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Maloney v. Valley Medical Facilities

November 24, 2009

MAX C. MALONEY, INDIVIDUALLY AND AS ADMINISTRATOR OF THE ESTATE OF LINDA E. MALONEY,
v.
VALLEY MEDICAL FACILITIES, INC., D/B/A THE MEDICAL CENTER, BEAVER, HERITAGE VALLEY HEALTH SYSTEM, INC., BEAVER INTERNAL MEDICINE ASSOCIATION, TRI-STATE MEDICAL GROUP, INC., BRIGHTON RADIOLOGY ASSOCIATES, P.C., MAURICE PRENDERGAST, M.D., AND, RICHARD E. BRENNAN, M.D.
APPEAL OF: MAURICE PRENDERGAST, M.D., BEAVER INTERNAL MEDICINE ASSOCIATION AND TRI-STATE MEDICAL GROUP, INC.



Appeal from the Order of the Superior Court entered March 7, 2008 at No. 346 WDA 2007, vacating the judgment of the Court of Common Pleas of Beaver County entered January 18, 2007 at No. 10369-: 2004 and remanding.

The opinion of the court was delivered by: Mr. Justice Saylor

CASTILLE, C.J., SAYLOR, EAKIN, BAER, TODD, McCAFFERY, GREENSPAN, JJ.

ARGUED: March 4, 2009

OPINION

Appeal was allowed to consider whether a plaintiff's release of principals whose potential liability was vicarious also discharges the plaintiff's claims against the agent, regardless of an express reservation of rights.

Appellee commenced the present medical malpractice action grounded on an asserted failure to timely diagnose and treat osteosarcoma in his wife, Linda Maloney. He alleged, among other things, medical negligence on the part of Appellant Maurice Prendergast, M.D. (an internist) and Richard E. Brennan, M.D. (a radiologist), as well as vicarious liability on the part of institutional defendants associated with these physicians.

Following settlement discussions, Appellee entered into a settlement with Dr. Brennan, funded by such physician's primary liability insurer and the Medical Care Availability and Reduction of Error Fund in its capacity, effectively, as an excess insurer. See generally Carrozza v. Greenbaum, 591 Pa. 196, 219-20 n.23, 916 A.2d 553, 568 n.23 (2007) ("For judgments in excess of the provider's primary insurance, up to a statutory limit, the MCARE Fund satisfies the judgment."). Appellee executed a joint tortfeasor release surrendering all claims "in any way connected with all medical professional health care services rendered by the above named Health Care Providers." Joint Tortfeasor Release, Oct. 24, 2006, ¶1. Notably, the "above named Health Care Providers" included the institutional defendants associated with Dr. Prendergast, namely, Appellants Beaver Internal Medicine Association and Tri-State Medical Group, Inc. (hereinafter "Employers"),*fn1 but not Dr. Prendergast himself. See id. Further, a second paragraph of the release was included to expressly reflect a reservation of rights against Dr. Prendergast. See Id. at ¶2 ("It is understood that I, Max C. Maloney, am not hereby releasing any claims or demands that I have against Maurice D. Prendergast, M.D. However, I am agreeing to limit my potential recovery against Maurice D. Prendergast, M.D. pursuant to the provisions in paragraphs 3, 4, 5, 6, and 7.").*fn2 The intent was also expressed in the release that it was to comply with and be interpreted in accordance with the Uniform Contribution Among Tortfeasors Act.*fn3

Thereafter, Dr. Prendergast and Employers filed motions for summary judgment, each asserting that the language of the release discharged all direct and derivative claims arising from Dr. Prendergast's conduct, based on the common-law rule governing releases. See Mamalis v. Atlas Van Lines, Inc., 522 Pa. 214, 560 A.2d 1380 (1989) (holding the release of an agent operates to release the principal from vicarious liability claims, regardless of any attempted reservation of rights);*fn4 Pallante v. Harcourt Brace Jovanovich, Inc., 427 Pa. Super. 371, 629 A.2d 146 (1993) (applying Mamalis to require that the release of an agent follows, as a matter of law, from the release of a principal). Employers also contended that the express language of the release foreclosed all claims against them.

The common pleas court granted the respective motions, initially crediting the argument that the release encompassed all claims against all of the institutional defendants, including Employers. As to Dr. Prendergast himself, the court determined that the common-law release rule applied, per Mamalis and Pallante.

On appeal, the Superior Court agreed that the release encompassed all claims against Employers. See Maloney v. Valley Med. Facilities, Inc., 946 A.2d 702, 706 (Pa. Super. 2008). However, the intermediate appellate court differed with the common pleas court's reasoning and holding concerning Dr. Prendergast. In this regard, the Superior Court initially stressed the application of traditional contract principles to releases, including the policy of effectuating the intention of the parties via enforcement of the ordinary meaning of release terms. See id. at 706, 708 (citing, indirectly, Buttermore v. Aliquippa Hosp., 522 Pa. 325, 328-29, 561 A.2d 733, 735 (1989)). The court then distinguished Pallante, and inferentially Mamalis, as follows:

In Pallante, we explained that the reason for the rule that release of the principal also releases the agent is that "the law seeks to protect an injured party's right to payment for a single injurious act from either a vicariously liable principal or an independently liable agent." Here, a jury might well consider to be multiple rather than singular acts of negligence Appellee Prendergrast's [sic] alleged misdiagnosis of Mrs. Maloney's condition, and his repeated failure to treat or even to disclose the existence of [a] bone cyst during the fourteen years prior to her death. This set of circumstances bears no resemblance to the single injury examined in Pallante, nor is the trial court's resolution of this matter congruent with its responsibility to implement the intent of the parties.

Maloney, 946 A.2d at 708 (internal citations omitted). Based on this reasoning, the Superior Court vacated the judgment as to Dr. Prendergast and remanded for further proceedings consistent with its opinion. See id.

Presently, Dr. Prendergast and Employers argue that the Superior Court disregarded Mamalis' holding that a release's purported reservation of a claim is ineffective in the vicarious liability scenario. See Mamalis, 522 Pa. at 221, 560 A.2d at 1383 ("A claim of vicarious liability is inseparable from the claim against the agent since any cause of action is based on the acts of only one tortfeasor."). Further, according to Appellants, the decision is irreconcilable with Pallante. See Pallante, 427 Pa. Super. at 377, 629 A.2d at 149 (finding Mamalis' reasoning "equally as applicable to instances of the release of the principal as it is to [the] release of the agent"). Appellants also indicate that, in 1999, the American Law Institute approved the same rule as that enunciated in Mamalis. See RESTATEMENT (THIRD) OF TORTS: APPORTIONMENT OF LIABILITY §16 Reporter's Note, cmt. d (1999) ("Release of both the agent and the vicariously liable party upon a settlement with one of those parties is logically required [since o]nly one measure of responsibility will be assigned to all such parties."). Likewise, Appellants observe that the Subcommittee Note to the 2003 Revision of the Pennsylvania Suggested Standard Civil Jury Instructions opines that Mamalis and Pallante prevent subjecting an agent to duplicative actions by his principal and the original plaintiff. See PENNSYLVANIA SUGGESTED STANDARD CIVIL JURY INSTRUCTIONS §4.20 (2008). Finally, Appellants submit that the Superior Court's decision may expose Dr. Prendergast to claims exceeding Appellee's actual damages should he be subject to a claim asserted by the MCARE Fund under indemnity and/or equitable subrogation theories, see generally, Judge v. Allentown and Sacred Heart Hosp. Ctr., 506 Pa. 636, 638-39, 487 A.2d 817, 818 (1985), in addition to litigation underlying the present appeal.

In opposition, like the Superior Court, Appellee relies on the general requirement to give effect to explicit release terms, such as those preserving claims against Dr. Prendergast. See Brief for Appellee at 10 ("Plaintiff settled his claims with one set of defendants, and signed a joint tortfeasor release that explicitly preserved, in the clearest possible language, his right to pursue claims against defendant Maurice Prendergrast [sic], M.D. That is what the parties agreed to, that is what the release says, and that is the partial settlement that the Trial Court approved."). Appellee recognizes the holding of Mamalis, indicating that it represents "sound policy [and] settled law." Id. at 13. Appellee explains, however, that Mamalis' central rationale focused on the inseparability of a claim of vicarious liability and that against the agent. See Mamalis, 522 Pa. at 221, 560 A.2d at 1383 (reasoning that "[a] ...


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