Carolyn Erwin v. Methodist Medical Center of Oak Ridge

Citation: Not availableDocket: 03A01-9811-CV-00379

Court: Court of Appeals of Tennessee; October 18, 1999; Tennessee; State Appellate Court

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Carolyn B. Erwin, the Plaintiff/Appellant, filed a negligence action against Methodist Medical Center of Oak Ridge, the Defendant/Appellee, following a workplace injury sustained while employed by Owen Healthcare on January 9, 1997. The injury occurred when Erwin tripped on electrical wiring at the hospital, where Owen Healthcare was contracted to provide pharmacy services. Erwin had previously filed a claim against CNA Insurance Company under the Tennessee Workers’ Compensation Act, which provided her with temporary indemnity and medical benefits.

The Defendant moved to dismiss the tort claim, citing immunity under the exclusive remedy provision of the Workers’ Compensation Act, arguing it was a principal contractor as defined by Tennessee law. The Trial Court agreed, dismissing the case on October 20, 1998, and stating that Erwin could not pursue common law negligence claims against the Defendant. The dismissal order, issued on November 13, 1998, held Erwin responsible for all accrued costs. Following this, Erwin filed a notice of appeal on November 18, 1998. The Court of Appeals affirmed the Trial Court’s dismissal of the tort action, reinforcing the applicability of the Workers’ Compensation Act’s exclusive remedy provision.

Defendant's motion to dismiss was treated as a motion for summary judgment when the Trial Court considered evidence outside the pleadings. The review standard for summary judgment is de novo, meaning the trial court's legal conclusions do not carry a presumption of correctness. Summary judgment is granted when no material facts are in dispute and the moving party is entitled to judgment as a matter of law. In this case, the Trial Court determined that Defendant qualified as a principal contractor under Tenn. Code Ann. § 50-6-113, allowing it to invoke the exclusive remedy provision of Tenn. Code Ann. § 50-6-108, thus dismissing Plaintiff's tort action.

Plaintiff contends that Defendant does not satisfy the statutory requirements to be considered a principal contractor. Key cases cited by Plaintiff include Stratton v. United Inter-Mountain Telephone and Barber v. Ralston Purina. Stratton outlines six factors to assess whether a worker is an employee or independent contractor, emphasizing the right to control the work as a significant factor. Barber evaluates the principal contractor statute in the context of subcontractor employment, focusing on whether the work performed aligns with the principal contractor's regular business and whether the principal has control over the subcontractor's employees.

Plaintiff argues that Barber's two factors indicate Defendant is not a principal contractor. The Barber ruling highlighted the importance of the principal's right to control the workers, stating that the right exists even if not exercised. Additionally, Plaintiff references Byrd v. Mahle to assert that the principal contractor statute does not apply, claiming Defendant only contracted for an end result without exercising control over Owen Healthcare's employees.

Byrd utilized the six factors from Stratton to challenge the trial court’s conclusion that Mahle was not a principal under Tenn. Code Ann. § 50-6-113. The court determined that five factors indicated no coverage under the Act, noting that Mahle’s control over the subcontractor was limited to ensuring compliance with plans and specifications. A key distinction in Mahle was that Mahle hired a general contractor, who in turn hired a subcontractor that employed Byrd. In contrast, Defendant directly hired Owen Healthcare, which employed Byrd, positioning Defendant as a general contractor rather than as Mahle. This separation from the work performed was critical in excluding Mahle from Workers’ Compensation coverage as a principal, thus preventing the exclusive remedy provision of Tenn. Code Ann. § 50-6-108 from applying to Byrd’s negligence claims.

Byrd contended that Owen Healthcare was not fulfilling a service for Defendant, failing the first standard in Barber, pointing to their exclusive pharmacy service agreement, which limited Defendant’s control over Owen's employees. Byrd argued that Defendant was not working for another entity, aligning with the facts in Byrd's case. Defendant claimed that exclusive contracts for healthcare services are common in hospitals, contesting Byrd's assertion. However, Defendant's argument for tort immunity hinged on its relationship with Owen and the Stratton employee control analysis, emphasizing that the work under contract occurred on its premises and was integral to its operations.

The crucial issues to resolve were whether Defendant qualified as a Principal, Intermediate Contractor, or Subcontractor under Tenn. Code Ann. § 50-6-113(a), and whether the injury occurred on the statutory 'premises' defined in Tenn. Code Ann. § 50-6-113(d), which would affect recovery under the Workers’ Compensation Act. It was confirmed that the injury took place on Defendant's premises and that Defendant had control over it. The relationship between Plaintiff and Defendant, based on the Agreement with Owen Healthcare, will determine the applicability of Workers’ Compensation coverage, necessitating an application of the Stratton/Barber factors to this Agreement.

The first factor in the Barber analysis examines whether the contractor's work aligns with the defendant's regular business activities. The key issue is whether the pharmacy operation on the defendant’s premises functions as an independent entity or is integrated into the defendant’s business. The precedent case Hendrix v. Ray-Ser Dyeing Co. illustrates this point; the court concluded that the defendant’s work did not include painting, which was deemed outside its normal operations. Applying this reasoning, the court would need to determine if pharmacy services are sufficiently distinct from the defendant’s customary healthcare services, which the record does not support. The contract specifies that Owen Healthcare is responsible for operating the pharmacy to supply medications to the hospital's patients, indicating that the service is part of the hospital's healthcare offerings rather than an isolated operation. 

To uphold the plaintiff's argument, it would necessitate a finding that the contract's focus is the hospital itself, contradicting the evidence that identifies the patients as the primary beneficiaries. Additionally, the second Barber factor concerns the defendant's control over the contractor's employees. The agreement stipulates that pharmacy services are provided only upon proper authorization, indicating that the defendant maintains control over the pharmacy staff's actions. This control is further evidenced by stipulations for ongoing training and collaboration on cost management, reinforcing that the pharmacy operation is integrated into the defendant's healthcare services.

The excerpt outlines key aspects of an agreement between Owen Healthcare and the hospital, emphasizing the hospital's control over operational functions, employee management, and financial arrangements. 

1. **Performance Reports**: Owen Healthcare is required to provide reports on operational functions such as interdepartmental communication and drug order turnaround, with the hospital retaining the right to control the employees' work.

2. **Right of Termination**: The hospital has the authority to demand the replacement of Owen Healthcare employees, establishing a significant level of control.

3. **Payment Method**: Employees of Owen Healthcare will be compensated by Owen Healthcare itself.

4. **Helpers and Personnel**: While the term "helpers" is not specifically mentioned, the hospital is responsible for providing various support services. Owen Healthcare employees are primarily focused on supplying pharmacy items, which are administered by other hospital staff.

5. **Tools and Equipment**: Owen Healthcare is responsible for supporting existing pharmacy systems and providing additional equipment with the hospital's approval, indicating the hospital's oversight.

6. **Work for Another**: The agreement clearly states that the work performed is directed at benefiting the hospital's patients, thus classifying it as "work for another." The court concludes that this work integrates efforts across different hospital departments.

The court determines that Owen Healthcare employees function as statutory employees under Tennessee's Workers’ Compensation Act, classifying the hospital as a principal contractor. This classification precludes the plaintiff from pursuing tort claims against the hospital, affirming the trial court's decision to dismiss the case.