Appeal from the Order of the Superior Court entered July 15, 2010, at No. 2180 WDA 2007, reversing the Judgment of the Court of Common Pleas Allegheny County entered November 8, 2007, at No. GD 05-24806 and remanding. Appeal from the Order of the Superior Court entered July 15, 2012, at No. 2301 WDA 2007, reversing the Judgment of the Court of Common Pleas Allegheny County entered November 8, 2007, at No. GD 05-24806 and remanding.
The opinion of the court was delivered by: Mr. Chief Justice Castille
CASTILLE, C.J., SAYLOR, EAKIN, BAER, TODD, McCAFFERY, ORIE MELVIN, JJ.
ARGUED: November 30, 2011
ARGUED: November 30, 2011
Highland Park Care Center, L.L.C. and Grane Healthcare Company (separately, "Highland Park" and "Grane Healthcare"; together, "appellants") appeal the decision of the Superior Court to reverse the grant of a non-suit in part, affirm the denial of a non-suit in part, and award a new trial to Richard Scampone, the executor of the estate of Madeline Scampone (the "Scampone estate" or "appellee"). We hold that a nursing home and affiliated entities are subject to potential direct liability for negligence, where the requisite resident-entity relationship exists to establish that the entity owes the resident a duty of care, as we explain infra. Accordingly, we affirm the Superior Court in part, upon reasoning different from that articulated by the Superior Court, and we remand to the trial court for proceedings consistent with this Opinion.
Ms. Madeline Scampone resided at Highland Park, a nursing home in Pittsburgh, Pennsylvania, from 1998 to 2004. She received skilled nursing care for a number of chronic ailments, including senile dementia, osteoporosis, pulmonary disease, and hypertension. Ms. Scampone was also susceptible to developing urinary tract infections; indeed, she was hospitalized repeatedly upon such diagnosis in June 2002, July 2003, October 2003, and December 2003. During her 2003 hospitalizations, staff also noted a degradation in Ms. Scampone's mental status. Following admission in December 2003, Ms. Scampone remained hospitalized for three days, after which she returned to Highland Park in good condition. On January 30, 2004, however, the hospital re-admitted Ms. Scampone, diagnosing her with yet another urinary tract infection, dehydration, malnutrition, bedsores, and an acute myocardial infarction. On February 9, 2004, Ms. Scampone died of a heart attack at the age of 94. Following his mother's death, Richard Scampone was appointed executor of her estate.
In 2005, Mr. Scampone filed in the Allegheny County Court of Common Pleas an action on behalf of the Scampone estate against Highland Park, a corporation; against Grane Healthcare, a corporation providing management services to Highland Park; and against Grane Associates L.P., Trebro Inc., and Ross J. Ness, parties with direct or indirect ownership interests in Highland Park.*fn1 In the complaint, the Scampone estate asserted claims of negligence under the Survival Act and of wrongful death, and requested compensatory and punitive damages, costs of litigation, and other relief that the court could find proper. Appellee proceeded on theories of (1) corporate negligence, or appellants' direct liability, and (2) appellants' vicarious liability for the negligent acts of their employees and other agents. The matter went to trial on May 14, 2007, before the Honorable Robert J. Colville.
At trial, the Scampone estate offered evidence -- primarily testimony of nurses and certified nursing assistants, former Highland Park employees -- regarding the care provided to Ms. Scampone during the period leading up to the end of her stay at the nursing home and subsequent death. These former employees testified that they often lacked time to accomplish the tasks assigned to them in the care plans of all residents, including distributing water, and tracking with regularity the daily activities, food and water intake, output, and medications provided to Ms. Scampone. Moreover, witnesses stated that staff at Highland Park failed to inform Ms. Scampone's doctors and family of changes in her condition, and failed to follow doctors' orders regarding obtaining samples and performing tests on Ms. Scampone to determine whether she had an infection. The former caretakers for Ms. Scampone testified to their observations that the limited personnel available could not accomplish all tasks required by Ms. Scampone's care plan, and stated that they informed Highland Park and Grane Healthcare supervisors and administrators of the shortfall in care and its causes. The Scampone estate also introduced evidence regarding the relationship between Highland Park and Grane Healthcare; the degrees of direct healthcare provided to residents and of control exercised over daily operations at the nursing home by each appellant's employees; and the decision-making process and authority invested in various employees and officers of Highland Park and Grane Healthcare, respectively, over budgetary and personnel matters.
Finally, appellee elicited expert testimony regarding the applicable standard of care and causation. The Scampone estate's nursing expert concluded that the failures to provide sufficient water and medication, to track the daily activities and report changes in condition, and to follow doctors' directions breached the standard of care for a skilled nursing facility. Additionally, a medical expert testified that appellants' breach of the standard of care, as described by the former employees and the nursing expert, caused dehydration and permitted Ms. Scampone's urinary tract infection to progress, affecting her heart and leading up to her acute myocardial infarction and related death.
On May 24, 2007, after the Scampone estate concluded its case, appellants moved for a non-suit on all claims against Grane Healthcare, as well as for a non-suit limited to the claims of corporate negligence and for punitive damages against Highland Park. See Notes of Testimony ("N.T."), 5/24/2007, at 683-84. Following briefing and argument, the trial court granted appellants' motion, except for the request to dismiss appellee's claim of corporate negligence against Highland Park. N.T., 5/25/2007, at 12-14. Highland Park, as the only defendant remaining in the case, proceeded to offer evidence in its defense.
Highland Park elicited testimony from its current and former employees regarding the daily care afforded Ms. Scampone and their observations regarding the level of staffing at the nursing home. According to the testimony, Highland Park had sufficient staff to meet state and federal requirements, as well as patient needs. Moreover, Highland Park offered evidence that, although record keeping was admittedly poor, Ms. Scampone received the requisite care. Highland Park sought to show that complaints of former employees regarding understaffing were unfounded or based on the perception and unjustified expectations of those witnesses, rather than on the actual requirements of appropriate care.
Highland Park also offered expert opinion on whether the care provided to Ms. Scampone met the standard for a skilled nursing facility; the expert testified that Ms. Scampone's overall well-being and longevity exceeded expected outcomes given her age and degraded health upon admission, and was evidence that Highland Park met the requisite standard of care. Finally, Highland Park concluded with testimony from its medical expert, which challenged appellee's theory of causation. The medical expert offered his opinion that Ms. Scampone's decline, inability and/or unwillingness to take in food and water, and Ms. Scampone's subsequent death were caused by a stroke detected after her admission into the hospital. The expert described a rapid "cascading" effect, commonly encountered in geriatric patients like Ms. Scampone, whose cause could not be attributed to any acts or omissions of Highland Park or its employees. The trial court denied the Scampone estate's request to offer rebuttal testimony.
On May 31, 2007, the trial court charged the jury, inter alia, with respect to the Scampone estate's theories of direct and vicarious liability. N.T., 5/31/2007, at 161-67. The court then recessed for jury deliberations. On June 1, 2007, the jury returned a verdict in favor of the Scampone estate, finding Highland Park directly and vicariously liable for negligence. The jury awarded appellee compensatory damages in the amount of $193,500. The parties filed cross-motions for post-verdict relief, which the trial court denied in October 2007. On November 8, 2007, the trial court entered a judgment on the verdict plus costs, which both parties appealed timely to the Superior Court.
The trial court ordered both parties to file statements of matters complained of on appeal. See Pa.R.A.P. 1925(b). The parties complied. In its Rule 1925(b) statement, the Scampone estate alleged, inter alia, that its evidence was sufficient to state claims of direct and vicarious liability against Grane Healthcare, and for punitive damages against both Grane Healthcare and Highland Park; appellee challenged the trial court's decision to grant appellants' non-suit motion in these respects. Highland Park, in its separate Rule 1925(b) statement, challenged the judgment on the ground that the trial court erred in allowing the Scampone estate's corporate negligence claim against Highland Park to proceed to the jury. Among other theories, Highland Park argued that a nursing home, unlike a hospital or a health maintenance organization ("HMO"), is not exposed to direct liability under the corporate negligence theory recognized by Pennsylvania courts. On February 8, 2008, the trial court filed its Rule 1925(a) opinion, explaining the bases of its various decisions.
On appeal, the Superior Court panel affirmed in part, holding that the trial court properly allowed the claim of corporate liability as to Highland Park to go to the jury. But, the panel otherwise reversed, based on the conclusion that the trial court improperly granted appellants' motion for non-suit because the Scampone estate had offered sufficient evidence with respect to corporate negligence (as to Grane Healthcare) and with respect to punitive damages (as to both appellants) to warrant submission of these issues to the jury. The panel remanded the matter to the trial court for a new trial, and dismissed as moot any remaining issues of which the parties complained on appeal. See Scampone v. Highland Park Care Ctr., 11 A.3d 967 (Pa. Super. 2010). Grane Healthcare and Highland Park filed petitions for allowance of appeal, which we granted. The issue accepted for appeal, as rephrased by the Court, is:
Whether the Superior Court erred in applying the corporate negligence theory, initially adopted by this Court in Thompson v. Nason Hospital, 591 A.2d 703 (Pa. 1991), to a skilled nursing facility and the healthcare company responsible for its operations?
Scampone v. Highland Park Care Ctr., 15 A.3d 427 (Pa. 2011) (per curiam). The parties filed timely briefs with the Court.*fn2
Appellants argue that the Superior Court erred in remanding the case to the trial court for a new trial because corporate negligence is not a viable cause of action against either a skilled nursing facility or the company which provides management services to the facility. According to appellants, this Court has limited corporate liability for negligent conduct to hospitals, on the principle that the "corporate hospital today" is "a comprehensive health center with responsibility for arranging and coordinating the total healthcare of its patients." Appellants' Brief at 17 (quoting Thompson, 591 A.2d at 706). In Thompson, appellants state, this Court addressed only the question of a hospital's liability and did not portend to articulate a doctrine of corporate negligence applicable to all other types of healthcare corporations. Indeed, according to appellants, in two matters decided after Thompson, the Court analyzed corporate liability only as applied to hospitals. Id. at 18 (citing Welsh v. Bulger, 698 A.2d 581 (Pa. 1997) (plaintiff must present expert testimony in order to establish prima facie case of negligence against hospital, unless negligence is obvious) and Moser v. Hestend & Ashland St. Gen. Hosp., 681 A.2d 1322 (Pa. 1996) (state-owned medical facility has sovereign immunity from claims of corporate negligence)). Appellants further note that federal courts have recognized this Court's supposed "desire" to limit the application of corporate liability to hospitals. Id. (citing, inter alia, Milan v. Am. Vision Ctr., 34 F. Supp. 2d 279 (E.D. Pa. 1998)).
Moreover, appellants argue that the Court has correctly limited liability to hospitals, and claim that extending the doctrine of corporate negligence to any other type of healthcare entity is problematic. Appellants identify several "policy" reasons in support of their argument. First, according to appellants, developing a test for identifying healthcare corporations to which the doctrine should apply is impossible and unworkable; an added difficulty is to re-define hospitals' duties under Thompson in a manner that applies to all healthcare corporations. Limiting the doctrine of corporate liability to hospitals, appellants claim, has the advantage of simplicity. Second, appellants posit that a cause of action for corporate negligence is superfluous, because patients can be made whole via vicarious liability claims. Third, appellants argue that the extension of liability will increase operational expenses, discouraging healthcare corporations from providing affordable, or even any, services in the Commonwealth. Such corporations, according to appellants, will be exposed to additional liability, including for punitive damages; will be forced to obtain medical malpractice insurance, where now they rely on medical professionals to carry policies; and will generally suffer increased uncertainties and complexities in litigation, and decreased incentives for settlement.
With respect to the development of a test for determining what types of healthcare corporations may be held liable for corporate negligence, appellants structure their argument on the assumption that some types of healthcare corporations are exempt from liability. Thus, appellants state that, after Thompson, the first extension of the doctrine was to an HMO, which was like a hospital because the HMO "actually provided health care to its subscribers." Appellants' Brief at 23 (citing Shannon v. McNulty, 718 A.2d 828 (Pa. Super. 1999) (HMO may be held liable for corporate negligence)). Appellants distinguish Shannon, contending that the Superior Court's considerations are inapplicable to a skilled nursing facility. Appellants represent that nursing home staffs simply carry out orders of physicians without the ability to challenge them, and skilled nursing facilities like Highland Park do not employ physicians and do not have an administrative staff to which to report failures of physicians. Accordingly, appellants state, holding a skilled nursing facility liable for acts or omissions which commonly occur in a hospital but not in the nursing facility is inappropriate. Appellants' Brief at 25 (citing Sutherland v. Monongahela Valley Hosp., 856 A.2d 55 (Pa. Super. 2004) (no viable corporate negligence claim against physician's office which, unlike hospital, does not assume role of comprehensive health center)).
Concomitantly, appellants criticize the Shannon decision, which they say "has become the beacon for trial courts and the Superior Court" on the issue of which entities are subject to the corporate negligence doctrine, on the ground that it is unworkable. Id.*fn3 According to appellants, the test applied by Pennsylvania lower courts following Shannon is whether a particular type of healthcare corporation resembles either a hospital or an HMO rather than a physician's office: "if [a healthcare corporation] is 1% or more like an HMO or a hospital, corporate negligence applies . . . [and i]f it is 1% or more like a physician's office, it does not apply." Appellants' Brief at 27. Moreover, appellants state that the Shannon standard of reasonable care is not grounded in any "cogent policy considerations" and "essentially renders healthcare corporations liable for the general malpractice of their employees and independent contractors," and "duplicates vicarious liability." Id. at 24 (citing Sutherland, supra) (no corporate negligence liability for physician's office)). Appellants note that other courts have proceeded even farther afield from this Court's Thompson test and have looked to whether a patient "forfeit[s] legally or practically the ability to turn elsewhere for medical care," whether a patient had to commit to a single provider for comprehensive care, or whether the provider delivered care or simply functioned as a gateway for entry into the healthcare system via referrals. Id. at 29-30. Appellants argue that the Court should avoid the difficulty of developing a test for determining the applicability of corporate negligence theory by holding that it only applies to hospitals.
In the alternative, appellants submit that "[t]he test that should be adopted is whether the healthcare corporation is like a hospital as to its comprehensiveness of care." Id. at 32. Application of appellants' proposed test would exempt nursing homes from corporate liability. Specifically, appellants offer that Highland Park does not provide extensive medical care but simply aids residents in performing daily activities (such as eating, dressing, bathing, walking, and transferring into bed) or acts as a "gateway into the healthcare system." When necessary, residents employ their own physicians and may be admitted to hospitals. Accordingly, appellants assert that a nursing home cannot be found to owe any "non-delegable duty" directly to its residents. Appellants' Brief at 32-34. Appellants highlight the General Assembly's definitions of "nursing home" and "hospital" to confirm the distinction and as a guidepost for determining whether a type of healthcare entity functions as a hospital. Id. at 34 (citing 62 P.S. § 1001; 28 Pa. Code § 101.4). For appellants, any conclusion that a skilled nursing facility functions as a hospital would undercut the Commonwealth's administrative system, for example, with respect to a patient's right to choose a physician. Id. at 36 (citing 42 U.S.C. § 1395(a) (concerning Medicare beneficiaries)).
Appellants also suggest that articulating duties of healthcare corporations to address the variety of such types of entities is difficult and will necessitate adjustment of Thompson. As an example, appellants cite Thompson-derived duties to select, retain, and oversee competent physicians, and to formulate and enforce policies regarding physicians -- functions which, appellants indicate, a nursing home has no ability to perform. Accordingly, appellants offer, "it makes no sense to expand corporate negligence to nursing homes," as almost all resident care other than that relating to the functions of daily living, are outside the control of the skilled nursing facility. Appellants warn that modifications of Thompson in the lower courts have "brought to pass [former] Justice Flaherty's prediction" that the decision will be ...