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Dunn v. Praiss

April 18, 1995

LINDA B. DUNN, INDIVIDUALLY, AND AS THE ADMINISTRATRIX AD PROSEQUENDUM OF THE ESTATE OF CAREY DUNN, PLAINTIFF,
v.
DONALD E. PRAISS, M.D., AND MARTHA BRUMBAUGH, M.D., DEFENDANTS, AND JOEL E. MARMAR, M.D., AND SOUTH JERSEY UROLOGIC ASSOCIATES, DEFENDANTS-RESPONDENTS, V. HEALTH CARE PLAN OF NEW JERSEY, DEFENDANT-APPELLANT



On certification to the Superior Court, Appellate Division, whose opinion is reported at 271 N.J. Super. 311 (1994).

The opinion of the Court was delivered by O'hern, J. Chief Justice Wilentz and Justices Handler, Pollock, Garibaldi, Stein and Coleman join in this opinion.

The opinion of the court was delivered by: O'hern

(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the interests of brevity, portions of any opinion may not have been summarized).

LINDA B. DUNN V. DONALD E. PRAISS, M.D., ET AL. (A-58-94)

Argued January 18, 1995 -- Decided April 18, 1995

O'HERN, J., writing for a unanimous Court.

In May 1982, Carey Dunn experienced pain and swelling in his scrotal area. He was treated by a private physician with antibiotics and his condition improved. Later that year, Dunn joined the Health Care Plan of New Jersey (HCP), a health maintenance organization (HMO). Dr. Martha Brumbaugh became Dunn's primary care physician at HCP. Pursuant to HCP's official description of benefits, the primary physician is responsible for coordinating the subscriber's total health program.

In December 1982, Dunn's symptoms reoccurred. Dr. Brumbaugh diagnosed a recurrence of inflammation of the tissues surrounding the testicle. She referred Dunn to Dr. Donald Praiss of South Jersey Urologic Associates (SJUA), a group that contracted with HCP to provide services to HCP subscribers. Dr. Praiss diagnosed a shrunken testicle with persistent collection of fluid and a possible hernia. Praiss sent Dunn for a scrotal scan. That scan, taken on February 14, 1983, showed a mass but did not determine its composition. Dr. Praiss ordered no other tests to determine if the mass was cancerous. He did schedule a return appointment with Dunn.

On February 22, 1983, Dr. Joel Marmar, another SJUA physician, examined Dunn. He told Dunn to note any change in the size of the mass through self-examination but did not order any further tests or schedule a return appointment. Neither the scrotal scan nor the reports of the SJUA physicians reached Dr. Brumbaugh, who had no further contact with Carey Dunn until November 1983. At that time, Dunn saw Dr. Brumbaugh in respect of other symptoms. Dr. Brumbaugh ordered medication and various tests. In December 1983, oncological tests revealed testicular cancer that had spread to the liver. Carey Dunn died as a result of the cancer in April 1985.

Carey Dunn's widow, Linda Dunn (also, Dunn), sued HCP, Dr. Brumbaugh, Dr. Marmar, Dr. Praiss, and SJUA, asserting claims for medical malpractice in addition to other claims against HCP, including breach of contract based on Dr. Brumbaugh's failure to review and follow up with the urologists' reports. Dr. Marmar and SJUA asserted cross-claims for contribution and indemnification against their codefendants.

The case was tried before a jury in June and July of 1990. At the Conclusion of Dunn's case, on HCP's motion, the court dismissed all of the claims against HCP as well as the claims against all of the other defendants except Dr. Marmar and SJUA (collectively, Dr. Marmar). Because Dr. Marmar had no evidence to present in respect of HCP's independent negligence, his cross-claims against HCP were effectively dismissed, even though there was no court order. HCP declined to participate in the trial against Dr. Marmar. The jury returned a verdict in favor of Dunn in excess of $2.9 million, apportioning ten-percent fault to Carey Dunn and ninety-percent fault to Dr. Marmar.

Dunn 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 did not appeal the dismissal of his cross-claims against HCP. The Appellate Division held that HCP was vicariously liable for Dr. Marmar's actions pursuant to theories of respondeat superior or agency and, therefore, it was thus not necessary to address Dunn's contract theory. The court affirmed the liability judgment but remanded for retrial on damages only. This Court denied HCP's petition for certification and Dunn's cross-petition. Dr. Marmar did not petition for certification in respect of the dismissal of his cross-claims.

On remand to the trial court, Dr. Marmar sought to litigate his cross-claims against HCP. The trial court agreed with HCP's argument that the court resolve the issue of the existence of those cross-claims at the Conclusion of the damage trial. Prior to the retrial, Dr. Marmar settled with Dunn and she assigned to Dr. Marmar any remaining rights that she had. The trial court heard argument on the remaining issues concerning HCP and ruled that the Appellate Division had implicitly affirmed its dismissal of Dr. Marmar's cross-claims.

Dr. Marmar appealed from the dismissal of his cross-claims. The Appellate Division remanded the matter for a determination of whether any viable claims against HCP, if proven, could have been independent proximate causes of Carey Dunn's 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 of the indemnification agreement between Dr. Marmar and HCP. The Appellate Division also determined that Dunn had no viable negligence claim directly against HCP, noting that Dr. Marmar had conceded that he had no evidence that HCP did anything negligent. The court found that, although Dr. Marmar preserved the cross-claims, they solely encompassed the right to assert contribution for Dunn's contractual claims or claims based on agency or respondeat superior. The court further decided that Dr. Marmar's contribution claim may be based on HCP's alleged breach of contract with Carey Dunn.

The Supreme Court granted HCP's petition for certification.

HELD: There may be contribution between one whose breach of contractual duty is a proximate cause of personal injury and one whose negligence is a proximate cause of the same injury. However, in the circumstances of this case, Dr. Marmar failed to adequately preserve his right to assert a cross-claim for contribution against the Health Care Plan of New Jersey.

1. Under the Comparative Negligence Act, joint tortfeasors share liability on the basis of proportion of fault as determined by the trier of fact. The Act's application is not limited to negligence actions. It is appropriate in this case to apportion responsibility based on a breach of contract that is alleged to have proximately caused personal injury. The alleged failure of HCP is more like a negligent act than an intentional breach of contract. Thus, Dr. Marmar, a physician-provider who has been found guilty of medical malpractice, may seek contribution from his health maintenance organization on the basis of its independent breach of contractual duty to Carey Dunn, a patient-subscriber of HCP. (pp. 12-17)

2. A claim for contribution must be timely asserted. Although there may be strategic reasons for initially declining to assert a cross-claim for contribution, parties must "stake out positions among themselves" well before trial. Here, Dr. Marmar did not at the time of the first trial stake out his position concerning the independent negligence of HCP. Dr. Marmar's cross-claims were not automatically reinstated when Dunn's claims against HCP were reinstated nor did he seek to preserve them at the time of settlement. It was not until the case effectively had been disposed of that Dr. Marmar first presented expert evidence pointing a finger at HCP. At that point, the time to assert such a claim had passed; the interests of Justice require that such factual claims be presented at the early stages of litigation. (pp.19-21)

Judgment of the Appellate Division is REVERSED and the trial court's dismissal of Dr. Marmar's cross-claims against HCP are REINSTATED.

CHIEF JUSTICE WILENTZ and JUSTICES HANDLER, POLLOCK, GARIBALDI, STEIN and COLEMAN join in JUSTICE O'HERN'S opinion.

O'HERN, J.

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.

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 malpractice lawsuits on the HMO itself. Robbins v. HIP of New Jersey, 264 N.J. Super. 572, 625 A.2d 45 (Law Div. 1993).

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 ...


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