can be injected into the
area of the lumbar spine to provide pain relief to individuals who
suffer with low back pain and related symptoms.
Court of Appeals of Indiana | Opinion 71A03-1512-CT-2199 | November 7, 2016 Page 6 of 28
9. Plaintiffs allege there are particular safety and
product quality risks associated with purchasing pharmaceuticals
from a compounding pharmacy. The risk is heightened for those
pharmaceutical products that are made without preservatives,
due to the increased risk of their being or becoming
contaminated.
10. Plaintiffs allege an outbreak of fungal meningitis,
lumbar fungal infections and related injuries and complications
arose in September, 2012. [CDC] was notified by the Tennessee
Department of Health of a patient who developed fungal
meningitis after receiving an epidural steroidal injection.
Additional patients developing fungal meningitis were next
identified in Massachusetts and the outbreak continued spreading
to 19 states, including Indiana and Michigan. The outbreak was
the result of patients receiving one or more contaminated
injections from three different lots of MPA compounded by
NECC (lot numbers 05212012@68, 06292012@29 and
08102012@51) or from another contaminated NECC
medication.
11. Plaintiffs allege The Food and Drug Administration
(“FDA”) and the Massachusetts Department of Public Health
(“MDPH’’) began investigating NECC, along with the
involvement of other state and federal agencies. On September
26, 2012, NECC recalled the three lots of MPA found to be
contaminated. The suspected lots contained 17,676 dosage vials.
Of this number, more than 14,000 were used for injections. Only
about 3,000 doses were returned through the recall process.
12. Plaintiffs allege the investigation of NECC revealed
black particulate matter in sealed, returned vials of MPA. Vials
also contained a greenish black foreign matter and others a white
filamentous material. Sterility analysis later confirmed the
presence of “viable microbial growth” in all of the 50 vials tested.
Appellant’s App. pp. 93-97 (record citations omitted).
Court of Appeals of Indiana | Opinion 71A03-1512-CT-2199 | November 7, 2016 Page 7 of 28
[4] A total of six claims against Anonymous Clinic were consolidated to address
the threshold legal issue of whether the claims are claims of general negligence
or are subject to the MMA. On May 15, 2015, in the consolidated action
captioned In re Steroid Litigation, Anonymous Clinic filed a motion to dismiss all
of the Plaintiffs’ claims for lack of subject matter jurisdiction on that basis that
MMA requirements had not been met.
[5] On June 26, 2015, the PCF filed a response to the motion to dismiss, opposing
it on the ground that the MMA did not apply to Plaintiffs’ claims. Also on
June 26, 2015, Plaintiffs reversed their earlier position and filed a response
urging the trial court to conclude that their claims were covered by the MMA.
On August 27, 2015, the St. Joseph Superior Court heard oral argument on
Anonymous Clinic’s motion to dismiss.
[6] On October 12, 2015, the St. Joseph Superior Court granted Anonymous
Clinic’s motion to dismiss in part, concluding that Plaintiffs’ claims were
governed by the MMA. The St. Joseph Superior Court stayed proceedings until
compliance with MMA procedures could be accomplished. On November 12,
2015, the PCF moved the St. Joseph Superior Court to certify the case for
interlocutory appeal, which motion was granted on November 16. This court
accepted jurisdiction.
II. Elkhart County
[7] The Elkhart Superior Court set forth the facts underlying the claims filed in
Elkhart County in its order entering summary judgment in favor of OSMC:
Court of Appeals of Indiana | Opinion 71A03-1512-CT-2199 | November 7, 2016 Page 8 of 28
FINDINGS OF FACT
1. Plaintiffs are residents of Indiana and Michigan.
2. OSMC operates medical clinics in Indiana.
3. Medical Protective provides medical malpractice insurance
to OSMC.
4. Broadly, the medical malpractice insurance coverage policy
requires Medical Protective to defend and indemnify OSMC
“[i]n any claim based upon professional services,” subject to four
exclusions:
a. Criminal acts and willful torts,
b. Claims that fall under OSMC’s general liability policy,
c. Punitive damages, or damages above and beyond
compensatory damages, and
d. Any amounts that exceed policy limits.
5. The New England Compounding Center (“NECC”) was a
compounding pharmacy located in Massachusetts.
6. In 2005, OSMC began purchasing betamethasone and
hyaluronidase from New England Compounding Center.
7. OSMC began purchasing drugs from NECC after Elkhart
General Hospital, which is not a party to this case, began
ordering compounded pharmaceuticals from NECC.
8. Before Elkhart General Hospital ordered pharmaceuticals
from NECC, two pharmacists from the hospital traveled to
NECC’s facilities.
9. Dr. Gene W. Grove, Sr., M.D. works as the medical
director of OSMC and as chairman of the pharmacy and
therapeutics board at Elkhart General Hospital.
10. While acting as chairman of the pharmacy and
therapeutics board, Dr. Grove became aware that the Elkhart
General Hospital medical staff had authorized NECC as a
supplier.
11. OSMC hires Elkhart Hospital pharmacists to act as
consultants.
12. OSMC’s trust in Elkhart General Hospital’s vetting
process for pharmaceutical suppliers played a role in OSMC’s
authorization of NECC as a supplier.
13. In 2006, OSMC decided to use preservative-free [MPA].
Court of Appeals of Indiana | Opinion 71A03-1512-CT-2199 | November 7, 2016 Page 9 of 28
14. Physicians at OSMC determined that preservative-free
steroids are safer for patients because preservatives may cause
arachnoiditis and damage the spinal cord.
15. Commercial drug manufacturers do not produce MPA in
a preservative-free form.
16. OSMC decided to purchase preservative-free MPA from
NECC because OSMC was already purchasing betamethasone
and hyaluronidase from NECC.
17. OSMC did not seek other potential suppliers of
preservative-free MPA.
18. The medical board at OSMC authorized the use of
preservative-free MPA.
19. The medical board at OSMC authorized NECC as a
supplier of medications.
20. Plaintiffs allege that compounding pharmacies may not
mass produce pharmaceuticals, but rather must produce drugs for
individual patients.
21. Mass producers of pharmaceuticals must receive special
licenses and are subject to greater FDA oversight.
22. Drugs acquired from a compounding pharmacy generally
involve greater risk than drugs acquired from a mass producer.
23. In 2012, the [CDC] began investigating an outbreak of
fungal meningitis, lumbar fungal infections, and similar diseases.
24. The CDC traced the outbreak to three lots of preservative-
free MPA that NECC produced.
25. Approximately 17,676 vials of preservative-free MPA
originated from the contaminated lots.
26. A recall was issued, and only approximately 3,000 vials
were returned, with approximately 14,000 doses having been
previously administered.
27. A number of the returned vials contained visible
particulate and other foreign matter.
28. Fifty (50) of the returned vials were tested for sterility, and
all of them contained viable microbial growth.
Appellant’s App. pp. 116-31.
Court of Appeals of Indiana | Opinion 71A03-1512-CT-2199 | November 7, 2016 Page 10 of 28
[8] Beginning on October 27, 2014, several Plaintiffs sued OSMC to recover for
injuries allegedly suffered because of the injection of defective MPA. 3 On May
15, 2015, the PCF moved for summary judgment on the ground that the
Plaintiffs’ claims were not covered by the MMA. Also on May 15, 2015,
OSMC moved for summary judgment, asserting that the Plaintiffs’ claims were
covered by the MMA. On June 25, 2015, Plaintiffs responded to the summary
judgment motions, seeking a determination that their claims were covered by
the MMA. On August 7, 2015, the Elkhart Superior Court heard oral
arguments on the summary judgment motions. On November 13, 2015, the
Elkhart Superior Court issued its order entering summary declaratory judgment
in favor of OSMC on the ground that the MMA applies to Plaintiffs’ claims.
III. Appellate Procedure
[9] On February 17, 2016, Plaintiffs moved this court to consolidate the St. Joseph
appeal with the Elkhart appeal, a motion the PCF did not oppose. On March
7, 2016, this court granted the motion to consolidate the appeals, consolidating
appellate cause numbers 20A03-1512-CT-2148 and 71A03-1512-CT-2199 under
the latter cause number.
Discussion and Decision
3
At the time of the Elkhart Superior Court’s order, a total of twenty-six cases were before the court
involving the same question about whether the MMA applied to their claims.
Court of Appeals of Indiana | Opinion 71A03-1512-CT-2199 | November 7, 2016 Page 11 of 28
[10] All agree that the only issue in this appeal is whether Plaintiffs’ allegations
against Anonymous Clinic and OSMC are claims of general negligence or are
covered by the provisions of the MMA. The parties also agree that the issue, as
ultimately one of jurisdiction, is to be reviewed de novo by this court. See
Kondamuri v. Kondamuri, 799 N.E.2d 1153, 1156 (Ind. Ct. App. 2003) (“A
court’s jurisdiction either exists or does not, and the question of a court’s
jurisdiction is therefore a question of law that is not entrusted to the trial court’s
discretion but rather is reviewed de novo.”), trans. denied.
I. Background—The MMA
[11] Plaintiffs, Defendants, and Amici Curiae argue that Plaintiffs’ claims are covered
by the MMA while the PCF argues that they are not.
[T]he MMA [is] a statute that applies to claims of personal injury
or death proximately caused by a “health care provider,” as that
term is defined in the MMA.… We will usually refer to this type
of claim in this opinion as “medical malpractice” or just
“malpractice.” The MMA did not create or establish the medical
malpractice claim; it only imposed procedural requirements on
the prosecution of them. Chamberlain v. Walpole, 822 N.E.2d 959,
961 (Ind. 2005).
One of the requirements of the MMA is that a proposed medical
malpractice complaint first be filed with the Department of
Insurance for review by a medical panel before the complaint is
filed in court.
Ellenwine v. Fairley, 846 N.E.2d 657, 660 (Ind. 2006).
The MMA … set up a system under which health care providers
meeting qualifications set forth in the act (“Qualified Provider”)
Court of Appeals of Indiana | Opinion 71A03-1512-CT-2199 | November 7, 2016 Page 12 of 28
would enjoy certain benefits, including a limitation on liability.
For an act of malpractice occurring after June 30, 1999, the total
amount recoverable for an injury or death is now capped at
$1,250,000. See Ind. Code § 34-18-14-3(a)(3). A Qualified
Provider’s liability for an occurrence of malpractice is now
limited to $250,000. See Ind. Code § 34-18-14-3(b). Any
remaining amount due from a judgment or settlement is to be
paid from the Fund. See Ind. Code § 34-18-14-3(c).
In re Stephens, 867 N.E.2d 148, 150 (Ind. 2007).
[12] At the heart of both the Elkhart and St. Joseph Superior Courts’ decisions is
their conclusion that the MMA governs Plaintiffs’ claims against Defendants.
Defendants and Amici Curiae, who are also health care providers under the
MMA, wish to have this court declare Plaintiffs’ claims subject to the MMA.
Plaintiffs, despite the fact that they would face the additional procedural
burdens of compliance with the MMA as well as the limitations on recovery,
take the same position. The PCF contends that Plaintiffs’ claims are claims of
general negligence, not governed by the MMA.
II. The Arguments
[13] Pursuant to Indiana Code section 34-18-2-13, “‘Health care’ means an act or
treatment performed or furnished, or that should have been performed or
furnished, by a health care provider for, to, or on behalf of a patient during the
patient’s medical care, treatment, or confinement.” The question is whether the
negligence alleged against Defendants qualifies as “health care.” If so,
Plaintiffs’ claims are subject to the MMA; if not, they are claims of general
negligence.
Court of Appeals of Indiana | Opinion 71A03-1512-CT-2199 | November 7, 2016 Page 13 of 28
[14] In the brief in support of the PCF’s summary judgment motion filed in Elkhart
Superior Court, it characterized Plaintiffs’ arguments as follows:
Instead, the gravamen of plaintiffs’ underlying complaints is that
OSMC [was] negligent in procuring preservative-free [MPA]
from NECC.
Based on a review of the underlying complaints and the
deposition testimony of [OSMC]’s representatives, the PCF
anticipates that plaintiffs’ arguments related to whether the
MMA applies to their claims will fall into two broad categories -
namely, (1) the decision to use a preservative-free [MPA], and (2)
the decision to purchase that product from NECC.
Appellant’s App. p. 277.
[15] In the PCF’s motion in St. Joseph Superior Court, it characterizes the Plaintiffs’
claims as follows:
Instead, the gravamen of plaintiffs’ underlying complaints is that
[Anonymous Clinic was] negligent in procuring preservative-free
[MPA] from NECC. The “question of whether a given course of
treatment was medically proper and within the appropriate,
standard” is the “quintessence of a malpractice case.” Howard
Reg’l Health Sys. v. Gordon, 952 N.E.2d 182, 185 (Ind. 2011). But,
noticeably absent in this case is any allegation that the “course of
treatment” was improper or improperly administered. Instead,
plaintiffs allege that the course of treatment was tainted by a third
party who allowed the medications to become contaminated.
This factual scenario is fundamentally different from the
allegations that state a claim for medical malpractice.
The complaint allegations relevant to [Anonymous Clinic] fall
into two broad categories - namely, (1) the decision to use a
preservative-free [MPA], and (2) the decision to purchase that
product from NECC.
Court of Appeals of Indiana | Opinion 71A03-1512-CT-2199 | November 7, 2016 Page 14 of 28
Appellant’s App. pp. 996-97. So, the question is whether deciding to use
preservative-free MPA and deciding to purchase it from NECC constitute
“health care” under the MMA. If so, the alleged negligence in those areas
would be subject to the MMA. If not, such claims would be claims of general
negligence.
A. Legal Arguments
[16] The PCF contends that the general procurement of products that will eventually
be used in the course of treatment does not qualify as “health care” under the
MMA. The OSMC and Anonymous Clinic argue that Plaintiffs’ allegations are
covered by the MMA. Amici point out that the U.S. District Court for the
District of Massachusetts, which is hearing hundreds of similar cases in federal
multidistrict litigation (“the MDL Court”), has determined similar claims to be
claims of professional negligence, and urges this court to do the same.
[17] “The [MMA] is not all-inclusive as to claims against medical providers, and a
claim against a medical provider sounding in general negligence or premises
liability rather than medical malpractice is outside the [MMA].” Peters v.
Cummins Mental Health, Inc., 790 N.E.2d 572, 576 (Ind. Ct. App. 2003), trans.
denied.
The Act covers “curative or salutary conduct of a health care
provider acting within his or her professional capacity, but not
conduct unrelated to the promotion of a patient’s health or the
provider’s exercise of professional expertise, skill, or judgment.”
Howard Reg’l Health Sys. v. Gordon, 952 N.E.2d 182, 185 (Ind.
2011) (emphasis added) (citation and quotation marks omitted).
Court of Appeals of Indiana | Opinion 71A03-1512-CT-2199 | November 7, 2016 Page 15 of 28
When deciding whether a claim falls under the provisions of the
Act, “we are guided by the substance of a claim to determine the
applicability of the Act.” Doe by Roe v. Madison Ctr. Hosp., 652
N.E.2d 101, 104 (Ind. Ct. App. 1995).… [W]e reiterate that the
“fact that the alleged misconduct occurs in a healthcare facility”
or that “the injured party was a patient at the facility,” is not
dispositive in determining whether the claim sounds in medical
malpractice. Madison Ctr., Inc. v. R.R.K., 853 N.E.2d 1286, 1288
(Ind. Ct. App. 2006), trans. denied. “[T]he test is whether the
claim is based on the provider’s behavior or practices while
acting in his professional capacity as a provider of medical
services.” Id. (quotation marks omitted). We also noted more
recently that:
A case sounds in ordinary negligence [rather than
medical negligence] where the factual issues are
capable of resolution by a jury without application
of the standard of care prevalent in the local medical
community. By contrast, a claim falls under the
Medical Malpractice Act where there is a causal
connection between the conduct complained of and
the nature of the patient-health care provider
relationship.
B.R. ex rel. Todd v. State, 1 N.E.3d 708, 714-15 (Ind. Ct. App.
2013) (citations omitted), trans. denied.
Terry v. Cmty. Health Network, Inc., 17 N.E.3d 389, 393 (Ind. Ct. App. 2014).
Indiana courts understand the Malpractice Act to cover “curative
or salutary conduct of a health care provider acting within his or
her professional capacity,” Murphy v. Mortell, 684 N.E.2d 1185,
1188 (Ind. Ct. App. 1997), but not conduct “unrelated to the
promotion of a patient’s health or the provider’s exercise of
professional expertise, skill, or judgment.” Collins v. Thakkar, 552
N.E.2d 507, 510 (Ind. Ct. App. 1990). To determine whether the
Court of Appeals of Indiana | Opinion 71A03-1512-CT-2199 | November 7, 2016 Page 16 of 28
Act is applicable, the court looks to the substance of a claim. Van
Sice v. Sentany, 595 N.E.2d 264 (Ind. Ct. App. 1992).
Thus, regardless of what label a plaintiff uses, claims that boil
down to a “question of whether a given course of treatment was
medically proper and within the appropriate standard” are the
“quintessence of a malpractice case.” Id. at 267 (plaintiff’s claims
of fraud and battery fell within the Malpractice Act because the
first was essentially a claim that the defendant failed to adhere to
a standard of care and the second was a claim that the defendant
did not obtain informed consent for a procedure); Popovich v.
Danielson, 896 N.E.2d 1196, 1202-04 (Ind. Ct. App. 2008)
(though styled as assault and battery, fraud, breach of contract,
and defamation, all plaintiff’s claims involved defendant’s
exercise of professional judgment and involved actions taken
while providing medical care and thus the requirements of the
Act applied).
By contrast, to fall outside the Malpractice Act a health care
provider’s actions must be demonstrably unrelated to the
promotion of the plaintiff’s health or an exercise of the provider’s
professional expertise, skill, or judgment. Kuester v. Inman, 758
N.E.2d 96 (Ind. Ct. App. 2001); Collins, 552 N.E.2d at 510 (Ind.
Ct. App. 1990) (Act held inapplicable in cases where the conduct
involved was “unrelated to the promotion of a patient’s health or
the provider’s exercise of professional expertise, skill or
judgment”).
Howard Reg’l Health Sys. v. Gordon, 952 N.E.2d 182, 185-86 (Ind. 2011).
1. Harts and Pluard
[18] The PCF relies primarily on two Indiana cases to support its argument that
alleged negligence in this case is not governed by the MMA. The first of these
cases is Harts v. Caylor-Nickel Hosp., Inc., 553 N.E.2d 874 (Ind. Ct. App. 1990),
trans. denied, in which the elderly plaintiff was injured when the railing allegedly
Court of Appeals of Indiana | Opinion 71A03-1512-CT-2199 | November 7, 2016 Page 17 of 28
collapsed on his hospital bed, causing him to fall out. Id. at 875-76. Harts
argued, and the court agreed, that his claim against the hospital was not subject
to the MMA. Id. at 879. In so doing, the Harts court relied on our earlier
decision in Winona Memorial Found. of Indianapolis v. Lomax, 465 N.E.2d 731
(Ind. Ct. App. 1984):
“Such matters as the maintenance of reasonably safe premises are within
the common knowledge and experience of the average person. Health
care providers, who must make up the medical review panel…, are no
more qualified as experts on such matters than the average juror. And
as we have stated: ‘When … the matters at issue are within the
common knowledge and experience of the jury, expert testimony
regarding the exercise of reasonable care is improper and should
be excluded.’ Emig v. Physicians’ Physical Therapy Service, Inc., 432
N.E.2d [52, 53 (Ind. Ct. App. 1982)] (citing Rosenbalm v. Winski,
(1975) 165 Ind. App. 378, 332 N.E.2d 249).”
Harts, 553 N.E.2d at 879-80 (quoting Lomax, 465 N.E.2d at 740) (emphasis in
Harts, first ellipsis added).
[19] Noting that Harts’s allegations were limited to a claim that the hospital’s
employees failed to properly restrain or secure the guardrail on his bed, we
concluded that
[t]he tenor of Harts’ complaint taken as a whole clearly supports
an allegation of ordinary negligence. We cannot say that these
allegations were part and parcel of diagnosis and treatment
which would subject his claim to coverage under the Act. He did
not allege any breach of duty directly associated with medical
negligence that was integral to the rendering of medical treatment
that would subject his claim to the Medical Malpractice Act.
Court of Appeals of Indiana | Opinion 71A03-1512-CT-2199 | November 7, 2016 Page 18 of 28
Harts, 553 N.E.2d at 879.
[20] The PCF also relies on our decision in Pluard ex rel. Pluard v. Patients
Compensation Fund, 705 N.E.2d 1035 (Ind. Ct. App. 1999), trans. denied. Infant
Pluard was injured when a surgical lamp detached from a wall and fell on him,
striking him in the head. Id. at 1036. After settling with the hospital, Pluard
sought to recover excess damages from the PCF, which countered that the tort
that caused Pluard’s injuries was not governed by the MMA. Id. We ruled in
favor of the PCF, concluding that
[t]he nurses’ assistant’s manipulation of the light, while very
close in time to the light’s falling on Pluard, has not been alleged
to have caused his injury. Pluard was injured because the light
fell on him; the light fell on him because it was not properly
attached to the wall. Put another way, the duty to secure the
light, and even the nurses’ assistant’s duty to position it, did not
involve a health care decision involving the exercise of
professional skill or judgment. Instead, it involved the general
duty to maintain safe premises and equipment. As such, it
involves issues capable of resolution without application of the
standard of care prevalent in the local medical community, and
thus, is outside the purview of the Act, which requires convening
a panel of medical experts for the purpose of judging a
completely different kind of question. Even when we view the
evidence in the light most favorable to Pluard, and accept the
proposition that the light fixture’s fall was sufficiently proximate
in time as to make it part of the ongoing care of Pluard, the
nurses’ assistant being under the direction of the surgeon, it still
was not an event that required the exercise of professional skill
and judgment.
Id. at 1038.
Court of Appeals of Indiana | Opinion 71A03-1512-CT-2199 | November 7, 2016 Page 19 of 28
[21] The PCF contends that the court’s focus in Harts and Pluard was on whether the
product was defective or misused during treatment. Specifically, the PCF
asserts that the decisions stand for the proposition that if the product is
defective, the claim falls outside the MMA, and, if the product is misused, the
claims are governed by the MMA. It would follow, then, that because there
have been no allegations that the Defendants misused the MPA, Plaintiffs’
claims fall outside the MMA. We are not persuaded, however, that the PCF’s
position is a reasonable reading of Harts and Pluard.
[22] A fair reading of both decisions indicates that the court’s true focus in both
cases was on whether the issues were capable of resolution without referring to
the medical standard of care; if so, the claims would not be subject to the
MMA. The Harts court stated that “[w]hen … the matters at issue are within
the common knowledge and experience of the jury, expert testimony regarding
the exercise of reasonable care is improper and should be excluded.” Harts, 553
N.E.2d at 879 (quoting Lomax, 465 N.E.2d at 740). The Pluard court also based
its conclusion on this distinction, determining that the case involved “issues
capable of resolution without application of the standard of care prevalent in
the local medical community, and thus, is outside the purview of the Act,
which requires convening a panel of medical experts for the purpose of judging
a completely different kind of question.” Pluard, 705 N.E.2d at 1038. Contrary
to the PCF’s assertion, Harts and Pluard stand for the proposition that matters
are not subject to the MMA when they can be resolved without reference to the
local medical standard of care.
Court of Appeals of Indiana | Opinion 71A03-1512-CT-2199 | November 7, 2016 Page 20 of 28
[23] With this in mind, we turn to Plaintiffs’ specific allegations. Plaintiffs have
alleged that Defendants negligently decided to purchase preservative-free MPA
from NECC and also negligently failed to properly investigate and evaluate
NECC’s manufacturing procedures. The PCF asserts that these allegations are
not covered by the MMA. We have little trouble concluding that the selection
of preservative-free MPA—in particular, preservative-free MPA made by
NECC—in favor of MPA with preservatives from other suppliers, were actions
that involved the exercise of professional medical skill and judgment, i.e., they
qualify as the practice of medicine.
[24] We have observed that “[t]he practice of medicine may be said to consist in
three things: First, in judging the nature, character, and symptoms of the
disease; second, in determining the proper remedy for the disease; third, in
giving or prescribing the application of the remedy to the disease.” Fowler v.
Norways Sanitorium, 112 Ind. App. 347, 42 N.E.2d 415, 420 (Ind. Ct. App.
1942) (quoting Underwood v. Scott, 23 P. 942, 943 (Kan. 1890)) (superseded by
statute on other grounds as recognized by Sloan v. Metro. Health Council of
Indpls., Inc., 516 N.E.2d 1104, 1106 (Ind. Ct. App. 1987)). We conclude that
the allegations in this case clearly fall under the second aspect of the practice of
medicine—selection of the proper remedy.
[25] As mentioned, MPA is injected into the lumbar spinal region of patients to
relieve lower back pain. In Anonymous Clinic’s case, the decision to
administer preservative-free MPA was made by a physician, Dr. Kathryn Park,
on the basis that preservatives can be neurotoxic. In OSMC’s case, the decision
Court of Appeals of Indiana | Opinion 71A03-1512-CT-2199 | November 7, 2016 Page 21 of 28
to purchase preservative-free MPA from NECC was made by its medical board,
which consisted of Dr. Gene Grove and other physicians on OSMC’s board.
Physicians at SMC determined that the preservatives in question could cause
arachnoiditis and damage the spinal cord. Selection of preservative-free MPA
clearly involved the practice of medicine.
[26] We also conclude that the decision to purchase preservative-free MPA from
NECC was an integral part of the remedy-selection process. For Anonymous
Clinic, the decision to purchase from NECC was made by Dr. Park because
NECC was, as far as she knew, the only supplier of preservative-free MPA;
Anonymous Clinic had used other NECC products for years without problems;
and NECC had a good reputation among other physicians. Put another way,
Anonymous Clinic’s medical decision to administer preservative-free MPA
necessarily involved an evaluation of NECC’s suitability as a supplier because it
represented the only source known to the clinic. It is reasonable to assume that
Dr. Park evaluated NECC’s suitability in light of Anonymous Clinic’s long-
standing relationship with NECC and its reputation.
[27] In the case of OSMC, the decision to source the MPA from NECC was also the
result of a long-standing relationship. In 2005, OSMC began purchasing
betamethasone and hyaluronidase from NECC after Elkhart General Hospital
began ordering compounded pharmaceuticals from NECC. As it happens, in
addition to being on the medical board of OSMC, Dr. Grove was chairman of
the pharmacy and therapeutics board at Elkhart General and had become
aware that the Elkhart General medical staff had authorized NECC as a
Court of Appeals of Indiana | Opinion 71A03-1512-CT-2199 | November 7, 2016 Page 22 of 28
supplier. The record reflects that OSMC’s trust in Elkhart General’s vetting
process for pharmaceutical suppliers played a role in OSMC’s subsequent
authorization of NECC as a supplier. It is reasonable to assume that OSMC
weighed the potential benefits of using preservative-free MPA from NECC
against the potential risks and determined that purchasing the medication from
NECC was a reasonable approach. This decision is obviously one that was
made using professional judgment. In summary, pursuant to this court’s
holdings in Harts and Pluard, the line between MMA claims and non-MMA
claims divides them into situations that can be understood without the
assistance of expert testimony and those that cannot be, and the claims in this
case fall into the latter category.4
4
Plaintiffs and OSMC bring our attention to two Indiana cases in which the court concluded that
claims involving allegedly defective products provided by medical providers to patients were
nonetheless subject to the MMA. See St. Mary Med. Ctr., Inc. v. Casko, 639 N.E.2d 312, 315 (Ind. Ct.
App. 1994); and Dove by Dove v. Ruff, 558 N.E.2d 836 (Ind. Ct. App. 1990), trans. denied.
It is worth noting, however, that in Casko and Dove, the plaintiffs were attempting to have their cases
treated as products liability claims, while the PCF is attempting to have the claims here treated as
general negligence. In the first situation, the question is whether the product was used as part of
medical treatment and in the second, whether the actions of the health care providers cannot be
understood by laypersons without expert testimony. While the holdings in Casko and Dove are certainly
not inconsistent with our conclusion in this case, the issues resolved are different and the reasoning is
not particularly helpful here.
Amici, who are health care providers and defendants in several cases involving defective MPA, note that
the U.S. District Court for the District of Massachusetts (“the MDL Court”) is currently overseeing
multi-district litigation (“MDL”) from jurisdictions nationwide involving steroids made by NECC in In
re: New England Compounding Pharmacy, Inc., Products Liability Litigation, No. 1:13-md-02419 (D. Mass.).
The MDL Court has dismissed claims regarding defective MPA under other states’ laws. As with Casko
and Dove, however, the plaintiffs’ claims in those cases are all claims of products liability, unlike the
negligence claims brought in this case. Consequently, the MDL Court’s reasoning is no more helpful in
this case than the courts’ reasoning in Casko and Dove.
Finally, the Amici have compiled a table of cases in their brief from other jurisdictions addressing the
question of whether the delivery of a product in the context of medical treatment can support a products
liability claim or whether the claim is one of medical malpractice. The Amici note that twenty-three of
twenty-five jurisdictions to consider the question have determined the claim before it to be one of
Court of Appeals of Indiana | Opinion 71A03-1512-CT-2199 | November 7, 2016 Page 23 of 28
2. Lack of Causal Connection
[28] The PCF also contends that there is no causal connection shown in this case
between the treatment of any individual patient and the exercise of medical
judgment by any Defendants. The PCF’s argument is apparently that the
decisions by Defendants to purchase preservative-free MPA from NECC, even
if they did involve the exercise of medical judgment, occurred years before any
of Plaintiffs received their treatments and were therefore made outside the
provider-patient relationship. This position would seem to be based on the
proposition that only decisions made by providers with specific patients in mind
can be subject to the MMA. The language of the MMA is not so restrictive.
“‘Health care’ means an act or treatment performed or furnished, or that should
have been performed or furnished, by a health care provider for, to, or on behalf
of a patient during the patient’s medical care, treatment, or confinement.” Ind.
Code § 34-18-2-13. Nothing in the statutory language exempts decisions made
by a health care provider regarding a general course of treatment for a particular
class of patient. We conclude that general decisions that later affect particular
patients are not exempt from the provisions of the MMA for an alleged lack of
causal connection.
medical malpractice and not products liability. Suffice it to say that, as with Casko, Dove, and the
decisions rendered by the MDL Court, all of the holdings rely on the concept that medical treatment is
primarily a service and not a sale of products and do not address negligence theories of the type brought
in this case.
Court of Appeals of Indiana | Opinion 71A03-1512-CT-2199 | November 7, 2016 Page 24 of 28
B. Policy Arguments
[29] The PCF points out that, pursuant to the MMA, the total recovery in any
malpractice action is $1,250,000 per injury or death. Ind. Code § 34-18-14-
3(a)(3). Moreover, the MMA caps the health care provider’s malpractice
liability at $250,000 per occurrence. Ind. Code § 34-18-14-3(b). Amounts in
excess of this are payable from the PCF upon petition. Ind. Code §§ 34-18-14-
3(c), -15–3. Also, subject to certain terms and conditions,
[i]f an annual aggregate [of $750,0005] for a health care provider
qualified under this article has been paid by or on behalf of the
health care provider, all amounts that may subsequently become
due and payable to a claimant arising out of an act of malpractice
of the health care provider occurring during the year in which the
annual aggregate was exhausted shall be paid from the patient’s
compensation fund[.]
Ind. Code § 34-18-6-6(a).
[30] The PCF notes that OSMC faces approximately 100 individual claims while
Anonymous Clinic faces approximately twelve individual claims. Assuming
that Defendants are found liable for negligence following trial in all or many of
these cases, the potential exposure could be significant. The PCF asserts that
the General Assembly did not contemplate making the PCF the insurer of the
safety of practically all products used in health care and suggests that a decision
5
It does not seem to be disputed that all Defendants have annual aggregates of $750,000 each pursuant
to Indiana Code section 34-18-4-1(1)(C)(i), which provides that “[i]f the health care provider is a health
facility, the minimum annual aggregate insurance amount is as follows:… For health facilities with not
more than one hundred (100) beds, three (3) times [$250,000.]”
Court of Appeals of Indiana | Opinion 71A03-1512-CT-2199 | November 7, 2016 Page 25 of 28
against it would subject it to strict liability in this and similar cases. The PCF
further argues, essentially, that the allegedly increased potential liability it
would face due to cases such as this would result in increased surcharges from
healthcare providers to fund the PCF and jeopardize their ability to obtain
affordable medical malpractice insurance.
[31] Defendants counter that a determination that this case is governed by the MMA
does not thwart but, rather, furthers the legislative intent. Defendants argue
that the MMA was designed as a comprehensive medical liability insurance
arrangement that struck a balance between ensuring both that (1) the patients
injured by professional negligence receive at least some compensation and (2)
health care providers can continue to provide affordable health care.
Anonymous Clinic also argues that the PCF mischaracterizes Plaintiffs’ claims
as product liability and that the PCF would not be subject to strict liability for
defective products used in medical care. OSMC also points out that a statutory
mechanism, i.e., Indiana Code section 34-18-5-4, already exists for increasing
the surcharge on health care provides to maintain the PCF’s liquidity in the
event of large payouts. In a nutshell, Defendants argue that even if the claims
at issue in this case were to drain the PCF entirely, it is not this court’s place to
ensure the PCF’s liquidity; this court’s only job is to decide if the claims before
it are governed by the MMA. To the extent that there may be a public policy
question with the MMA and the PCF, it is the General Assembly’s decision to
address the question.
Court of Appeals of Indiana | Opinion 71A03-1512-CT-2199 | November 7, 2016 Page 26 of 28
[32] The Defendants and Plaintiffs have the much more defensible position here,
namely that ensuring the PCF’s continued liquidity is not this court’s job. If,
pursuant to the MMA’s plain language and under current precedent, the
Plaintiff’s claims should be governed by the MMA, we should rule as such,
whatever the consequences. See, e.g., Ind. Dep’t of Envtl. Mgmt. v. Chem. Waste
Mgmt., Inc., 643 N.E.2d 331, 338 (Ind. 1994) (“The General Assembly has
decided to concentrate the State’s energies on regulating commercial waste
disposal facilities and it is not our job to second guess such decisions.”). Even if
we assume that the claims in this case will result in payouts sufficient to
threaten the viability of the PCF (which is by no means a foregone conclusion),
we are not free to ignore the law in an attempt to save it.
Conclusion
[33] There is really only one issue before the court in this case, whether alleged
negligence by a medical provider in selecting a certain drug from a particular
supplier are claims subject to the MMA or sound in general negligence.
Indiana law stands for the proposition that if allegations cannot be understood
by laypersons without resort to expert testimony, the claims are governed by the
MMA. We conclude the claims in this case, i.e., that Defendants were
allegedly negligent in choosing to purchase and administer preservative-free
MPA and in choosing NECC without proper vetting, are allegations that claim
negligence in decisions that were made using professional expertise. Because
we conclude that Plaintiffs’ claims are governed by the provisions of the MMA,
Court of Appeals of Indiana | Opinion 71A03-1512-CT-2199 | November 7, 2016 Page 27 of 28
we affirm the judgment of the trial courts and remand for further proceedings
consistent with this opinion.
[34] We affirm and remand for further proceedings.
Pyle, J., and Altice, J., concur.
Court of Appeals of Indiana | Opinion 71A03-1512-CT-2199 | November 7, 2016 Page 28 of 28