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Charitable cap: Plead it or lose it, court says.

Byline: Kris Olson

A trial judge could reject a defendant's request to amend its pleadings to invoke as an affirmative defense the charitable liability cap as it would cause "manifest" prejudice to the plaintiffs, the Appeals Court has decided.

The stakes in the case, Larkin v. Dedham Medical Associates, Inc., could hardly have been higher. A ruling in the defendant's favor would have reduced a $35.4 million medical malpractice verdict to a fraction of that amount just $20,000.

After more than four years of litigation and two weeks of trial, the defendant argued that it should be allowed to amend the pleadings by leave of court, which is permitted under Rule 15(a) "when justice so requires."

But the Appeals Court noted that the defendant had not suggested that the defense was unavailable to it when its answer was filed in 2011 and had given no reason for the delay, "aside from inadvertence."

[box type="shadow" align="alignright" width="325px" ]Consultant's contingent fee OK

In addition to resolving the defendant's challenge premised on the denial of its opportunity to amend its complaint, the Appeals Court in Larkin had to confront a unique arrangement one unlike any Boston defense attorney David M. Gould has seen in more than 40 years of practice and about 350 trials.

Rather than a flat fee, the plaintiff had paid a contingency fee to New England Medical Legal Consultants, which had found the plaintiff's expert witnesses.

The plaintiff's appellate attorney, Adam R. Satin, said his Boston firm does not enter into such arrangements but had been referred the case after the plaintiff's previous counsel had signed the agreement.

Defendant Dedham Medical Associates argued that it was entitled to a new trial because the judge had improperly denied its motion for post-trial discovery on the arrangement, which it added "undermines the integrity of the judicial process."

The Appeals Court disagreed, distinguishing it from the prohibited practice in Massachusetts of paying an expert witness a contingent fee. Other jurisdictions are split, the Appeals Court noted, with some holding that such contracts are contrary to established public policy in those states and others upholding the arrangements, so long as the experts themselves are paid a flat fee.

The Appeals Court decided that the "concern that contingent fees will improperly induce expert witnesses to provide outcome-oriented testimony" did not extend to consulting services.

The court added that the defendant could not point to anything in the record to suggest that the payment to the consultant had any effect on the independence of the plaintiff's expert witnesses. Indeed, the experts had not even been told about the agreement with the consultant, Satin said.

But the defendant's attorney, Douglas H. Hallward-Driemeier, said his client may well have been able to unearth evidence of bias had the judge allowed the defendant's request for discovery, which he filed immediately after learning of the arrangement post-verdict.

"In our view, these arrangements are problematic because they pose a serious risk that the service's financial interest in the outcome will influence an expert's testimony, particularly where a service works repeatedly with the same experts, as we understand is the case here," he said.

Hallward-Driemeier said the Supreme Judicial Court ultimately will need to address the issue, whether in a case or by rule.

But Satin said that even in the cases the defendant cited to support its position, the parties were fighting over an alleged breach of the contingency fee agreement. No decision anywhere stands for the proposition that a defendant and non-party to the agreement can use the agreement's existence to disturb a judgment in the plaintiff's favor, he said.

Though Boston plaintiffs' attorney Marianne C. LeBlanc said she has never paid a consultant on a contingency basis, the services of such consultants are vital to plaintiffs. Massachusetts malpractice insurers have access to experts who testify repeatedly on the defense side, but plaintiffs would otherwise have difficulty finding an expert in Massachusetts' "tightknit medical community" willing to testify against a peer, she said.

Thus, it would be wrong to limit access to experts "without some strong justification," she said.[/box]

"Among the good reasons for which a motion to amend may be denied are that no justification for the lateness of the motion is apparent [beyond counsel for the moving party having had a late dawning idea] and that one or more of the nonmoving parties would be caught off balance by the proffered amendment," Judge William J. Meade wrote for the panel, quoting from the court's 1994 decision in DiVenuti v. Reardon.

The 19-page decision is Larkin v. Dedham Medical Associates, Inc., Lawyers Weekly No. 11-098-18. The full text of the ruling can be found here.

No chance to challenge

Boston lawyer Adam R. Satin, who handled the appeal on behalf of the plaintiff, lauded the Appeals Court for confirming that allowing the defendant to amend its answer so deep into the proceedings would have been "clearly prejudicial."

As the court noted, the plaintiff had lost his right to take pre-trial discovery relating to the defendant's charitable status, Satin said.

The Appeals Court pointed to the Supreme Judicial Court's ruling in Keene v. Brigham & Women's Hosp., Inc., which found that G.L.c. 231, 85K, "does not mandate the cap be applied whenever a defendant proves its status" but rather requires that it "be engaged in its charitable purpose to enjoy the benefit of the cap."

Satin said the plaintiff likely would have prevailed on that issue, had he been given a fair opportunity to contest it. The defendant, he said, had long been a private medical group but reorganized "somewhere along the line" to claim that it was a charitable organization. But it had not changed the way it operated, Satin contended.

Satin's client took the position that the defendant's failure to plead the charitable cap was not a mistake but rather a tactical choice.

"They knew they didn't qualify under the statute and decided not to [plead it]," he said.

Only when confronted with the possibility of a massive verdict did it take "a stab at the last minute at throwing the defense into the playing field," Satin said.

Satin said the strenuous objections of his co-counsel, Benjamin R. Novotny, highlights that plaintiffs' lawyers need to be aware of the issues a defendant has and has not raised in its answer. If a defendant attempts to try something not raised in the pleadings, "that should be brought to the court's attention right away," he said.

Plaintiffs' attorneys should also remember that just because a corporation files paperwork with the state as a charitable organization, they do not have to accept that as a rubber stamp but rather can cite the factual element of the statute to form the basis of a successful challenge.

However, defense counsel Douglas H. Hallward-Driemeier said the legislative intent of the charitable cap was thwarted in the case.

"The intent of the statutory cap is to ensure that a charitable entity's resources go to its charitable purposes, rather than liability awards," he said.

The Boston lawyer said that application of the cap is typically undisputed in medical malpractice cases but, when challenged, is decided by the trial court after a verdict. The trial judge indicated he planned to address the issue post-verdict, "but later ruled that was not his intent," Hallward-Driemeier said.

"We firmly believe that the Legislature's policy would have been better served by adjudication of the cap issue following the jury's verdict," he said.

But Boston plaintiffs' attorney Marianne C. LeBlanc said she was not surprised to see the defendant held to the burdens the statute imposes on it. Plaintiffs, too, have "many procedures and statutory hoops they have to jump through" to make their claims viable, she said.

Fellow plaintiffs' attorney Elizabeth N. Mulvey agreed that, in the aftermath of the Keene decision, the general assumption is that a defense based on charitable status needs to be pleaded and proven. Nonetheless, she said it was interesting that the trial judge here did not let the defendant off the hook.

"I think a lot of judges would have," she said.


"We firmly believe that the Legislature's policy would have been better served by adjudication of the cap issue following the jury's verdict."

Douglas H. Hallward-Driemeier, Boston


Dangerous condition not noted

Andrea Larkin, a former elementary school teacher, exercise class instructor and marathon runner, began to experience persistent dizziness in 2004.

An MRI at Massachusetts General Hospital found a "venous varix," essentially an aneurysm, in her brain, which was determined not to be a cause of her dizziness.

Larkin's primary care doctor, an employee of defendant Dedham Medical Associates, was copied on the MGH report but failed to note the venous varix on Larkin's "problem list," which would have alerted her various treating physicians to her medical conditions.

Thus, when Larkin became pregnant in 2007, her obstetricians had no knowledge of a condition that likely would have led them to counsel her to have an elective cesarean section rather than give birth vaginally.

Twelve hours after Larkin delivered her baby, she experienced a sudden, very painful headache, which accompanied a rupture of the venous varix in her brain. After undergoing emergency surgery to remove a part of her skull and falling into a month-long coma, Larkin awoke to discover extensive, permanent injuries. Her legs and left hand were paralyzed, her trunk muscles were impaired, and she had difficulty chewing, swallowing and speaking.

Larkin's husband, Timothy, then filed suit against Dedham Medical Associates and the primary care physician. After a two-week-long trial that began on April 27, 2015, a jury found in favor of the plaintiff and awarded him $35.4 million.

Dedham Medical then filed a series of post-trial motions premised on the statutory limitation on tort liability for charitable organizations and three other grounds, which were denied. The subsequent petition to the Appeals Court raised all four issues as well.

Other routes fail

In addition to its Rule 15(a) motion, the defendant also filed a Rule 15(b) motion, arguing that the pleadings should be amended to "conform to the evidence."

But the trial judge found that the parties had not tried the issue of Dedham Medical's charitable status by either express or implied consent, the Appeals Court noted.

"Although DMA points to its pretrial efforts to have Larkin stipulate to its charitable status, Larkin refused to do so," Meade wrote.

Earlier in the proceedings, Dedham Medical's state certificate regarding its nonprofit status had been marked for identification but kept apart from the jury. On the last day of trial, Dedham Medical sought to introduce the certificate to prove its charitable status, but the plaintiff objected.

"The plaintiffs' actions reveal that they did not consent, but rather, that they expressly declined to consent to try the issue of DMA's status," Meade wrote.

Dedham Medical suggested that the trial judge had erred in not accepting the introduction of its state certificate as prima facie evidence of its charitable status. But Meade noted that the documents the defendant sought to introduce were not intended for the jury and thus not evidence.

The Appeals Court noted that it had once grappled with a case, Goldberg v. Northeastern Univ., in which a judge had taken a "different approach." That judge bifurcated the trial to resolve, separately from the jury, whether the statutory cap applied.

But by contrast, in Larkin, the judge had "reassured the plaintiffs that they had reserved their rights as to DMA's (unpleaded) limitation on liability," Meade wrote.

Though the trial judge had left the door open for "post-trial jousting" on the defendant's charitable status, Meade wrote that it was "within the judge's discretion to determine that the issue did not arise during the course of the proceedings, making any post-trial 'jousting' unnecessary, and to deny DMA's motion."

Larkin v. Dedham Medical Associates, Inc.

THE ISSUE: Does a trial judge have the right to reject a defendant's request to amend its answer to invoke as an affirmative defense the statutory cap on liability for charitable organizations under G.L.c. 231, 85K?

DECISION: Yes, if doing so would cause manifest prejudice to the plaintiffs (Appeals Court)

LAWYERS: Adam R. Satin and Benjamin R. Novotny, of Lubin & Meyer, Boston (plaintiff)

Douglas H. Hallward-Driemeier of Ropes & Gray, Boston and Washington, D.C. (defense)

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Title Annotation:Larkin v. Dedham Medical Associates, Inc., Massachusetts Appeals Court
Author:Olson, Kris
Publication:Massachusetts Lawyers Weekly
Date:Aug 9, 2018
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