Date: 05-15-2015

Case Style: Mark R. Mohan v. Orlando Health, Inc.

Case Number: 5D13-3869

Judge: Palmer

Court: Florida Court of Appeal, Fifth District on appeal from the Circuit Court, Orange County

Plaintiff's Attorney: Sharon Proctor, of Proctor Appellate Law, P.A., Merrit Island, for Appellant.

Defendant's Attorney: Mike D'Lugo, of Wicker, Smith, Et Al., Orlando, for Appellee.

Description: In this medical malpractice lawsuit, Marc Mohan and Rohini Budhu ("Plaintiffs")
appeal the final dismissal order entered by the trial court against them on all of their claims
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against Orlando Health, Inc. (Orlando Health). Determining that Plaintiffs' complaint
states cognizable causes of action against Orlando Health, we reverse.1
Plaintiffs filed a medical malpractice lawsuit against Orlando Health, South Lake
Hospital, Inc., Dr. Jorge Florin, and Dr. Karl Hagen. The complaint alleged that Hagen
operated on Mohan at South Lake Hospital and, during the operation, mistakenly
removed his ureter rather than his appendix.
The counts against Orlando Health were for direct liability, joint liability, and
vicarious liability. Orlando Health moved to dismiss all counts, and the trial court granted
the motion with prejudice and later entered a final judgment thereon.
Plaintiffs argue that the trial court reversibly erred by dismissing all counts of their
complaint against Orlando Health, because the complaint stated viable causes of actions
for direct liability, joint liability, and vicarious liability. We agree.
Appellate courts review de novo a trial court's order dismissing a complaint. Dingle
v. Dellinger, 134 So. 3d 484, 487 (Fla. 5th DCA 2014). When reviewing a dismissal order,
the appellate court must take all factual allegations set forth in the complaint as true and
draw all reasonable inferences in favor of the pleader. Ray Coudriet Builders, Inc., v.
R.K. Edwards, Inc., 157 So. 3d 484 (Fla. 5th DCA 2015). The court cannot look further
than the complaint and its attachments when considering a dismissal motion. King v.
Baptist Hosp. of Miami, Inc., 87 So. 3d 39, 43 (Fla. 3d DCA 2012).
1 Although the case is still pending below with other defendants, we have
jurisdiction because the instant order disposed of the entire case as against Orlando
Health. See Fla. R. App. P. 9.110(k).
3
In Count I, Plaintiffs alleged the following claim of direct liability for negligent
credentialing:
NEGLIGENT CREDENTIALING BY DEFENDANT OH
…
30. At all times material hereto, defendant OH, by virtue of its
assumption of South Lake Hospital's governance as
described herein, had the duty and responsibility to exercise
reasonable care for the safety and quality of care, treatment,
and services provided at South Lake Hospital to the citizens
of this community including the plaintiffs MARK R. MOHAN
and ROHINI BUDHU. Further, defendant OH had the duty and
responsibility to exercise reasonable care in providing
oversight to the medical staff's recommendations to the
hospital's governance on the credentialing and recredentialing
of the medical staff physicians including
HAGEN. This would necessarily include familiarization with
the background and performance of any physician opting to
apply, or re-apply for privileges at the hospital, including
review of any/all disciplinary proceedings and adverse
incidents reportedly involving the subject physician, and
corresponding action in recommending rejection of, and/or in
fact, rejecting a physician's reapplication for privileges where
such physician fails to meet minimum community standards.
Orlando Health moved to dismiss this count, arguing that the parties' Pre-Organizational
Agreement and/or Management Agreement, which were attached as exhibits to the
amended complaint, demonstrated "that South Lake, not Orlando Health, was solely
responsible for all decisions related to the medical staff and credentialing." As for the Pre-
Organizational Agreement, Orlando Health cited to paragraph 7.6 which sets forth the
following "Post-Closing Covenants":
7.6 Operational Matters.
(a) South Lake Board of Directors. South Lake shall be
responsible for the overall supervision and operation of
the Hospital and for directing ORHS, as manager of the
Hospital, as required by the Management Agreement.
South Lake's Board of Directors shall be responsible for all
policies and corporate direction required by South Lake.
Actions of the South Lake Board of Directors for the normal
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course of business shall require a majority vote of the
combined directors appointed by SLMH and ORHS. …
(emphasis added). Also, Orlando Health cited to paragraphs 2, 3(b), and 8(b) of the
parties' Management Agreement, which read:
2. Control By South Lake. Throughout the Term of this
Agreement, South Lake's Board of Directors shall
exercise all authority and control over the business,
policies, operation, and assets of the Hospital, and ORHS
shall perform its duties in accordance with the policies,
bylaws, and directives of South Lake. By entering into this
Agreement with ORBS, South Lake does not delegate to
ORHS any of the powers, duties and responsibilities vested in
South Lake's Board of Directors by law or by South Lake's
Articles of Incorporation and Bylaws. South Lake shall
communicate all policies and directives to ORHS. All medical
and professional matters shall be the responsibility of
South Lake and medical staff of the Hospital.
. . . .
[3](b) Employees. South Lake, in consultation with ORHS,
shall determine the number, qualifications, and duties of
personnel employed at the Hospital. South Lake, in
consultation wìth ORHS, shall have authority to hire and
discharge all employees of the Hospital, and such authority
may be delegated to appropriate employees.
. . . .
[8](b) Cooperation with Medical Staff. ORHS shall cooperate
and maintain liaisons with the medical staff of the hospital and
shall advise and assist the medical staff concerning
procedural matters and concerning standards and guidelines
on accreditation promulgated by the Joint Commission on
Accreditation of Healthcare Organizations. However,
medical, ethical, and professional matters, including
control of and questions relating to the composition,
qualifications, and responsibilities of the medical staff,
shall be the responsibility of South Lake and the medical
staff of the Hospital.
(emphasis added).
Plaintiffs argue that the provisions of the Pre-Organizational and Management
Agreements do not conclusively establish that South Lake was solely responsible for the
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credentialing, but instead, the documents demonstrate that Orlando Health exercised "a
great deal of control over the hospital's operations, including oversight of the medical
staff." See generally Magnum Capital, LLC v. Carter & Associates, LLC, 905 So. 2d 220,
221 (Fla. 1st DCA 2005) (explaining that only when documents attached to a complaint
conclusively negate a claim can the pleadings be dismissed).
In the amended complaint, Plaintiffs averred, inter alia, that "defendant OH
undertook to manage and operate South Lake Hospital in all material ways, including but
not limited to risk management, quality assurance, credentialing oversight, and human
resource department functions." They cited to the Management Agreement which states
that "ORHS shall be responsible for all day-to-day management of the Hospital, including
. . . personnel (including selection, testing, training and education of personnel)." In that
agreement, Orlando Health's duties vis-à-vis South Lake Hospital were stated as follows:
3. Duties of ORHS. South Lake hereby retains ORHS to
manage and operate the Hospital in the name, for the
account, and on behalf of South Lake. ORHS shall permit
South Lake to integrate specific operations of the Hospital into
the ORHS system as practical and appropriate, as mutually
determined by South Lake and ORHS, with ORHS's duties to
include, as mutually determined to be practical and
appropriate by ORBS and South Lake, provision of the
following services, resources, consultations, and support in
order to permit the Hospital to provide quality healthcare
consistent with the policies and directives of the South Lake
Board of Directors, the financial resources of the Hospital, the
competitive marketplace and applicable laws:
(a) Operational Management. ORHS shall be responsible
for all day-to-day management of the Hospital, including
without limitation, annual budget and charges, data
processing, purchasing (including the purchasing of insurance
on a group basis), warehousing, billing and collection, food,
clinical, industrial engineering, laboratory, printing,
communications, record center, personnel (including
selection, testing, training and education of personnel),
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and other services as agreed between ORHS and South
Lake.
(b) Employees. South Lake, in consultation with ORHS,
shall determine the number, qualifications, and duties of
personnel employed at the Hospital. South Lake, in
consultation wìth ORHS, shall have authority to hire and
discharge all employees of the Hospital, and such authority
may be delegated to appropriate employees. Unless
otherwise agreed by ORHS and South Lake, employees
employed at Hospital shall be employees of South Lake.
ORHS and South Lake agree that the Chief Executive Officer
of the Hospital (and other personnel as agreed in writing) shall
be an ORHS Employee. Any decisions to hire or discharge
the Chief Executive Officer or the Chief Financial Officer of the
Hospital shall require separate approvals of the SLMH
directors and the ORHS directors comprising South Lake's
Board of Directors.
(emphasis added). We conclude that the allegations set forth in Plaintiffs' complaint,
when coupled with the language contained in the parties' Management Agreement, fail to
conclusively establish that Orlando Health was not involved in any credentialing decisions
issued by South Lake Hospital. As such, the trial court erred in dismissing Count I of
Plaintiffs' complaint.
The trial court further dismissed claims for joint liability based on theories of
partnership, purported partnership, joint venture, and joint enterprise. The court reasoned
that a "cause of action based on a partnership, purported partnership, joint venture, or
joint enterprise [could not survive,] as such a relationship between two non-profit
corporations is a legal impossibility". Plaintiffs challenge this ruling, asserting there is no
legal support for the trial court's "legal impossibility" ruling, and that the exhibits to their
complaint do not conclusively establish that joint liability is not available in this case.
The amended complaint averred, in relevant part, that
[o]n or about April 10, 1995, defendant OH, along with South
Lake Memorial Hospital, Inc. (SLMH), and the South Lake
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County Hospital District (the DISTRICT), entered into a
partnership agreement, joint venture agreement, joint
enterprise agreement, and/or joint ownership agreement
(hereinafter the "joint enterprise"), for the operation of a preexisting
hospital facility known as South Lake Hospital,
previously being operated by SLMH and the DISTRICT. The
joint enterprise included the formation of a newly organized
corporate entity now known as defendant SLHI, whereby the
partners, joint venturers, and/or joint owners, placed
themselves in a position to jointly and equally control such
corporate entity.
. . . .
At all times material hereto, defendant OH purported to the
public to be a partner in the ownership, operation, and use of
the hospital known as South Lake Hospital, by claiming such
status on the Internet, its website, in print ads, television,
radio, and in the use of its logos on buildings and uniforms
utilized in its operations.
The counts at issue read, in pertinent part, as follows:
PARTNER LIABILITY OF DEFENDANT OH FOR THE
NEGLIGENT ACTS OF THE PARTNERSHIP
. . . .
By virtue of entering into a partnership agreement with SLMH
and the DISTRICT, and by virtue of its status as a partner of
such partnership, defendant OH is jointly and severally
obligated for the tortious acts of the partnership, whether such
torts were committed by either OH's employees, SLMH's
employees, or the DISTRICT's employees, or anyone
employed under their control, or right to control, pursuant to
Florida's Revised Uniform Partnership Act of 1 995, §
620.8306 Fla. Stat.
. . . .
PURPORTED PARTNER LIABILITY OF DEFENDANT OH
FOR THE NEGLIGENT ACTS OF THE PURPORTED
PARTNER
. . . .
By virtue of purporting to be a partner in the ownership,
operation, and use of South Lake Hospital as alleged in detail
within paragraphs 10 and 17 herein, and by virtue of the
detrimental reliance by plaintiffs MARK R. MORAN and his
wife ROHINI BUDHU as alleged in detail within paragraph 18
herein, defendant OH is jointly and severally obligated for the
tortious acts of the purported partnership.
. . . .
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JOINT VENTURER LIABILITY OF DEFENDANT OH FOR
THE NEGLIGENT ACTS OF THE JOINT VENTURERS
. . . .
By virtue of entering into a joint venture agreement with SLMH
and the DISTRICT, defendant OH is jointly and severally
obligated for the tortious acts of the joint venturers, whether
such torts were committed by either OH's employees, SLMH's
employees, or the DISTRICT's employees, or anyone
employed under their control or right to control.
. . . .
JOINT ENTERPRISE LIABILITY OF DEFENDANT OH FOR
THE NEGLIGENT ACTS OF THE JOINT ENTERPRISERS
. . . .
By virtue of entering into a joint enterprise agreement with
SLMH and the DISTRICT. Defendant OH is jointly and
severally obligated for the tortious acts of the joint
enterprisers, whether such torts were committed by either
OH's employees, SLMH's employees, or the DISTRICT's
employees. or anyone employed under their control, or right
to control.
Orlando Health concedes that the trial court’s ruling was erroneous, but suggests
that we should affirm this ruling based on the tipsy coachman doctrine. See Taylor v.
State, 146 So. 3d 113 (Fla. 5th DCA 2014) (explaining that, under the tipsy coachman
doctrine, if a trial court reaches the right result but for the wrong reasons, the ruling will
be upheld if there is any basis which would support the judgment in the record). We reject
this suggestion as meritless because the exhibits attached to the amended complaint
include copies of documents which support Plaintiffs' joint liability allegations.
In that regard, the exhibits attached to the amended complaint include a copy of a
non-compete agreement which states:
COVENANT NOT TO COMPETE AGREEMENT
Background. South Lake Hospital, Inc. ("South Lake") was
formed as a corporation jointly controlled by SLMH and
ORHS to own and operate hospital facilities known as
South Lake Memorial Hospital. initially located at 847 Eighth
Street, Clermont, Florida 3471 1 (the "Hospital") and to
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construct; own and operate a new replacement hospital on
land leased to South Lake, to be known as South Lake
Hospital--a Partner of Orlando Regional Healthcare System.
(emphasis added). The exhibits also include a lease agreement in which it is stated that
South Lake Hospital is jointly owned, operated, and controlled by Orlando Health:
AGREEMENT OF LEASE
THIS AGREEMENT OF LEASE (the "Lease") IS MADE AS
OF October 1, 1995, by SOUTH LAKE MEMORIAL
HOSPITAL, INC. AND SOUTH LAKE COUNTY HOSPITAL
DISTRICT (collectively referred to as "Landlord"), and
SOUTH LAKE HOSPITAL, INC. ("Tenant") . . . .
WHEREAS, Tenant was formed as a not-for-profit
corporation jointly controlled by Landlord and Orlando
Regional Healthcare System, Inc. ("ORHS") to own and
operate hospital facilities known as South Lake Memorial
Hospital . . . . and to construct, own, and operate a new
replacement hospital on vacant land.
(emphasis added). Thus, at least two corporate documents contained in Plaintiffs' exhibits
to their amended complaint purport to establish that South Lake Hospital was formed as
a corporation jointly owned, operated, and/or controlled by Orlando Health. As such,
Orlando Health is unable to succeed on its tipsy coachman theory because it has failed
to sustain its burden of proving that the exhibits to the amended complaint conclusively
demonstrate that the relationship between South Lake Hospital and Orlando Health was
neither a partnership nor a joint venture.
Count IX of Plaintiffs' amended complaint alleged a claim for joint liability based on
the theory of joint ownership. The trial court dismissed this count concluding that, as a
matter of law, Orlando Health could not be a "beneficial" owner since non-profit hospitals
do not have owners. However, the exhibits attached to the amended complaint
(referenced above) support Plaintiffs' joint-liability theory. As such, dismissal of this count
was error.
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The amended complaint further averred the following facts as grounds for
establishing vicarious liability against Orlando Health based on its employment
relationship with South Lake Hospital's CEO and three members of the hospital's board
of directors:
OH was given three (3) of the six (6) board of director seats
of defendant SLHI, along with the authority to hire and
terminate the hospital's Chief Executive Officer (CEO), a
position exclusively reserved for OH to fill; a position at all
times material hereto, held by an OH employee;
. . . .
Further, by reserving the CEO position, and therefore, the
President of SLHI's position for itself, and by reserving three
(3) of the six (6) SLHI Board of Director positions, defendant
OH undertook to assume oversight and control over the
credentialing process, and the ultimate granting of privileges
at South Lake Hospital.
. . . .
At all times material hereto, the three (3) OH employees, and
the three (3) SLMH employees, accepting appointments to fill,
and in fact filling, the six (6) SLHI Board of Director seats
(three (3) being reserved for OH employees, and three (3)
being reserved for SLMH employees), were acting in the
course and scope of their agency relationship with OH and
SLMH, respectively.
At all times material hereto, the CEO of defendant SLHI,
employed by defendant OH, was acting in the course and
scope of her employment relationship with defendant OH.
Upon information and belief, sometime in the year 2000,
defendant HAGEN submitted for approval his application to
be credentialed at South Lake Hospital. Such application was
reviewed, and an investigation of his background was
undertaken, and ultimately, his application was recommended
for acceptance, whereupon at the highest levels of
governance of South Lake Hospital, including oversight by
three (3) of the six (6) SLHI Board of Directors, each an OH
employee, HAGEN's application was approved "without
conditions."
Count X of Plaintiffs' amended complaint alleged a claim for vicarious liability as follows:
VICARIOUS LIABILITY OF DEFENDANT OH FOR THE
NEGLIGENT ACTS OF IT EMPLOYEES
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. . . .
At all times material hereto, the three (3) OH employees, and
the three (3) SLMH employees, accepting appointments to fill,
and in fact filling, the six (6) SLHI Board of Director seats
(three (3) being reserved for OH employees, and three (3)
being reserved for SLMH employees), were acting in the
course and scope of their agency relationship with OH and
SLMH, respectively.
At all times material hereto, the CEO of defendant SLHI,
employed by defendant OH, was acting in the course and
scope of her employment relationship with defendant OH.
The trial court summarily held that dismissal of Count X was warranted because
Orlando Health cannot be held vicariously liable for the actions taken by the hospital's
CEO and board members. Plaintiffs challenge the court's ruling, arguing that the record
is undisputed that the CEO and three board members of South Lake Hospital are
employed by Orlando Health and that, as a result, Orlando Health can be held vicariously
liable for negligent acts committed by said employees. They cite to the fact that the
amended complaint expressly alleged that South Lake Hospital's CEO and board
members were directly involved in negligently extending and renewing staff privileges to
Dr. Hagen, and they maintain that Orlando Health failed to conclusively refute the
allegation. Orlando Health responds that whether the CEO and the board members were
employees of Orlando Health "is irrelevant" because, when making decisions relating to
South Lake Hospital issues, they were not working within the course and scope of their
employment with Orlando Health. However, Orlando Health fails to cite to any portion of
the instant pleading to support this claim of fact. Accordingly, on the state of the instant
pleading, the trial court erred in dismissing Count X because neither the amended
complaint nor any exhibit to the amended complaint establishes that Orlando Health's
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employees were not working within the course and scope of their employment with
Orlando Health while also working for South Lake Hospital.

Outcome: REVERSED and REMANDED

Plaintiff's Experts:

Defendant's Experts:

Comments: