The Wisconsin Court of Appeals District IV (“Wisconsin Appellate Court”) stated in its decision dated January 14, 2021: “The dispositive issue before this court is whether a suit against an individual who is not a statutorily defined health care provider (Gander), but is an employee of a statutorily defined health care provider (SSM), may proceed where the health care provider employer is not a party. We conclude that a suit against a nonprovider employee as the sole defendant may not proceed where the employer is not a party. Accordingly, we affirm the circuit court’s order dismissing the Kennedys’ claims against Gander.”
The Underlying Facts
Natalie Kennedy was treated for a broken leg in 2015 by Physician Assistant Terry Gander (Gander) at a facility operated by SSM Health (SSM). Natalie and her parents, Christine Kennedy and Jonathan Kennedy, sued Gander, SSM, and the Injured Patients and Families Compensation Fund (the Fund), alleging, among other claims, that Gander was negligent in his treatment of Natalie. The Kennedys and SSM subsequently stipulated to the dismissal with prejudice of all claims against SSM.
Following SSM’s dismissal, the Fund moved for summary judgment requesting dismissal of the Kennedys’ claims against the Fund. Gander ultimately supported the Fund’s motion and also argued that the Kennedys could not pursue a claim against him. Following extensive briefing and argument, the circuit court granted the motion and entered two orders: one dismissing all claims against the Fund and one dismissing all claims against Gander. As to Gander, the court determined that Gander was an employee of SSM and, therefore, could not be named as a defendant in a medical malpractice suit under WIS. STAT. ch. 655 (2017-2018), and that with Gander’s dismissal this suit could not proceed because SSM could not be a party on account of the dismissal with prejudice of all claims against SSM.
Wisconsin Medical Malpractice Laws
Chapter 655, which is titled “Health Care Liability and Injured Patients and Families Compensation,” is the exclusive procedure and remedy for medical malpractice in Wisconsin against health care providers and their employees. The chapter requires “health care providers” to participate in the Fund, WIS. STAT. § 655.002, and provides that the Fund will pay the portions of malpractice awards against health care providers and their employees that exceed the limits of the health care providers’ malpractice insurance liability limits. WIS. STAT. §§ 655.23(3)(a) and (5); § 655.27(1).
“Health care providers” as defined by the statute fall into two broad categories: (1) various classes or groupings of “physicians” and/or “nurse anesthetists” and (2) hospitals and other similar organizations providing medical services. WIS. STAT. § 655.002. “Physician” is defined by the chapter as a Wisconsin-licensed physician. WIS. STAT. § 655.001(10m).
WIS. STAT. § 655.007 provides that “any patient or the patient’s representative having a claim … for injury or death on account of malpractice is subject to this chapter.” A patient is “an individual who received or should have received health care services from a health care provider or from an employee of a health care provider acting within the scope of his or her employment.” WIS. STAT. § 655.001(10).
All health care providers as defined by the statute are required to have malpractice insurance. WIS. STAT. § 655.23(3)(a). This insurance must cover at least $1 million for each occurrence of malpractice claims and $3 million for all occurrences in any one year. Sec. 655.23(4)(b). As long as these insurance requirements are met, “the health care provider … and those conducting the health care provider’s business, including the health care provider’s health care liability insurance carrier, are liable for malpractice for no more than the limits expressed in [the statutory liability limit] or the maximum liability limit for which the health care provider is insured[.]” Sec. 655.23(5). In other words, health care providers must insure their own liability up to a certain amount and may insure their own liability above that amount, but they are not liable for malpractice damages beyond their insured amount.
Plaintiffs can nevertheless obtain damages beyond the limits established in WIS. STAT. § 655.23. They do so by recovering from the Fund. WIS. STAT. § 655.27(1). To recover from the Fund, plaintiffs must name the Fund as a codefendant “within the same time limitation within which the action against the health care provider or employee of the health care provider must be commenced.” Sec. 655.27(5)(a)(1). Health care providers must pay into the Fund by annual fee. Sec. 655.27(3)(a). In exchange, the Fund pays judgments or settlements against health care providers that exceed the providers’ liability limits. Sec. 655.27(5)(a).
Employees of health care providers, including physician assistants, are not required by WIS. STAT. ch. 655 to maintain their own health care liability insurance coverage, unless the employees are themselves “health care providers” because they are licensed physicians or nurse anesthetists. WIS. STAT. §§ 655.002(1); 655.23(3)(a). Nor are physician assistants required by other Wisconsin law to maintain insurance.
The Wisconsin Appellate Court explained: “Chapter 655, consistent with its purpose and as interpreted by binding case law, does abrogate that common law right with respect to medical malpractice claims in several significant ways, with the result that a person may not sue a nonprovider employee for medical malpractice as the sole defendant where, as here, the health care provider employer is not a party … consistent with its purpose and as interpreted by case law, Chapter 655 imposes certain conditions that differ from the common law in ways that matter to the issue on appeal. The result is that certain aspects of the common law rule on which the Kennedys rely do not apply because of policy choices made by the legislature. Chapter 655 is a comprehensive statutory scheme that reflects the legislature’s intent to replace common law medical malpractice tort procedures and remedies with a statutory procedure and remedy.”
“Chapter 655 provides that the health care provider employer is legally responsible for the negligent acts of its nonprovider employee … this court has interpreted chapter 655 as treating a nonprovider employee and the health care provider employer as a “unit” for liability purposes … physician assistants such as Gander, along with many other nonprovider employees such as most nurses, are not required by Chapter 655 or by any other statute to maintain their own malpractice insurance. In addition, numerous provisions of the chapter guard against nonprovider employees being exposed to personal liability by providing that the health care provider employer’s malpractice insurance and the Fund must cover the nonprovider employee … If nonprovider employees could be personally liable for malpractice, they might be incentivized to pursue individual malpractice coverage, which could result in an increase in health care costs due to efforts to offset that expense, as our supreme court has explained … This result would be contrary to the objective of Chapter 655 to “curb the rising costs of health care.” WIS. STAT. § 655.27(6). For this reason, our supreme court and this court have barred suits that sought to hold nonprovider employees personally liable.”
The Wisconsin Appellate Court thus held: “it is clear from the language of chapter 655, as interpreted by binding case law, that, for purposes of this appeal: there is no alleged negligent act by Gander that is not within the scope of his employment; SSM is liable for each such negligent act; SSM’s insurance and the Fund will pay for any such negligent act; and Gander and SSM are treated as a “unit” for liability purposes. In these substantial ways, chapter 655 changes the common law, and consistent with these changes, the Kennedys’ suit against Gander may not proceed where SSM is not a party.”
Kennedy v. Gander, Appeal No. 2020AP218.
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