CPA malpractice

My wife, Lacy Burris (associate with KPMG - State and Local Tax Department), has recently passed all of the exams required for her Certified Public Accountant ("CPA") license, and thus will become a Louisiana CPA in a few short months. This has inspired me to review Louisiana law regarding CPA professional liability in Louisiana.

I found that accountants are not sued as often as health care providers and attorneys. At least cases regarding accountant liability are not published by the appellate courts as often. In a very cursory search of the case law, I only found one reported case regarding CPA liability. That case (Bardwell v. Faust, 2006-1472 (La. App. 1 Cir. 5/4/07) 2007 WL 1299705 --- So.2d ----) was an appeal from a dismissal due to peremption.

Peremption is the loss of the right of action against the defendant due to the passage of a certain amount of time. Like the LMMA, the peremptive period to bring a claim against a CPA is 1 year from the date of the alleged act or omission, or 1 year from date of discovery, but in no case can the claim be brought after three years from the date of the alleged act or omission.

A CPA has the same procedural advantages granted to qualified health care providers under the Louisiana Medical Malpractice Act ("LMMA"). Any claim against a CPA must be heard by a review panel before a lawsuit is filed. This panel consists of three Louisiana CPAs each of whom must have at least 10 years of experience as a CPA. An attorney chairman resides over the panel similarly to the LMMA.

Unfortunately for the CPA (much like an attorney), there is no statutory cap on the amount of damages that may be assessed against a CPA or an accounting firm.

For more detail, the statutes setting forth this procedure are found in the Louisiana Revised Statute Title 37.

Trial Court to receive more evidence regarding constitutionality of Med Mal Statutory Cap

The last post stated that the Louisiana Supreme Court recently remanded Arrington v. Galen-Med, Inc. and Taylor v. Clement back to the Third Circuit on a procedural issue. Now, the Third Circuit has remanded the case to the Calcasieu Parish trial court. Although there were two dissents from judges ready to rule the cap unconstitutional again, the majority held that the trial court should receive more evidence on the alleged unconstitutionality of the $500,000 cap, and the plaintiff should file pleadings to allege all unconstitutional aspects of the statute specifically.

What I suspect this means is that the same trial court judge will hear all of the evidence he can, and beef up the record for appellate review. Whereupon he will rule the statute unconstitutional again. Thus, the ride to Supreme Court review will begin again.

For now, we must wait and see what happens in Calcasieu Parish.

Out on procedural issue

As an update to the previous post, the Louisiana Supreme Court vacated the judgment of Arrington v. Galen-Med., Inc., 2007 WL 29339 (La. 2/2/07). However, they did not reach the merits of the case, and said nothing as to the constitutionality of the statute.

The Court dismissed the case because the issue of constitutionality was not raised at the trial court level. For those non-legal readers, let me explain. In order to bring almost any claim up on appeal, you must first give the trial court the chance to take evidence regarding the matter, and render a decision. Courts of Appeal do not receive evidence, and thus can not hear any new matters without remanding the case back to the trial court for a complete record (all of the facts) upon which to make a decision.

This is exactly what happened in Arrington. The Third Circuit made a decision as to the constitutionality of a statute while having an incomplete record, and without giving the trial court the chance to make a decision upon which to appeal. In essence, the Louisiana Supreme Court, said "go back and do it through proper procedures."

Thus, we still do not know whether the statute is constitutional. As of now, it remains constitutional. Hopefully, the Courts will stay out of the matter and let the legislature decide those things that are under its constitutional authority, and the courts will allow them to do it without become legislators themselves.

Unconstitutional Statutory Cap in Med Mal Act?

It is all the buzz today in Louisiana Medical Malpractice circles. As many of you have already heard, the Louisiana Third Circuit Court of Appeal has held in two different decisions, both released September 28, 2006, that the $500,000 statutory cap violates the Louisiana Constitution. Specifically, Louisiana Constitution art. 1 § 22, which provides that “[a]ll courts shall be open, and every person shall have an adequate remedy by due process of law and justice, administered without denial, partiality, or unreasonable delay, for injury in him to his person, property, reputation or other rights.”

The two cases are Arrington, et al. v. ER Physicians Group, APMC, et al., 04-1235 (La. App. 3 Cir. 9/28/06) --- So. 2d ----, 2006 WL 2773657; Taylor, et al. v. Clement, et al., 04-1069 (La. App. 3 Cir. 9/28/06) --- So. 2d ----, 2006 WL 2773649. The Third Circuit sent this certified question to the Louisiana Supreme Court in 2004 when the Court first heard these cases. The Supreme Court denied the request to answer the certified question. The Third Circuit, in a five judge panel, thereupon took it upon itself, with Judge Pickett writing the opinion, to rule the statutory cap unconstitutional. Judge Cook authored a wonderfully well-reasoned dissent.

The reasoning behind the Court holding the $500,000 cap found in La. R.S. 40:1299.42(B)(1) unconstitutional … the statute is old. That’s right! The statute limiting plaintiff’s recovery to $500,000 was made effective in 1975. More simply put $500,000 in 1975 is not $500,000 today. According to the testimony put forth in the trial court $500,000 in 1975, today would amount to either $160,000 or $146,435 depending on which expert you ask. Therefore, in effect, the statute limits today’s plaintiffs to $160,000 instead of the $500,000 the legislature must have intended.

Although I may agree that the cap is located on the low side of the spectrum, I must argue that this issue is not for the court to decide. In my humble opinion, the boundaries of separation of power have been breached by the Third Circuit in this decision. The statutory cap is often a hotly debated topic and is quite frequently discussed by the Legislators. The legislature is well aware of the issue, and has decided not to raise the $500,000 cap, or to reflect inflation. If I’m not mistaken, the court has been instructed to presume that if the legislature had desired to amend a statute, they would have done so. So why does the Third Circuit now believe that the Louisiana Legislature has forgotten to update the $500,000 statutory cap? Wouldn’t a reasonable person think that if the legislature had desired the $500,000 to rise with inflation, they would have enacted the legislation that way, or amended it to do so?

To take the Court’s holding to the next logical conclusion, let us think of a hypothetical situation. The legislature takes its cue from the Third Circuit, realizes the error of its ways and raises the statutory cap to $1,000,000. Another plaintiff raises the issue of constitutionality stating that $1,000,000 is not enough to adequately remedy his/her situation. The Third Circuit decides that the plaintiff is correct and states that $1,000,000 is now unconstitutionally low. The Third Circuit is now acting in the place of the Louisiana Legislature. Where will the problem end? When will the court decide that enough is enough? When it can set the amount of the statutory cap? When the entire purpose and policy behind the statutory cap is abolished?

The statutory cap is an amount set by the legislature to help with the rising costs of medical care in Louisiana. The statutory cap has been reviewed by the legislature again and again. The Louisiana Supreme Court has upheld the constitutionality of the statutory cap on numerous occasions. The Third Circuit has decided to disregard all precedent and attempt to force the legislature to amend the statutory cap by holding the statute unconstitutional. It is not the place of the Third Circuit to inform the legislature how and when to do their jobs.

Again, I agree with the Third Circuit that the statutory cap is low, and I agree that the statutory cap should be amended. However, I vehemently disagree with the Third Circuit’s method of legislating from the bench, and attempting to force the legislature to change the law when and how the Court says it should. The legislature has the constitutional right to decide when, how, and to what amount the statutory cap should be amended. The Third Circuit has impeded upon the legislature’s right to do so.

The Third Circuit has, in effect, disregarded one Constitutional provision (Separation of Powers) in an attempt to enforce another (Adequate Remedy). Hopefully, the Louisiana Supreme Court will accept a writ of certiorari and reverse the Third Circuit to allow the Louisiana Legislature the ability to do its Constitutional duty without interference.

William H. Burris
Law Clerk
Seale, Smith, Zuber and Barnette
Two United Plaza, Suite 200
8550 United Plaza Boulevard
Baton Rouge, Louisiana 70809
http://www.sszblaw.com

Bailey v. Khoury, 2004-0647 (La. 1/20/05) 891 So. 2d 1268: Prescription misinterpreted?

Ginger Bailey was prescribed Depakote in May 1997 because she suffered from bipolar disorder. Depakote is a prescription drug that may cause birth defects in the unborn children of pregnant women who consume the drug. In July or August of 1997, Ms. Bailey became pregnant and ceased all use of her prescription medicine, but her obstetrician informed her on September 25, 1997 that there would be a chance that her baby would be born with birth defects as a result of her use of Depakote. An ultrasound was performed on October 28, 1997, and Ms. Bailey’s fears were realized when the test revealed birth defects. On November 28, 1997, Ms. Bailey’s doctor informed her that the child definitely had birth defects, and those birth defects were more than likely caused by her consumption of Depakote in the early stages of her pregnancy. On the same date, the same doctor informed Ms. Bailey that the physician who prescribed the drug should have warned her against becoming pregnant while taking Depakote.

On March 20, 1998, Jada Nacaya Bailey was born with an array of debilitating birth defects, alleged to have been the result of her ingestion of Depakote. On March 17, 1999, Ms. Bailey filed a personal action against numerous defendants, as well as an action in her representative capacity for her daughter Jada. As one would expect, the defendants filed exceptions of prescription due to Ms. Bailey’s knowledge of Jada’s birth defects as early as October of 1997, and definitely by November of 1997. Either of these dates, in my opinion, would suffice to show that the one-year prescriptive tort period had run.

Now that the scene is set, let me be forthcoming with my audience. I do not agree with this decision in its entirety. I agree more readily with the concurring-in-part, dissenting-in-part opinion of Justice Victory. The Louisiana Supreme Court, in my humble opinion, (over-)stretched the clear statutory language regarding Ms. Bailey’s prescriptive period. For brevity’s sake, I will forego the discussion of Jada’s prescriptive period. In short, I agree with the majority. However, I think there is a more logical process to reach the same result. That might be the topic of another blog post on another day.

First, allow me to briefly state the law of prescription as it relates to Ms. Bailey’s claim. To find that prescription commenced in a Medical Malpractice Claim, the plaintiff must (1) have had actual or constructive knowledge of the injury, and (2) damages must have been present. Both of these factors must be present. This rule primarily comes from La. R.S. 9:5628. There are numerous cases interpreting this law, and its application of the doctrine of contra non valentem (prescirption does not begin to run until the plaintiff learns of the injury).

Now, here is the Court’s application of this law. The Court states that the doctor visits in both October and November of 1997, did not sufficiently show Ms. Bailey that she was the victim of a personal tortious act, although Ms. Bailey admitted in deposition that she knew that the baby had birth defects probably caused by Depakote. Any reasonable person would know that a cause of action arises when a doctor prescribes medicine that causes your baby to have birth defects. The Court’s reasoning is illogical. As proof, the Court states in its own recitation of facts that the doctor informed Ms. Bailey that her baby would be born with birth defects and those defects were caused by Depakote.

If this weren’t illogical enough, the Court then goes on to discuss the second prong, damages. The Court states that the “damages must be at least actual and appreciable in quality.” Ms. Bailey candidly admitted in her deposition that when told of the defects and probable cause of the defects she was really “messed up.” Oddly, the Court holds that learning that your child has severe birth severe debilitating and permanent defects does not cause damage to a mother. The damage is not appreciable until that child is born with those defects. I would wager that if a doctor tells a child-bearing mother that her baby will be born with severe permanent birth defects, any reasonable court would find a cause of action for damages. To say that this did not cause “appreciable damages” is completely unreasonable.

Finally, let me briefly state how I would have decided this case. Jada’s cause of action arose upon her birth. Although she had a cause of action as an unborn child, that cause of action was not recognized or available until her live birth. Ms. Bailey’s cause of action probably arose on October 28, 1997, but at the absolute latest on November 28, 1997, when the doctor informed Ms. Bailey that her baby had severe birth defects and these birth defects were probably caused by her ingestion of Depakote, and from that diagnosis Ms. Bailey suffered severe emotional distress, and probably other damages. Therefore, Jada’s action is not prescribed, but Ms. Bailey’s action is prescribed.

Although I would have enjoyed a more thorough analysis by Justice Victory in his partial dissent regarding Ms. Bailey’s prescription, he is ultimately more correct than the majority. The Louisiana Supreme Court clearly disregarded statutory and jurisprudential language to extend to Ms. Bailey a timely cause of action.

I agree with Chief Justice Calogero when he quotes, “[r]apid advances in many scientific disciplines have led to the application of new methods and technologies in every aspect of medicine. Often these new capabilities require fundamental changes in legal analysis or raise legal questions that never before have required consideration.”[1] However, these fundamental changes in legal analysis that we so desperately need should not summarily change an entire body of law regarding the clear application of prescriptive periods and the doctrine of contra non valentem.

---

[1] Hutton Brown, Miriam Dent, L. Mark Dyer, Cherie Fuzzell, Lanita Gifford, Sam Griffin, A.G. Kasselberg, M.D., Jayne Workman, and Melinda L. Cooper, "Special Project: Legal Rights and Issues Surrounding Conception, Pregnancy, and Birth," 39 Vand. L. Rev. 597, 605 (1986).

William H. Burris
Law Clerk
Seale, Smith, Zuber and Barnette
Two United Plaza, Suite 200
8550 United Plaza Boulevard
Baton Rouge, Louisiana 70809
http://www.sszblaw.com

Common Mistake by Plaintiffs in Medical Malpractice

A common issue in Medical Malpractice Defense occurs when a plaintiff fails to provide an expert witness who is qualified to give an opinion as to the standard of care for a medical provider’s specialty. One would think that a plaintiff’s attorney might view the fact that they cannot find a doctor to testify to the alleged breach of care as the first sign that their case is not worth pursuing. But alas, such is not the case. Plaintiffs continuously fight tooth and nail against that Motion for Summary Judgment that they know must be coming.

What do these Motions for Summary Judgment look like? They often begin by citing La. R.S. 9:2794, which states that if a physician practices in a particular specialty, then the expert witness who is criticizing the alleged negligent acts or omissions by the physician, must also be qualified in that specialty. For example, it would not be fair to allow an anesthesiologist to testify regarding the standard of care, or the subsequent alleged breach of care, imposed on a neurosurgeon.

Medical Malpractice Defense attorneys will generally cite a few cases regarding the standard of care in a Summary Judgment of this nature, such as Wright v. HCA Health Services of Louisiana, 38-427 (La. App. 2 Cir. 6/23/04), 877 So. 2d 211, 214; and Kennedy v. Holder, M.D., 33-346 (La. App. 2 Cir. 5/10/00), 760 So. 2d 587, 590 (Sorry. I could not find links to a free website for the cases like I could for the statute, supra.). These cases, in a nutshell, say that the plaintiff has the burden of proof in establishing: 1) the standard of care, 2) whether there was a breach of that standard of care, and 3) whether the plaintiff sustained injuries as a result of the alleged breach. Then, as with all Summary Judgments, if the plaintiff cannot meet his burden by providing an expert witness, the claim must fail.

Defense attorneys end their relatively short brief’s law section with a couple cases for illustration such as Venable v. “Dr. X” and “Dr. Y”, 671 So. 2d 1249 (La. App. 3 Cir. 1996); Richoux v. Tulane Medical Center, 617 So. 2d 13 (La .App. 4 Cir. 1993); and maybe Guillory v. Andrus, 96-85 (La.App.3 Cir. 1996); 679 So.2d 1004. These cases stand for the simple principle that if the plaintiff cannot produce a qualified expert in a particular specialty after the physician has received a favorable unanimous review panel opinion, then the suit must be dismissed.

I should note that there are exceptions to this general rule. One such exception is where specialties overlap the court may allow an expert witness to testify as to a different specialty. For example, otolaryngologists (ENTs) and oral surgeons are often allowed to testify regarding the standard of care for the other because many of their procedures utilize the same standard of care. However, the court should allow these experts very warily. Different specialties often use different methods to perform the same procedure, and both are found to be within the applicable standard of care of the other specialty. The expert who is not trained in that specialty may not be aware of this fact.

Another of these exceptions is found where a jury may infer negligence. This is only the case where the negligence is obvious. An example would be where a sponge was left in the body, or if the wrong limb was amputated. Unfortunately, plaintiffs often attempt to strain this exception by asking that the jury infer negligence simply because the patient received injuries while undergoing care by a physician in more complex situations. This cannot be allowed.

Time and time again, plaintiffs sue every doctor who signed or initialed a patient’s medical charts, and then attempt to use one or two expert witnesses to offer opinions pertaining to all of the physicians even after they have received a favorable opinion, unanimously rendered by the Medical Review Panel. I suppose that is why we have Summary Judgments.

William H. Burris
Law Clerk
Seale, Smith, Zuber and Barnette
Two United Plaza, Suite 200
8550 United Plaza Boulevard
Baton Rouge, Louisiana 70809
http://www.sszblaw.com

What does it take to sue a lawyer for malpractice under 42 U.S.C. § 1983?

Not much. The Fifth Circuit Federal Court of Appeals, in Ballard v. Wall, et al., 413 F.3d 510 (5th Cir. 2005), states that a plaintiff merely has to allege that the judge might have given “significant aid” to a lawyer to deprive a plaintiff of his rights. The plaintiff in Ballard alleged that he was held in a “debtor’s prison.” The plaintiff failed to appear for a judgment debtor examination valued at roughly $13,000. The judge set a bond of $10,000, and issued a writ of attachment. After the debtor was incarcerated, the plaintiff’s wife chose to pay $10,000 in settlement of the debt instead of the $10,000 bond because she alleged a secretary told her she had to.

The trial court, on 12(b)(6) motions, dismissed the judge and the lawyers. On appeal, the Fifth Circuit affirmed the dismissal of the judge due to her judicial immunity. However, the panel reversed the trial court’s decision as to the private lawyers and their firm.

Why did the Fifth Circuit reverse the trial court’s decision even though the private lawyers are not state actors, and the judge’s actions were found to be within her judicial discretion? The plaintiff sufficiently alleged that private actors-lawyers might have been “significantly aided” by the state actor-judge. Thus, the Court can force private actors to litigate a civil rights claim through all of discovery and at least until a Motion for Summary Judgment can be filed because the plaintiff alleged “aid” by the judge.

The Fifth Circuit utilized the two-prong test for determining whether an act could be fairly attributable to the state from Lugar v. Edmonson Oil Co., 457 U.S. 922, 73 L.Ed 2d 482, 102 S.Ct. 2744 (1982). The two prongs are: (1) "the deprivation must be caused by the exercise of some right or privilege created by the State or by a rule of conduct imposed by the State or by a person for whom the State is responsible"; and (2) "the party charged with the deprivation must be a person who may fairly be said to be a state actor," and "this may be because he is a state official, because he has acted together with or has obtained significant aid from state officials, or because his conduct is otherwise chargeable to the State." Id. at 941.

Significantly, the Fifth Circuit stated that if true, the allegations sufficiently alleged a conspiracy or, at a minimum, the judge “provided ‘significant aid’ to the attorneys in their effort to collect the money Ballard owed to their client.” Ballard, at 519. This means that a plaintiff does not have to allege conspiracy to have a private lawyer’s conduct attributable to the state.

I would suggest that, if the Lugar test is used in this context, anytime a lawyer receives a favorable opinion from a judge, especially in the context of debt collection, he is obtaining aid from the judge. Thus, the question should not be whether a lawyer was given significant aid, rather whether a lawyer conspired to receive that aid from the state actor. Otherwise, a floodgate of litigation may arise, and lawyers may be sued anytime a judge sets a bond, issues a writ of attachment, or merely renders a favorable opinion.

So what does this mean to the field of legal malpractice? First off, in the specific fact situation found in Ballard, in order to prevent litigation, be sure to tell the plaintiff before they pay the debt that they may post the bond in lieu of paying the debt. Secondly, if sued, private lawyers will be forced to litigate through summary judgment phase of the trial, as long as the plaintiff alleges that the judge “aided” the lawyers in collecting the money owed whether there is a conspiracy or not. As a result thereof, malpractice insurers will have to pay for the entire discovery phase of the trial, which is much more than they would otherwise have to pay if the claim were dismissed when it should be…on a 12(b)(6) motion.

William H. Burris
Law Clerk
Seale, Smith, Zuber and Barnette
Two United Plaza, Suite 200
8550 United Plaza Boulevard
Baton Rouge, Louisiana 70809
http://www.sszblaw.com

COMING SOON!!!

Posts from the expert attorneys and law clerks at Seale, Smith, Zuber and Barnette will be coming soon!!!

Please bookmark this page, and reference it often.

To learn more about the law firm of Seale, Smith, Zuber and Barnette, please visit http://www.sszblaw.com.

Thank you.