Damages cap upheld in charitable-hospital malpractice case.

The Massachusetts Supreme Judicial Court has overturned a trial court's decision in a malpractice case to strike a damages cap that protects a hospital as a charitable organization.

On behalf of the majority, Justice John Greaney wrote that the statutory language that installed the $20,000 cap "does not allow an interpretation chat negligent conduct on the part of a charitable corporation constitutes a waiver" of the recovery limitation. (Keene v. Brigham and Women's Hosp., Inc., 786 N.E.2d 824 (Mass. 2003).)

Forty-one states have abolished such caps; of the remaining nine, Massachusetts's cap, which was set in 1971, is one of the most restrictive.

Although the court said the trial judge was wrong to sanction the hospital for failing to produce critical records pertaining to the care of a newborn who suffered brain damage while in the hospital nursery, Greaney suggested that the plaintiffs might have a viable claim for spoliation of evidence, which would still be subject to the cap.

Chris Milne, the Dover, Massachusetts, attorney who represents the child and his parents, has petitioned for a rehearing, arguing that the state's consumer-rights and patient-rights statures give the court the authority to sanction the hospital by striking the recovery cap.

Dylan Keene was born at 1:07 a.m. on May 15, 1986, at Brigham and Women's Hospital in Boston. Within the first five hours of life, he exhibited signs of respiratory distress and was sent to the special-care nursery. The baby underwent several tests and returned to the regular-care nursery. At 6:25 a.m., a doctor advised his caregivers to wait for the test results before taking further steps.

Dylan's records from 6:30 that morning to midnight are missing, but by 2:30 a.m. May 16, when his records resume, he was suffering septic shock and having seizures. At this time, antibiotics were administered, but subsequent testing revealed that the child had contracted neonatal sepsis and meningitis. This infection resulted in mental retardation, spastic quadriplegia, limited vision, painful scoliosis, and chronic seizure disorder.

Dylan's family filed a malpractice suit in 1995. The defendants refused initial requests for the missing records, but the hospital ultimately conceded it could not find the records and had made no effort to determine who had treated the infant during the time for which there were no medical records. These records would have revealed the decisions made after Dylan's initial battery of tests and, perhaps, the names of the doctors and nurses who treated him.

The trial judge determined that the loss of Dylan's records amounted to negligence. Although the judge did not find the hospital's negligence to be willful or an act of bad faith, he concluded that its failure to maintain records deprived Dylan of the opportunity to collect damages from the health care practitioners who treated him and entered a default judgment against it.

As a sanction, he also removed the damages cap applying to charitable organizations, reasoning that the doctors--who were not protected by the cap and presumably could have been liable if identified--and the hospital were covered by the same insurer. The appeals court upheld this judgment.

The Supreme Judicial Court, while agreeing that the hospital was liable for damages, said the trial court erred in sanctioning the hospital for violating a court order to turn over Dylan's lost records. "Put simply, there can be no discovery violation ... when a party fails to produce documents it does not possess," Greaney wrote.

Instead, the court said, the case should be analyzed as a spoliation claim, in which a party may be held accountable for "negligently ... lost" relevant evidence that is "known to be relevant" to future litigation. The court said the hospital was aware that the Keenes might sue as early as ]987, when it filed a notice of a potential claim with its insurer after receiving the family's first request for Dylan's records.

The high court agreed with the trial judge that the defendants had a statutory obligation to keep patients' records. "In the spoliation context ... a judge has broad discretion to impose a variety of sanctions against the defendant for the breach of its statutory duty to retain the plaintiffs missing records," Greaney wrote. The court concluded that "the judge was within his authority in ordering the sanction of default on the issue of liability" but that "the [trial] judge lacked authority to strike the cap."

His "attempt to remedy what he (correctly) perceived to be a horrific wrong" was faulty, if well intentioned, Greaney wrote. "In the absence of an expression of legislative intent" to create an exception to the cap, "we cannot create one."

Milne bas petitioned the high court for rehearing or an amended decision, citing the state's patients' bill of rights as a basis for waiving the damages cap. Doing so would "remedy unfairness and would be consistent with a legislative intent to protect consumers ... regardless of the charitable status of the organization," Milne argued in the petition.

Also addressed in the petition is the hospital's status as a charitable organization that engages in commercial activities, which Milne argued makes it vulnerable to damages beyond the cap. Brigham and Women's Hospital was paid for Dylan's care, so his treatment did not fill any charitable purpose, he said.

Milne argued that Massachusetts's consumer-protection statute allows judges to strike the damages cap, as the Supreme Judicial Court did in Linkage Corp. v. Trustees of Boston University. (679 N.E.2d 191 (Mass. 1997).)

In that decision, the court wrote that a charity that engages in commercial transactions can "fall under the governance" of the statute, which embodies the legislature's intent to protect consumers--in the Keene case, a hospital patient whose treatment was paid for.

At press time, the Keenes were awaiting the court's response to the petition.