Jackson v. Sparks Reg'l Med. Ctr. & Columbia Cas. Co.
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SUPREME COURT OF ARKANSAS
No.
08-323
Opinion Delivered February 12, 2009
WILLIAM L. JACKSON,
APPELLANT,
VS.
SP A R K S R EG IO N A L M E D IC A L
CENTER & COLUMBIA CASUALTY
COMPANY,
APPELLEES,
APPEAL FROM THE SEBASTIAN
COUNTY CIRCUIT COURT,
NO. CV-2005-963,
HON. STEPHEN MERRILL TABOR,
JUDGE,
AFFIRMED IN PART; REVERSED
AND REMANDED IN PART.
PAUL E. DANIELSON, Associate Justice
Appellant William L. Jackson, as special administrator of the Estate of Sherri Jackson,
deceased, appeals the order of the Sebastian County Circuit Court granting summary
judgment in favor of appellees Sparks Regional Medical Center and Columbia Casualty
Company. Jackson asserts that Sparks’s motion for summary judgment was granted in error
because Sparks is not entitled to the charitable-immunity defense and that, under the special
circumstances of this case, Columbia was not entitled to summary judgment based on the
expiration of the statute of limitations and the savings statute. We affirm in part and reverse
and remand in part.
The record reveals the following facts. Jackson originally filed a lawsuit on February
7, 2002, against Sparks, Steadfast Insurance Company, Dr. James Patrick Bell, Emergency
Medical Services Group, P.A., Dr. Robert L. Kale, and John Does Nos. 1-10, based upon
allegations of medical malpractice resulting in the death of Sheri Jackson. Sparks and Steadfast
filed a timely answer, in which Sparks asserted it was immune from suit because of the
charitable-immunity doctrine and Steadfast denied it was the correct liability carrier for
Sparks.
On May 6, 2002, Jackson filed a First Amended Complaint, naming Columbia, the
correct liability carrier for Sparks, as a defendant. Jackson took a voluntary nonsuit as to
Steadfast and, as a result, an order of dismissal without prejudice was entered as to Steadfast
on May 7, 2002. Subsequently, Jackson also took a voluntary nonsuit as to Columbia and
Sparks on April 6, 2004, and July 29, 2004, respectively.
Jackson refiled his lawsuit against Sparks, Dr. James Patrick Bell, Emergency Medical
Services Group, P.A., Dr. Robert L. Kale, and John Does Nos. 1-10, on July 25, 2005.
Columbia was not named as a defendant. Sparks again asserted charitable immunity in its
answer and filed a motion for summary judgment on February 26, 2007, asserting the same.
On July 6, 2007, Jackson filed a motion to substitute Columbia for Sparks. A hearing was
held four days later, on July 10, 2007, on Sparks’s motion for summary judgment, which the
circuit court granted. On July 11, 2007, Jackson filed an Amended Complaint, naming
Sparks, Columbia, and John Does Nos. 1-10 as the defendants. An order dismissing Sparks
with prejudice was entered on July 17, 2007.
Columbia filed an answer and a motion for summary judgment on September 10,
2007. In its motion for summary judgment, Columbia asserted that its motion should be
granted because the medical malpractice statute of limitations and the one-year savings statute
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had both expired. The circuit court granted Columbia’s motion on November 14, 2007.
Jackson now appeals from the circuit court’s orders of July 17, 2007, and November 14, 2007.
Before reaching the merits, we must address the potential Rule 54(b) problem
presented by the instant case. While neither party raises this issue on appeal, whether or not
an order has been properly appealed pursuant to Rule 54(b) of the Arkansas Rules of Civil
Procedure is a jurisdictional question, which this court may address sua sponte. See Jones v.
Huckabee, 363 Ark. 239, 213 S.W.3d 11 (2005). When Jackson refiled suit on July 25, 2005,
he named Sparks, Dr. James Patrick Bell, Emergency Medical Services Group, P.A., Dr.
Robert L. Kale, and John Does Nos. 1-10 as the defendants. However, the record reveals
that Dr. Bell, Dr. Kale, and Emergency Medical Services Group were never served or
dismissed. There is also not a Rule 54(b) certificate in the record. Under the old civil
procedure rule, this case would be dismissed for lack of a final order. See McKinney v. Bishop,
369 Ark. 191, 252 S.W.3d 123 (2007).
On October 9, 2008, this court approved a new rule, Rule 54(b)(5), said to be
effective January 1, 2009. See In Re: Arkansas District Court Rules; Rules of Civil Procedure;
Rules of Evidence; Rules of the Supreme Court and Court of Appeals; and Rules of Appellate
Procedure-Civil, ___ Ark. ___, ___ S.W.3d ___ (Oct. 9, 2008). The new rule provides:
(b) Judgment Upon Multiple Claims or Involving Multiple Parties
....
(5) Named but Unserved Defendant. Any claim against a named but unserved
defendant, including a “John Doe” defendant, is dismissed by the circuit court’s
final judgment or decree.
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Id. at ___.
This court must now decide whether the amended version of Rule 54(b) should be
applied retroactively to the instant case. We construe court rules using the same means and
canons of construction used to interpret statutes. See City of Fort Smith v. Carter, 364 Ark.
100, 216 S.W.3d 594 (2005). In Bean v. Office of Child Support Enforcement, 340 Ark. 286, 9
S.W.3d 520 (2000), we discussed the rules we adhere to when considering whether to apply
a statute retroactively:
Our rule on this point could not be more clear. Retroactivity is a
matter of legislative intent. Unless it expressly states otherwise, we presume the
legislature intends for its laws to apply only prospectively. Estate of Wood v.
Arkansas Dep’t of Human Servs., 319 Ark. 697, 894 S.W.2d 573 (1995) (citing
Chism v. Phelps, 228 Ark. 936, 311 S.W.2d 297 (1958)). Any interpretation of
an act must be aimed at determining whether retroactive effect is stated or
implied so clearly and unequivocally as to eliminate any doubt. In determining
legislative intent, we have observed a strict rule of construction against
retroactive operation and indulge in the presumption that the legislature
intended statutes, or amendments thereof, enacted by it, to operate
prospectively only and not retroactively. See Arkansas Rural Med. Practice
Student Loan & Scholarship Bd. v. Luter, 292 Ark. 259, 729 S.W.2d 402 (1987);
Chism, supra; Arkansas State Highway Comm'n v. Hightower, 238 Ark. 569, 383
S.W.2d 279 (1964).
However, this rule does not ordinarily apply to procedural or remedial
legislation. Gannett River States Publ’g Co. v. Arkansas Industrial Dev. Comm’n,
303 Ark. 684, 799 S.W.2d 543 (1990); Forrest City Mach. Works v. Aderhold,
273 Ark. 33, 616 S.W.2d 720 (1981). The strict rule of construction does not
apply to remedial statutes which do not disturb vested rights, or create new
obligations, but only supply a new or more appropriate remedy to enforce an
existing right or obligation. Harrison v. Matthews, 235 Ark. 915, 362 S.W.2d
704 (1962). Procedural legislation is more often given retroactive application.
Barnett v. Arkansas Transp. Co., 303 Ark. 491, 798 S.W.2d 79 (1990). The
cardinal principle for construing remedial legislation is for the courts to give
appropriate regard to the spirit which promoted its enactment, the mischief
sought to be abolished, and the remedy proposed. Arkansas Dep’t of Human
Servs. v. Walters, 315 Ark. 204, 866 S.W.2d 823 (1993); Skelton v. B.C. Land
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Co., 260 Ark. 122, 539 S.W.2d 411 (1976) (citing United States v. Colorado
Anthracite Co., 225 U.S. 219 (1912)).
340 Ark. at 296-97, 9 S.W.3d at 526.
Rule 54(b)(5) is procedural and remedial and certainly does not disturb vested rights
or create new obligations. This new rule merely attempts to avoid the problems on appeal
created by a certain situation. In the Reporter’s Notes accompanying Rule 54(b)(5), it is
stated that the problem under Rule 54(b), as previously drafted, was that when, after the case
had been appealed and briefed, the appellate court discovered a forgotten defendant whose
presence destroyed the finality of the judgment being appealed, it was a waste of litigants’ time
and money and scarce judicial resources. Therefore, we will apply the new rule retroactively
and allow it to serve its intended purpose.
Turning to the merits of the appeal, Jackson first argues that summary judgment should
not have been granted in favor of Sparks because Sparks is not an entity entitled to charitable
immunity. Appellees respond that Jackson failed to establish that Sparks is not a charitable
organization based on the eight factors set forth by this court in George v. Jefferson Hosp. Ass’n
Inc., 337 Ark. 206, 987 S.W.2d 710 (1999).
This court’s standard of review for summary judgment is well settled:
Summary judgment is to be granted by a trial court only when it is clear that
there are no genuine issues of material fact to be litigated and the moving party
is entitled to judgment as a matter of law. Once a moving party has established
a prima facie entitlement to summary judgment, the opposing party must meet
proof with proof and demonstrate the existence of a material issue of fact. After
reviewing undisputed facts, summary judgment should be denied if, under the
evidence, reasonable minds might reach different conclusions from those
undisputed facts. On appeal, we determine if summary judgment was
appropriate based on whether the evidentiary items presented by the moving
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party in support of its motion leave a material question of fact unanswered. This
court views the evidence in a light most favorable to the party against whom
the motion was filed, resolving all doubts and inferences against the moving
party. Our review is not limited to the pleadings, as we also focus on the
affidavits and other documents filed by the parties.
Sykes v. Williams, 373 Ark. 236, 239-40, ___ S.W.3d ___, ___ (2008) (internal citations
omitted).
This court has also established eight factors to consider when determining whether an
entity is entitled to charitable immunity:
(1) whether the organization’s charter limits it to charitable or eleemosynary
purposes; (2) whether the organization’s charter contains a “not-for-profit”
limitation; (3) whether the organization’s goal is to break even; (4) whether the
organization earned a profit; (5) whether any profit or surplus must be used for
charitable or eleemosynary purposes; (6) whether the organization depends on
contributions and donations for its existence; (7) whether the organization
provides its services free of charge to those unable to pay; and (8) whether the
directors and officers receive compensation.
George v. Jefferson Hosp. Ass’n Inc., 337 Ark. 206, 211-12, 987 S.W.2d 710, 713 (1999). We
have further instructed that these factors are “illustrative, not exhaustive, and no single factor
is dispositive of charitable status.” Id. (citing Ouachita Wilderness Inst. v. Mergen, 329 Ark. 405,
947 S.W.2d 780 (1997)).
A review of the evidence in the record shows that Sparks qualifies as a charitable
institution based on the factors listed in George, supra. Consideration of the first and second
factors suggest that Sparks is charitable as illustrated by its Articles of Incorporation, which
were included in the record and state that Sparks is “a public benefit corporation” under the
provisions of the Arkansas Nonprofit Corporation Act of 1993, and that it is “organized,
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pledges its assets to, and shall be operated exclusively for charitable, scientific, and educational
purposes . . . .”
Dan Hamman, Chief Financial Officer for Sparks, in a sworn affidavit filed with
Sparks’s motion for summary judgment, stated that Sparks’s operating margin in 2006 was
(0.3)% and 1.5% in 2005, indicating a loss from operations. Hamman’s affidavit also provided
that any surplus funds are used “exclusively for charitable, scientific, and educational
purposes,” more specifically, to “perpetuate its charitable community benefit of providing
medical assistance to the public.” Further, the affidavit provided that, for the fiscal year 2006,
the total unreimbursed value of providing charity care was approximately $3,045,284, and that
under its Charity Care policy, Sparks provides services free of charge to patients unable to pay
at the same level of care provided to those who are able to pay. Additionally, the
unreimbursed value of providing care to persons covered by governmental programs at below
cost totaled $5,691,424, which Sparks considers to constitute additional charity care.
Considering this evidence in light of the third, fourth, fifth, and seventh factors also suggests
that Sparks is entitled to a charitable status.
In considering the sixth factor, we note that Sparks does not depend solely on
contributions and donations for its existence. Most of its operating funds are provided
through Medicare, Medicaid, and individual patients or their private insurers. While the
nonprofit hospital in George only received donations totaling approximately 6% of its financial
obligations, this court stated that “a modern hospital, with rare exception, would find it
extremely difficult to operate wholly or predominately on charitable donations.” George, 337
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Ark. at 214, 987 S.W.2d at 710. As was the case in George, the fact that Sparks receives most
of its funding through sources other than contributions or donations does not “negate its
overriding charitable purpose.” Id.
Finally, the eighth factor listed in George considers whether the directors and officers
receive compensation. Article IX of Sparks’s Articles of Incorporation provides that “[t]he
Corporation shall not have or issue shares of stock and no dividends shall be paid, and no part
of the income of the Corporation shall be distributed to its members, directors and officers.”
However, Sparks’s Chief Executive Officer receives approximately $350,000 per year in
compensation, and the next two ranking officers receive approximately $250,000 and
$236,000 respectively. Jackson argues that those salaries, in addition to salaries of other fulltime employees, are evidence that Sparks is “big business.” This court has previously rejected
that argument, stating:
[I]t is not necessary for charitable organizations to have entirely volunteer staff
and management. [Jefferson Regional Medical Center’s] size and complexity
make knowledgeable, well-qualified personnel essential. Such persons do not
readily volunteer their services or serve at rates of compensation markedly
lower than market rates.
Id. at 214, 987 S.W.2d at 710. Similarly, in the instant case, such compensation for certain
positions required to manage and operate Sparks “does not put the hospital in the position of
being maintained for private gain, profit, or advantage of its organizers.” Id.
Based on the totality of the evidence shown in the record, circumstances, and the
factors this court has adopted to help determine whether an organization is entitled to
charitable immunity, the circuit court did not err in granting Sparks’s motion for summary
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judgment. See also Scamardo v. Sparks Reg’l Med. Ctr., ___ Ark. ___, ___ S.W.3d ___ (Dec.
19, 2008) (Scamardo II) (holding that Sparks was entitled to charitable immunity).
For his second point on appeal, Jackson argues that, although his amended complaint
naming Columbia as a defendant was filed after the two-year statute of limitations for
medical-malpractice claims and after the one-year savings statute had expired, due to the
special circumstances of this case, the circuit court’s dismissal resulted in an injustice. Further,
he asserts that the circuit court should have found that his amended complaint related back
to his original complaint, which was timely under the savings statute, or allowed him to
proceed under the law as set out in Scamardo v. Jaggers, 356 Ark. 236, 149 S.W.3d 311 (2004)
(Scamardo I). Appellees argue that the circuit court did not err because Jackson did not prove
each element as required by Rule 15(c) of the Arkansas Rules of Civil Procedure to have the
amended complaint relate back to the original filing. Specifically, appellees argue, as the
circuit court reasoned, that Jackson did not prove that Columbia knew or should have known
that, but for a mistake concerning the identity of the proper party, the action would have
been brought against Columbia.
The relevant facts are more clearly explained when set out in a time line as follows:
Feb. 2000:
Alleged Malpractice
Feb. 7, 2002:
Jackson timely filed a complaint against Sparks, Steadfast
Insurance, Dr. Bell, Emergency Medical Services Group, Dr.
Kale, and John Does Nos. 1-10.
May 6, 2002:
Jackson filed amended complaint to substitute Columbia for a
John Doe. (Columbia was the appropriate liability carrier for
Sparks rather than Steadfast.)
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May 7, 2002:
Jackson voluntarily nonsuited Steadfast.
Feb. 26, 2004:
This court handed down Scamardo I, holding that a charitable
institution was not necessarily immune from tort liability and,
therefore, the statute allowing direct suit against the liability
insurer did not apply.
April 6, 2004:
Jackson voluntarily nonsuited Columbia.
July 29, 2004:
Jackson voluntarily nonsuited Sparks.
July 25, 2005:
Jackson refiled his lawsuit against Sparks, Dr. Bell, Emergency
Medical Services Group, Dr. Kale, and John Does Nos. 1-10.
Dec. 15, 2005:
This court handed down Low v. Insurance Co. of North America,
364 Ark. 427, 220 S.W.3d 670 (2005), overruling Scamardo I and
holding that a charitable institute was immune from tort liability.
Feb. 26, 2007:
Sparks filed a motion for summary judgment, asserting charitable
immunity.
July 11, 2007:
Jackson filed an amended complaint, adding Columbia as a
defendant.
The issue this court must decide is if Jackson was in fact “whipsawed” by the changes
that took place in the law during the course of his lawsuit. It is undisputed that Jackson first
filed his lawsuit against both Sparks and Columbia, but took a voluntary nonsuit against both
parties in 2002 following this court’s decision in Scamardo I. The Scamardo I decision upheld
the principle established in Clayborn v. Bankers Standard Insurance Co., 348 Ark. 557, 75
S.W.3d 174 (2002), that charitable organizations are not altogether immune from suit and that
a charitable organization may have a suit brought against it and a judgment entered against it.
Therefore, Columbia, the liability insurer for Sparks, was not the appropriate party to sue at
the time Jackson needed to refile his lawsuit as the statute permitting direct action against a
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liability insurer would not have applied.
On December 15, 2005, this court handed down its decision in Low, specifically
overruling both Scamardo I and Clayborn. We held that charitable organizations were in fact
immune from tort liability. See Low, supra. It is clear, at that point in time, that Jackson’s
claim against Sparks became subject to summary judgment, and he had lost his opportunity
to file a claim against Columbia as the one-year savings statute had expired prior to this
change in the law.
The next important filing in the case did not occur until Sparks filed its summaryjudgment motion on February 26, 2007, based on charitable immunity. Before a hearing
took place on that motion, Jackson filed an amended complaint on July 11, 2007, attempting
to add Columbia as a defendant.
Appellees’ argument is that Jackson’s action against
Columbia was not timely because the two-year medical-malpractice statute of limitations and
the one-year savings statute had both expired at the time Jackson attempted to amend his
complaint. Jackson avers that his amended complaint should relate back to the time of the
original filing under Rule 15(c) of the Arkansas Rules of Civil Procedure. The Rule states:
An amendment of a pleading relates back to the date of the original pleading
when:
(1) the claim or defense asserted in the amended pleading arose out of the
conduct, transaction, or occurrence set forth or attempted to be set forth in the
original pleading, or
(2) the amendment changes the party or the naming of the party against
whom a claim is asserted if the foregoing provision (1) is satisfied and, within
the period provided by Rule 4(i) for service of the summons and complaint, the
party to be brought in by amendment (A) has received such notice of the
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institution of the action that the party will not be prejudiced in maintaining a
defense on the merits, and (B) knew or should have known that, but for a
mistake concerning the identity of the proper party, the action would have
been brought against the party.
Ark. R. Civ. P. 15(c) (2008).
The circuit court found that the claims clearly arose out of the same alleged conduct
or occurrence and that Columbia received the requisite notice. However, the circuit court
found that the last requirement of Rule 15(c), subsection (2)(B), was problematic because
Jackson did not attempt to amend his complaint for eighteen months after Low was handed
down. The circuit court found that the lapse of time between Low and Jackson’s amended
complaint gave the impression that something other than a mistake in identity was a factor.
Appellees also use that reasoning in their argument on appeal.
The circuit court relied on George v. Jefferson Hospital Ass’n, Inc., 337 Ark. 206, 987
S.W.2d 710 (1999), to support its finding that Jackson could have amended the complaint
before the court ruled that the defendant was charitably immune. The court in George opined
that the plaintiff there could have sued both the charitable institution and its liability insurance
carrier initially and, through alternative pleading, not have jeopardized its claim against either
the hospital or its insurer. 337 Ark. at 216, 987 S.W.2d at 715. However, the instant case is
factually different from George. Here, Jackson had initially named both Sparks and Columbia
as defendants, but took a voluntary nonsuit against both parties. It voluntarily nonsuited
Columbia after this court’s holding in Scamardo I. Scamardo I was still the law when Jackson
refiled his case and, therefore, Columbia would not have been a proper defendant for Jackson
to name at that time.
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There is nothing in the record to suggest why Jackson waited eighteen months to
attempt to amend his complaint; however, the situation would not have been any different
had he attempted to do so immediately following Low. In theory, Sparks could have filed its
motion for summary judgment immediately following Low as well, but it did not do so until
fourteen months later.
Appellees further argue that there was no doubt that Jackson knew the identity of
Columbia because he was provided with Columbia’s identity after his initial lawsuit was filed
against Sparks and Steadfast. That is clearly undisputed, but is not the issue here. Rule 15(c)
states only that there needed to be a “mistake concerning the identity of the proper party.”
(Emphasis added). While Jackson obviously knew that Columbia was the correct liability
insurer for Sparks, he was unaware that Columbia was the proper defendant because of the
change in the law. In fact, Columbia was not the proper defendant during the time within
he was required to refile his lawsuit. Columbia only became the proper defendant after Low,
which was not decided until after Jackson lost his opportunity to refile against it.
Other cases have come before this court in which an appellant argued that the
retroactive application of Low was unfair and prejudicial to their case. See Sowders v. St.
Joseph’s Mercy Health Ctr., 368 Ark. 466, 247 S.W.3d 514 (2007); Felton v. Rebsamen Med.
Ctr., 373 Ark. 472, ___ S.W.3d ___ (2008); Neal v. Sparks Reg’l Med. Ctr., ___ Ark. ___, ___
S.W.3d ___ (Nov. 6, 2008); Anglin v. Johnson Reg’l Med. Ctr., ___ Ark. ___, S.W3d ___
(Nov. 6, 2008). However, in the instant case, this court’s decision in Low caused Jackson to
make an understandable mistake, and not allowing Rule 15(c) to apply would indeed have
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an unfair and prejudicial result. In Crowder v. Gordons Transports, Inc., 387 F.2d 413, 418 (8 th
Cir. 1967), the Eighth Circuit Court of Appeals stated that Rule 15(c) was designed for
relation back “to prevent forfeiture when determination of the proper party to sue is difficult
or when an understandable mistake has been made.” Both bases apply here given the special
circumstances of this case and, therefore, we hold that Jackson’s amended complaint relates
back to his original timely complaint under Rule 15(c). As a result, we reverse and remand
the circuit court’s order granting summary judgment as to Columbia.
The summary-
judgment order granted in favor of Sparks is, however, affirmed.
Affirmed in part; reversed and remanded in part.
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