Court: Louisiana Court of Appeal; September 23, 2015; Louisiana; State Appellate Court
Plaintiff Eileen Clare Lynch-Ballard appeals the trial court's July 28, 2014 judgment that dismissed her claims against the remaining defendant. Lynch-Ballard, a physician previously employed by Correct Care, Inc., faced a medical malpractice complaint linked to her treatment of patient William Fautheree, resulting in the loss of his leg and subsequent death. Following her termination from Correct Care in June 2008, a medical malpractice claim was filed against her and East Carroll Parish Hospital in December 2008.
Correct Care had a professional liability insurance policy with Louisiana Medical Mutual Insurance Company (LAMMICO), which covered Lynch-Ballard. LAMMICO appointed attorney F. William Sartor to represent her during the medical review panel proceedings. However, in August 2009, the Louisiana State Board of Medical Examiners indefinitely suspended her medical license for failing to meet the standard of care. Sartor deemed the malpractice claim "indefensible" and recommended settlement, despite Lynch-Ballard's opposition. A settlement was reached whereby LAMMICO would pay $90,000, allowing the claimants to pursue further recovery from the Louisiana Patient’s Compensation Fund (PCF).
LAMMICO reported this settlement to the National Practitioner Data Bank in January 2010, indicating it was finalized on December 18, 2009. Lynch-Ballard objected to the settlement, claiming it was made without her consent and harmed her reputation. Although Sartor initially indicated her name should be excluded from the settlement documents, LAMMICO later insisted that it be included because she was an insured party under their policy. In February 2010, LAMMICO communicated that her consent was not required for settlement after her employment ended. The PCF subsequently settled for $360,000 in August 2010.
On December 15, 2011, Lynch-Ballard filed a lawsuit against LAMMICO and Sartor's law firm, alleging fraud and various claims, including breach of contract for settling without her permission and including her name in the documents contrary to prior agreements.
Dr. Lynch-Ballard alleged that LAMMICO violated its contractual obligations by settling her case without her consent and failing to advise her to obtain separate counsel. She claimed to have suffered mental anguish, loss of earnings, and damage to her reputation due to LAMMICO's reporting of the settlement to the NPDB. In response, LAMMICO filed a motion asserting that Dr. Lynch-Ballard's breach of contract claims should be dismissed, arguing that it was not required to obtain her consent to settle as she was not covered under the insurance policy after leaving her employment. LAMMICO also contended that her claims regarding the NPDB report were barred by federal law and that her tort claims were time-barred, as the lawsuit was filed over a year after she became aware of the alleged misconduct.
The trial court ruled in favor of LAMMICO, granting its motion for summary judgment and dismissing Dr. Lynch-Ballard’s claims. Dr. Lynch-Ballard appealed, but the appellate court dismissed the appeal for lack of jurisdiction, noting that the judgment did not address all her claims, particularly those regarding the exclusion of her name from settlement documents and the failure to secure separate counsel. Upon remand, LAMMICO filed another motion to dismiss the remaining claims, reiterating it was not required to obtain consent for settlement. The trial court again ruled in favor of LAMMICO, dismissing all claims with prejudice.
On appeal, Dr. Lynch-Ballard raised seven errors, arguing primarily that the trial court incorrectly found that LAMMICO did not breach its duty by settling without her consent, citing specific provisions in the insurance policy regarding the requirement for consent from insured physicians. However, her argument was subject to interpretation of the entire "Duty to Defend" section of the policy, which may contain additional relevant provisions.
The Company retains the right to conduct necessary investigations and cannot settle any claims without the insured's written consent. Once the liability limit is exhausted through judgments or settlements, the Company is not obligated to pay further claims or defend lawsuits. Exceptions to the consent requirement include situations where: a) an appeal is not pursued if a settlement is possible post-judgment; b) consent is not needed after a judgment against the insured; c) the insured is deceased or legally incompetent; d) the insured is not a physician or surgeon; e) the insured cannot be located or fails to respond within 14 days to certified mail; or f) the insured has stopped paying premiums or coverage is under an extended reporting endorsement.
At the time of settlement, Dr. Lynch-Ballard was no longer employed by Correct Care, Inc., and no premiums were being paid on her professional liability insurance with LAMMICO. Insurance policies are governed by the clear terms of the contract, and courts are required to enforce these terms without alteration. The interpretation of insurance policy provisions is a legal question suitable for summary judgment. In this case, LAMMICO was not required to obtain Dr. Lynch-Ballard’s consent to settle because she was not an active insured. Therefore, LAMMICO did not breach its contractual duty, and the court’s decision to grant summary judgment on this issue was appropriate. Dr. Lynch-Ballard's claim regarding LAMMICO settling in her name after agreeing not to include her name was also found to lack merit.
In January 2010, following a settlement agreement between LAMMICO and the Fautheree claimants, Dr. Lynch-Ballard threatened legal action against LAMMICO for breach of contract and failure to defend her. She claimed LAMMICO had agreed to exclude her name from the settlement documents, citing a letter dated January 20, 2010, from Mr. Sartor to Mr. Hammons as evidence. Dr. Lynch-Ballard alleged that her name was added to the documents in violation of this agreement. However, the trial court found no evidence supporting her claim of an exclusion agreement, and summary judgment was deemed appropriate.
The January 20 letter indicated that Correct Care was the insured under the LAMMICO policy but did not confirm the alleged exclusion agreement. A claims representative later stated that Dr. Lynch-Ballard’s name must be included to protect her from future claims. Despite her objections expressed in a letter dated February 6, 2010, LAMMICO maintained that including her name was necessary.
The legal principles highlight that a contract requires mutual consent (La. C.C. art. 1927), and on a motion for summary judgment, the burden lies with the movant to demonstrate the absence of factual support for the adverse party's claim (La. C.C.P. art. 966(C)(2)). The court concluded that no agreement to exclude Dr. Lynch-Ballard's name existed, and her failure to provide supporting evidence led to the affirmation of LAMMICO's entitlement to summary judgment. The assignment of error regarding this issue was dismissed as without merit.
Dr. Lynch-Ballard argues that the trial court erred in determining that LAMMICO did not breach its obligation to provide her separate counsel after a conflict arose regarding settlement of a medical malpractice case. LAMMICO had admitted coverage and retained Mr. Sartor to represent her, but a conflict emerged when she opposed settlement, which LAMMICO is allowed to make without her consent per the insurance policy. The court found no conflict necessitating separate counsel, deeming this error assignment without merit.
In her fourth assignment of error, Dr. Lynch-Ballard contends that LAMMICO breached its duty by failing to defend her before the medical review panel and subsequently dismissing the proceedings. She claims Mr. Sartor did not submit evidence in her defense and failed to inform her about the dismissal so she could seek separate counsel. Citing the Teague case, the court concluded that LAMMICO had no obligation to continue defending her after the case was settled. It noted that Mr. Sartor deemed the case "indefensible" and that Dr. Lynch-Ballard's malpractice claims against him were dismissed as perempted, rendering this assignment of error without merit.
In her fifth assignment of error, Dr. Lynch-Ballard asserts that the court incorrectly found LAMMICO exempt from liability for reporting a settlement to the National Practitioner Data Bank (NPDB) under 42 U.S.C.S. 11131. She claims that the report was false and made in bad faith, alleging harm to her reputation and job prospects. However, LAMMICO was required to report the settlement, which amounted to $90,000, pursuant to the Healthcare and Quality Improvement Act.
An insurance company must report to the National Practitioner Data Bank (NPDB) when it makes a payment to settle a medical malpractice claim, including the physician's name and settlement amount. Failure to report can lead to penalties up to $10,000. Entities reporting under this Act are shielded from civil liability unless they knowingly report false information. Settlements are not indicative of malpractice. LAMMICO's reporting of a $90,000 settlement for Dr. Lynch-Ballard was accurate, and her claims regarding the timing of this report lack merit. The PCF also reported a $360,000 settlement on her behalf. Dr. Lynch-Ballard's assertions of fraud against LAMMICO, including claims of misrepresentation concerning her name on settlement documents, were not supported by evidence, and thus her claims under the doctrine of contra non valentum were found unmeritorious. Additionally, LAMMICO argued that Dr. Lynch-Ballard's claims for emotional distress and related tort claims were time-barred under a one-year prescriptive period, while she claimed a ten-year period applied to her contract claims. The trial court upheld LAMMICO's exception of prescription, leading to the dismissal of the tort claims. The court did not affirm tolling for contract claims as they were dismissed on other grounds. Consequently, the trial court's judgment dismissing the claims with prejudice was affirmed. The initial malpractice complaint was filed in November 2008 and amended in December, with later claims against Mr. Sartor and his law firm dismissed in July 2012 due to peremption.
