Teresa Ambach v. H. Graeme French, M.D., et al.

In this case we are asked to decide whether the increased cost a



consumer pays for surgery instead of alternative medical treatment constitutes an injury to "business or property" as it is used in Washington's Consumer Protection Act (CPA),



chapter 19.86 RCW. Where the increased costs are incurred as a result of a personal



injury, we hold that the monetary injury cannot be separated from the personal injury and



a claim under the CPA cannot be maintained. We reverse the Court of Appeals.



FACTS



On November 16, 2001, Teresa Ambach visited Dr. Graeme French at Whitman



Hospital and Medical Center complaining of neck pain and left arm numbness. On



February 12, 2002, French performed surgery on Ambach's left shoulder. The surgery



consisted of performing an anterior and posterior capsular shift and insertion of five



suture rods and anchors with fiber wire structure. Following her surgery, Ambach



complained to French of excessive pain in her shoulder. She presented herself twice in



March 2002 to the emergency room at Sacred Heart Medical Center with excessive pain.





Also following her surgery, Ambach sought a second opinion with a different orthopedic



surgeon. After x-rays and an MRI (magnetic resonance imaging) by the second



orthopedic surgeon and an appointment with the University of Washington Medical Center, Ambach was diagnosed with osteomyelitis1 from a staph infection in her left



shoulder. On May 15, 2002, Ambach's shoulder was irrigated and debrided; all of the



anchors placed by Dr. French during the February 2002 surgery were removed. On



September 10, 2002, Ambach had an open fusion performed on her left shoulder.





According to Ambach, "[a]s a result of the surgery and subsequent fusion, the Ambachs



have suffered various financial losses." Br. of Appellant at 5.



On January 28, 2004, Ambach filed a complaint against French alleging professional negligence and violation of the CPA.2 French responded with a motion for



summary judgment in which he argued that Ambach failed to implicate the



"entrepreneurial aspects of [French's] practice of medicine" and that she failed to show



harm to a specific "business or property" interest. Clerk's Papers (CP) at 59. The motion



went before the trial judge only on the issue of whether Ambach's injury was to her



"business or property."



The trial court granted French's motion for summary judgment on the CPA claim



and held:



[I]f the claim for damages as requested by the plaintiff could be upheld in this case, there would be almost no case involving medical negligence issues, malpractice, and so forth, in which the claims could not be brought. It seems to me that the types of economic damages which are under discussion here . . . are exactly the traditional types of damages that flow from negligence from the ordinary types of tort claims which have always been present.



CP at 288.



On appeal, the Court of Appeals reversed the grant of summary judgment and held



that "allegations of economic loss due to the increased cost of surgery over the cost of



more conservative treatment are sufficient to satisfy the damages requirement [of the



CPA]." Ambach v. French, 141 Wn. App. 782, 790, 173 P.3d 941 (2007). French



petitioned this court for review. We granted review and now reverse the Court of



Appeals.



ANALYSIS



RCW 19.86.090 allows anyone who has been "injured in his or her business or



property by a violation" of the CPA to bring a civil action in which she may recover



actual damages, trial costs, and attorney fees. The trial court may, "in its discretion,"



award treble damages. Id. To state a prima facie claim under the CPA, a plaintiff must



"establish five distinct elements: (1) unfair or deceptive act or practice; (2) occurring in



trade or commerce; (3) public interest impact; (4) injury to plaintiff in his or her business



or property; (5) causation." Hangman Ridge Training Stables, Inc. v. Safeco Title Ins.



Co., 105 Wn.2d 778, 780, 719 P.2d 531 (1986).



While "[t]he injury involved need not be great," or even quantifiable, it must be an



injury to "'business or property.'" Id. at 792; Mason v. Mortgage Am., Inc., 114 Wn.2d



842, 854, 792 P.2d 142 (1990) (citing Hangman Ridge and noting that statutory provision



of injunctive relief "bolsters the conclusion that injury without specific monetary



damages will suffice"). "Business or property" is not defined in chapter 19.86 RCW.



Black's Law Dictionary defines "business" as "[a] commercial enterprise carried on for



profit; a particular occupation or employment habitually engaged in for livelihood or



gain." Black's Law Dictionary 226 (9th ed. 2009). "[P]roperty" is defined as "[t]he right



to possess, use, and enjoy a determinate thing . . . ; the right of ownership." Id. at 1335.



The legal definition of "property" appears



to have narrowed over time and does not include rights to one's person or body:



"In its widest sense, property includes all a person's legal rights, of whatever description. A man's property is all that is his in law. This usage, however, is obsolete at the present day, though it is common enough in the older books. . . . In a second and narrower sense, property includes not all a person's rights, but only his proprietary as opposed to his personal rights. The former constitute his estate or property, while the latter constitute his status or personal condition. In this sense a man's land, chattels, shares, and the debts due to him are his property; but not his life or liberty."



Id. at 1336 (alterations in original) (quoting John Salmond, Jurisprudence 423-24



(Glanville L. Williams ed., 10th ed. 1947)).



The legislature's use of the phrase "business or property" in the CPA is restrictive



of other categories of injury and is "'used in the ordinary sense [to] denote[] a



commercial venture or enterprise.'" Stevens v. Hyde Athletic Indus., Inc., 54 Wn. App.



366, 370, 773 P.2d 871 (1989) (quoting Hamman v. United States, 267 F. Supp. 420, 432



(D. Mont. 1967)); Wash. State Physicians Ins. Exch. & Ass'n v. Fisons Corp., 122 Wn.2d



299, 318, 858 P.2d 1054 (1993) (citing Reiter v. Sonotone Corp., 442 U.S. 330, 338-39,



99 S. Ct. 2326, 60 L. Ed. 2d 931 (1979) (interpreting identical phrase in § 4 of the



Clayton Act, 38 Stat. 731, 15 U.S.C. § 15 (1914), to hold that "'business or property'"



necessarily excludes "some category of injury" (emphasis omitted), for example, personal



injuries, but nonetheless retains its restrictive significance when construed to encompass



injury to a consumer "whose money has been diminished by reason of an antitrust



violation")).



Washington courts have found injury to "business or property" where the



defendant's act in violation of the CPA



caused the plaintiff to suffer loss of professional or business reputation, loss of goodwill,



or inability to tend to a business establishment. Nordstrom, Inc. v. Tampourlos, 107



Wn.2d 735, 739-41, 733 P.2d 208 (1987) (damage to business reputation caused by trade



name infringement "easily met" injury to business or property requirement); Fisons



Corp., 122 Wn.2d at 318 (physician suffered damage to reputation when he prescribed



deceptively marketed medication that injured a patient); Sign-O-Lite Signs, Inc. v.



DeLaurenti Florists, Inc., 64 Wn. App. 553, 563-64, 825 P.2d 714 (1992) (time spent



away from business to address a deceptively formed contract made with sign company



was injury to business).



Personal injury damages, however, "are not compensable [damages] under the



CPA" and do not constitute injury to business or property. Fisons, 122 Wn.2d at 317-18



(rejecting CPA damages for "'pain and suffering'"); Stevens, 54 Wn. App. at 369-70



(rejecting medical expenses); Hiner v. Bridgestone/Firestone, Inc., 91 Wn. App. 722,



730, 959 P.2d 1158 (1998) (damages "including reimbursement for lost wages and



earning capacity, medical expenses and damages to [a vehicle] arise from personal



injuries [are] commonly awarded in personal injury actions" and are "not recoverable



under the CPA"), rev'd on other grounds, 138 Wn.2d 248, 263-64, 978 P.2d 505 (1999)



(reversing Court of Appeals' disposition of plaintiff's product liability claim and



declining "to consider [CPA assignment of error] because [plaintiff] has not shown any



compelling reason for the Court to go beyond the questions raised in the petition for



review").



"[H]ad our Legislature intended to



include actions for personal injury within the coverage of the CPA, it would have used a



less restrictive phrase than injured in his or her 'business or property'." Fisons, 122



Wn.2d at 318 (quoting Stevens, 54 Wn. App. at 370). This limitation clearly excludes



stand alone personal injury claims like those for pain and suffering. Id. at 317-18 (doctor



could not recover under CPA for pain and suffering caused by deceptively marketed



drug).



Ambach attempts to describe her qualifying injury as "specific and limited" to a



traditional CPA claim of "the cost of a product . . . acquired due to fraud or deception."



Suppl. Br. of Resp't at 3. However, at hearing on the motion for summary judgment,



Ambach agreed that her CPA injury was "part and parcel of a personal injury claim" but



argued that the "damages" she suffered could be seen as distinct from malpractice damages if a jury decided there was a "consumer protection violation."3 Verbatim Report



of Proceedings (July 9, 2004) at 11-12. Ambach's focus on her loss of money as a



qualifying CPA injury ignores the larger reality of her claimed injury: "medical expenses,



wage loss, loss of earning capacity, and out-of-pocket expenses" are, as Ambach has



admitted, personal injury damages. Ambach, 141 Wn. App. at 789-90.



Where plaintiffs are both physically and economically injured by one act, courts



generally refuse to find injury to "business or property" as used in the consumer



protection laws. See Ass'n of Wash. Hosp. Dist. v. Philip Morris, Inc., 241 F.3d 696, 705-



06 (hospitals' claimed CPA injuries were "predicated on personal injuries to smokers"



and not cognizable under the CPA), cert. denied, 534 U.S. 891 (2001); Or. Laborers-



Employers Health & Welfare Trust Fund v. Philip Morris, Inc., 185 F.3d 957, 964 (1999)



("individuals that suffer personal injury cannot claim medical expenses as 'injury to



business or property'"); Nw. Laborers-Employers Health & Sec. Trust Fund v. Philip



Morris, Inc., 58 F. Supp. 2d 1211, 1215 (1999) ("[e]xpenses for personal injuries are not



injuries to business or property within the meaning of the statute"); Fisons, 122 Wn.2d



299; Stevens, 54 Wn. App. 366; Hiner, 91 Wn. App. at 730 (lost wages, medical



expenses and damage to vehicle are not injuries to business or property as contemplated



by the CPA); but see Erickson v. Upjohn Co., 78 F.3d 592, 1996 WL 95249, at *3 (1996)



(unpublished) (allowing plaintiffs to "salvage" their previously dismissed CPA claim by



narrowing their claim to recovery of money spent on "'excessive, useless, and ultimately dangerous'" medication) (citing Mason, 114 Wn.2d 842).4



Further, as the Ninth Circuit has established, payment for medical treatment, like



Ambach's payment for surgery, does not transform medical expenses into business or



property harm. Ass'n of Wash. Hosp. Dist., 241 F.3d at 705, 706 n.8 (analyzing the Washington State CPA, the Ninth Circuit noted, "expenses for personal injuries are not



injuries to business or property under the CPA" and further, that this court's decision in



Fisons does not require a different result: "[t]he physician in Fisons Corp. did not seek to



recover [damages] for his expenses incurred in treating the patient who was harmed by



the drug, but rather sought to recover for the injury to his reputation occasioned by the



misprescription").



Washington courts have reached similar conclusions. In Stevens, for example, a



woman purchased softball cleats later shown to be dangerous for use in softball. 54 Wn.



App. at 368. After fracturing her ankle while wearing the shoes, Stevens sued the store



where she purchased them for negligence, breach of express warranty, and violation of



the CPA. The Stevens court held that plaintiff's "[classification of] her personal injury



damages into a pseudo-property structure, i.e., [alleging] special damages such as



hospital, physician, and rehabilitative expenses constitute property and economic



interests" was an unconvincing attempt to come within the restrictive "business or



property" analysis. 54 Wn. App. at 370. Ambach argues that Stevens is distinguishable



because the plaintiff was not "alleging as CPA damages the cost of her shoes or the time



it would take her to buy new ones." Suppl. Br. of Resp't at 16. Whether or not this



allegation would have made Stevens' CPA claim cognizable, we agree with the Ninth



Circuit that the statutory exclusion of recovery for personal injuries prevents a plaintiff



from claiming expenses for personal injuries as a qualifying injury in and of itself. Ass'n



of Wash. Hosp. Dist., 241 F.3d at 705-06.



Both Ambach and the Court of Appeals rely on Podiatry Insurance Co. of Am. v. Isham, 65 Wn. App. 266, 828 P.2d 59



(1992), as support for the proposition that allegations of economic loss due to the



increased cost of surgery are sufficient to satisfy the CPA injury requirement. Isham,



however, involved the scope of coverage in an insurance policy, not the scope of



qualifying CPA injuries. In Isham, the Podiatry Insurance Company of America (PICA)



brought an action for declaratory relief against its insured doctor. The doctor, Dr. Isham,



had been sued for negligence and failure to obtain informed consent. The patient



amended her complaint against Dr. Isham after the Court of Appeals' decision in Quimby



v. Fine, 45 Wn. App. 175, 724 P.2d 403 (1986), in which Division One "held a lack of



informed consent claim against a health care provider may be within the scope of the



CPA, if it relates to the entrepreneurial aspects of the medical practice." Isham, 65 Wn.



App. at 267 (emphasis added). PICA filed the action for declaratory judgment "seeking a



judicial determination that any claim for violation of the CPA was outside their coverage



or fell within a policy exclusion and thus [they] had no duty to defend or pay." Id. at



268. The Isham court held only that PICA had no duty to defend Isham against an action



for a CPA violation because such an action amounts to an allegation that Isham violated a



law and was thereby within the clearly stated exemptions to his coverage. Id. at 271.



The Isham court did not hold, as Ambach argues, that the cost of surgery versus



more conservative treatment was a CPA injury. Suppl. Br. of Resp't at 12. In the facts



section of the opinion, the Isham court merely discussed what gave rise to PICA's suit for



declaratory relief:



PICA, Dr. Isham's malpractice insurance carrier, is defending the Ishams against [patient's] claims under a reservation of rights. Following this court's decision in Stevens v. Hyde Athletic Indus., Inc., 54 Wn. App. 366, 370, 773 P.2d 871 (1989), which held a personal injury does not constitute an injury to "business or property" for purposes of the CPA, the Ishams moved for dismissal of the CPA claim. The [trial] court denied the motion, finding the Stevens requirement that something more than "personal injury" type damages be alleged in a CPA action was met by [patient's] claim of economic loss due to the increased cost of surgery versus more conservative treatment. PICA then filed this declaratory judgment action.



Isham, 65 Wn. App. at 268.



This statement of facts was relevant only to the disposition of the declaratory



judgment. It is a far stretch to argue that Isham constitutes a substantive statement of the



law regarding CPA injury. However, to the extent the case can be read to comment on



the injury prong of a CPA claim, it should be noted that the Isham court rejected



arguments that Isham's acts giving rise to the negligence claim of failure to obtain



informed consent could also "subject[] him to an allegation he violated the CPA." Id. at



270.



Ambach's failure to state a cognizable CPA claim is not just that she attempts to



disguise her personal injuries as sounding in business or property, but also that she fails



to allege the truly public nature of Dr. French's actions. In Michael v. Mosquera-Lacy,



165 Wn.2d 595, 200 P.3d 695 (2009), we held no CPA claim could be had where the



claim relates to the doctor's "judgment and treatment of a patient," and the claimant fails



to submit evidence that the injurious procedure was "advertised or marketed." Id. at 604,



603. Because Michael could not show that the dentist's office "advertised to the public in



general" or actively solicited the claimant's



business, we held she "failed to show her lawsuit would serve the public interest." Id. at



605.



Though Ambach's case is before us only on the issue of whether her injury is to



"business or property," the structure of her CPA claim is similar to Michael's. She also



fails to allege that Dr. French actively solicited her as a patient or advertised shoulder surgeries to the general public.5 The individual Hangman Ridge factors should not be



read in isolation so as to render absurd conclusions. While Ambach's payment for her



surgery may look on its face like the purchase of a good or service envisioned by the



CPA, her actual damages demonstrate that what she really seeks is redress for her personal injuries, not injury to her business or property.6 We hold that because Ambach's purported CPA injury is payment for a surgery from which personal injury also arose, she has failed to state a prima facie CPA claim.7



* * *



See: http://www.courts.wa.gov/opinions/index.cfm?fa=opinions.showOpinion&filename=811075MAJ

The Court of Appeals is reversed.