On August 20, 2007, the Milwaukee County Circuit Court issued its most recent decision in the Hegarty v. Beauchaine case. The Circuit Court ruled that defendants (Doctor Angela Beauchaine and OHIC Insurance Company) were not entitled to a new trial.

In addition, the Circuit Court ruled that the settlement agreement was a Pierringer release , therefore the 25 percent reduction of the almost $17.4 million awarded to the plaintiffs (Estate of Sarah Hegarty, the parents of Sarah Hegarty) by the Circuit Court in December 2004 was appropriate. Even with reduction, this ruling brings the parents of Sarah Hegarty, a teenage girl who died in 1998, one step closer to collecting one of the largest malpractice awards in Wisconsin history.

The August 2007 decision by the Circuit Court is the most recent ruling in this wrongful death and medical malpractice case, a case which has gone on for 11-plus years, and has involved a complex set of appeals and cross appeals. Whether this ruling will be the last in this case remains to be seen.

Facts

In 1995, Sarah Hegarty developed abdominal pain and consulted her pediatrician, Doctor Zimmer. Doctor Zimmer referred Sarah to a pediatrician gastroentologist at Children’s Hospital of Wisconsin (Children’s). The pediatric gastroentologist diagnosed Sarah with irritable bowel syndrome.

On March 20, 1996, Sarah developed severe abdominal pain, nausea and vomiting and was rushed to Children’s emergency room (ER) at 4:30 p.m. Sarah was initially treated by Doctor Stremski, an ER physician. After consulting with a pediatric gastroentologist (Doctor Baliant), and Sarah’s pediatrician (Doctor Zimmer), Doctor Stremski prescribed treatment and suggested sending Sarah home. At her father’s insistence, Sarah was admitted to Children’s at approximately 8:30 p.m.

Upon admission, Doctor Angela Beauchaine, a first-year resident, not yet licensed to practice medicine, treated Sarah. Doctor Beauchaine was enrolled in a graduate medical training program through the Medical College of Wisconsin (MCW) and was assigned to Children’s through the MCW and the Medical College of Wisconsin Affiliated Hospitals, Inc. (MCWAH). Doctor Beauchaine diagnosed Sarah with constipation, called her a “whiner” and did not conduct a surgical consultation. From the time of Sarah’s admission until Doctor Zimmer arrived at 7:30 a.m. the following morning, no licensed physician saw Sarah to evaluate her condition.

Medical records state that by 6 a.m. on March 21, 1996, Sarah’s abdomen was distended, rigid and tender. Sarah’s condition became critical at 11:45 a.m.; she was resuscitated and taken to surgery at approximately 1:45 p.m. At that time, Sarah was diagnosed with small bowel volvulus with complete bowel infarction, meaning her small bowel had twisted, cutting off the blood supply.

Over the next two years, Sarah underwent 89 surgical procedures, including two organ transplants. She died on March 16, 1998, at the age of 17. The cost of her care during these two years exceeded 3 million dollars.

Case History

In December 1998, Sarah’s parents (the Hegartys) filed suit against Doctor Beauchaine, Doctor Stermski, Children’s, MCW, MCWAH and their respective liability insurers (OHIC Insurance Company and PIC Wisconsin) and the Wisconsin’s Patient’s Compensation Fund (“Fund”, now known as Wisconsin Injured Patients and Families Compensation Fund), setting forth survival claims on behalf of Sarah’s estate and wrongful death claims on their behalf as Sarah’s parents. The complaint also named Milwaukee County, Sarah’s father’s employer and Sarah’s insurer, as an involuntary plaintiff.

In December 1999, the Hegartys filed an amended complaint seeking to add Doctor Zimmer and her insurer, asserting that Doctor Zimmer’s role in Sarah’s care was not known until the depositions of Doctors Stremski and Beauchaine were taken. The trial court dismissed the claims against Doctor Zimmer with prejudice, determining that the action was barred by the medical malpractice statute of limitations. The Hegartys appealed this dismissal and in October 2001, the Court of Appeals of Wisconsin (Court of Appeals) upheld the trial court’s ruling.

On April 21, 2000, the Hegartys filed a motion for declaratory judgment that Children’s, MCWAH and Doctor Zimmer were vicariously liable for Doctor Beauchaine under the doctrine of respondeat superior.¹ The trial court dismissed the claims and the Hegartys appealed. Before the Court of Appeals heard the appeal, the Hegartys dismissed their vicarious liability claims against Children’s.

In their October 2001 ruling, the Court of Appeals concluded that a genuine issue of fact existed as to a number of material facts and that conflicting inferences could be drawn from the undisputed facts, allowing the suit filed by the Hegartys to proceed to trial.

On February 19, 2002, the Wisconsin Supreme Court denied the petition for review of the 2001 Court of Appeals ruling.

On March 26, 2004, Doctor Beauchaine moved for declaratory judgment that the Hegartys’ claims against her were subject to the noneconomic damages set for in Wis. Stat. § 893.55. On May 4, 2004, the trial court held that Wis. Stat. § 895.55(4) did not apply to Doctor Beauchaine because she was a first-year medical resident and thus not a health care provider under chapter 655 of the Wisconsin Statutes.

On April 14, 2004, the Fund sought a declaratory judgment that two policies of liability insurance issued by OHIC for Children’s covered Doctor Beauchaine, and OHIC’s combined liability limit of $20,400,000 must be exhausted before the Fund has exposure for any liability of Doctor Beauchaine. On June 16, 2004, the trial court issued an order granting the motion based on OHIC’s admission that Children’s $20 million umbrella policy through OHIC provided coverage to Doctor Beauchaine. This decision was appealed and upheld by the Court of Appeals in 2006. (See Key Issues in 2006 Court of Appeals Decision section)

On the eve of the trial, the Hegartys entered into a settlement agreement with MCW, the Fund and several physicians employed by Children’s Hospital (including Doctors Stremski and Baliant).

The trial began on October 4, 2004 and lasted for three weeks. At the close of evidence, Children’s and MCWAH were dismissed from the lawsuit by directed verdict,² leaving only Doctor Beauchaine and OHIC.

On October 12, 2004, OHIC made an oral motion to compel the disclosure of all settlement agreements and/or releases that the plaintiff had entered into in this case. Counsel for the Hegartys stated that the settlement agreement was not a Pierringer release³ and the parties had agreed to keep the terms confidential, unless the court ordered its production. The trial court denied OHIC’s motion, finding that OHIC had not shown bias or prejudice that would necessitate the admission of the agreement.

OHIC continued to compel the disclosure of the settlement agreements without success. OHIC ultimately appealed this issue and the Court of Appeals ruled that OHIC was entitled to copies of the settlement agreement and remanded the issue to the lower court. (See Key Issues in 2006 Court of Appeals Decision section)

On October 21, 2004, the jury returned a verdict in favor of Sarah’s estate and the Hegartys. The jury found Doctors Beauchaine and Stremski negligent with respect to Sarah’s care and treatment and that their negligence was the cause of Sarah’s injuries and death, attributing 75 percent of the negligence to Doctor Beauchaine and 25 percent of the negligence to the Doctor Stremski. Overall the jury awarded almost $17.4 million plus interest to Sarah’s estate and the Hegartys.

After the verdict all the parties filed post-verdict motions. In one of these motions, OHIC requested that the verdict against it and Doctor Beauchaine be reduced by 25 percent, to reflect the percentage of casual negligence the jury had assigned to Doctor Stremski. The trial court granted this motion and reduced the Hegartys’ total verdict by 25 percent. On December 14, 2004, the trial court entered an order for judgment in an amount a $19,002,754.29. This amount included interest, but also represented a 25 percent reduction for the negligence attributed to Doctor Stremski. The judgments were later perfected and entered in favor or Sarah’s estate on December 29, 2004.

Doctor Beauchaine and OHIC appealed the judgment, jury verdict, all findings, rulings and orders made during pretrial proceedings, during trial and regarding post-verdict motions. The Hegartys cross-appealed the judgment.

On October 10, 2006, the Court of Appeals affirmed in part, reversed in part and remanded the Hegarty v. Beauchaine case. While the Court of Appeals largely affirmed the lower court’s rulings, the Court’s analysis and discussion of the issues will have an influence on future medical malpractice cases. (See Key Issues in 2006 Court of Appeals Decision section.)

The Wisconsin Supreme Court denied petition for review of the 2006 Court of Appeals decision on March 14, 2007.

The Circuit Court recently ruled on the issues remanded to the trial court. The Circuit Court denied OHIC and Doctor Beauchaine’s motion to set aside the verdict and grant a new trial. The Circuit Court also denied the Hegartys’ motion for an Order modifying the judgment on the basis that the Settlement Credit Agreement is a dollar credit agreement rather than a Pierringer release³ and granted OHIC’s motion to declare the Settlement Credit Agreement a Pierringer release. This ruling means that the 25 percent reduction by the trial court in 2004 will stand.

It remains to be seen whether either of the parties will appeal this decision. If neither party appeals the funds, currently being held as ordered by the Circuit Court, will be released. If any party desires an appellate review, the funds will be held as previously ordered by the Circuit Court.

Key Issues in 2006 Court of Appeals Decision

The October 10, 2006 ruling of the Court of Appeals addressed a large number of issues, many of which will impact future medical malpractice cases. You will find a summary of the Court’s key holdings below.

Fund Liability

OHIC sought to hold the Fund liable for Doctor Beauchaine’s liability over the $400,000 primary limit rather than the $20 million excess policy limit. The trial court granted declaratory judgment that the Fund liability was not triggered, noting that Wis. Stat. § 893.55(4) did not apply to the doctor because she was a first-year medical resident and, thus, not a health care provider under chapter 655 of the Wisconsin statutes. It followed that pursuant to the primary policy, the doctor was independently insured under the umbrella policy, and she was not insured under it only subject to vicarious liability by the hospital. Therefore the Fund’s liability was not triggered.

Verdict Form

Despite OHIC’s objection, the trial court instructed the jury to answer the damage questions only if it answered one or more of the cause questions “yes.” OHIC agued that this instruction informed the jury of the effect of its verdict, specifically that the plaintiffs would not recover without a finding of casual negligence. The Court of Appeals concluded that this instruction was appropriate in a medical malpractice case where the jury is also instructed to award damages only for injuries sustained as a result of treatment. The Court felt that any other instruction would result in an inconsistent verdict were damages to be awarded without a finding of casual negligence from which the damages would have to flow.

Jury Instructions

The Court of Appeals approved the trial court’s decision to read the damages instructions to the jury just before the testimony of Sarah’s father. The Court held that such a ruling was at the discretion of the trial court, did not unduly emphasize the damage issue and allowed the jury to understand how the father’s testimony fit into the trial.

Loaned or Borrowed Employee

OHIC asked that the jury be asked to determine if Doctor Beauchaine was a borrowed employee conducting the business of Children’s or MCOW. A finding like this would have brought Doctor Beauchaine under the protection of chapter 655 of the Wisconsin Statutes. The Court of Appeals concluded that no evidence had been admitted that would support the contention that the doctor was a borrowed employee, therefore, there was no reason to present the issue to the jury.

Settlement Agreement

While the Court of Appeals believed that the trial court properly refused to order the production of the settlement agreement, it did believe the trial court should have conducted an in camera review of the documents prior to ruling on the motion, as it was unclear whether the agreement was a Pierringer release1, which would potentially reduce the final award. The Court of Appeals conducted an in camera review and determined that it is unclear whether the document was a Pierringer release, as the document appeared to contain aspects of a Pierringer release. The Court was satisfied that in order to determine the true character of the agreement, it would be necessary for OHIC to have access to the agreement and therefore ordered its disclosure to OHIC. The Court remanded this to the trial court for further proceedings.

Pre-Death and Post-Death Award for Loss of Society and Companionship

The Court of Appeals held that the trial court did not err in permitting an uncapped pre-death award for loss and companionship to Sarah’s parents because (1) the Hegartys were entitled to separate pre-and post-death loss of society and companionship awards (2) the Hegartys’ pre-death loss of society and companionship claim is not capped by the wrongful death statute or §893.55(4)(b) and (3) the Hegartys’ pre-death claim is recoverable because it was not based upon their own pain and suffering.

Reduction of Damage Awards Against Doctor Beauchaine and OHIC by 25 Percent

The Court ruled that, based on the non-disclosure of the settlement agreement, that the Hegartys were estopped, at that time, from arguing that the terms of their settlement agreement preserved their right to collect the entirety of their judgment against Doctor Beauchaine and OHIC. Since the Court ordered the production of the settlement agreement, they remanded this issue to the trial court for further consideration.

Medical Expenses

The Court noted that the recent decision by the Wisconsin Supreme Court in Lagerstrom v. Myrtle Werth, that Wis. Stat. § 893.55(7) permits a fact-finder to “use collateral source evidence to determine the reasonable value of medical expenses.” While collateral source payments do not automatically reduce the amount of medical expenses, the trial court’s limiting of the Hegartys recovery of past medical expenses to the amount paid by Milwaukee County (Sarah’s insurer) was appropriate in this circumstance. Justice Fine, one of the three justices, dissented from the majority’s opinion on the application of Wis. Stat. § 893.55 (7), arguing that the measure of recovery of medical expenses should have been the amount billed and that Wis. Stat. § 893.55(7) should not be applied because one of the physicians was not a chapter 655 health care provider.

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1. Latin for "let the master answer," a key doctrine in the law of agency, which provides that a principal (employer) is responsible for the actions of his/her/its agent (employee) in the "course of employment."
2. A directed verdict is a judge's order to a jury to return a specified verdict, usually because one of the parties failed to prove its case.
3. Pierringer release, in effect, limits a second joint tort-feasor’s liability to the amount reflecting its proportion of wrongdoing. It operates to impute to the settling plaintiff whatever the liability in contribution the settling defendant may have to non-settling defendants and to bar subsequent contribution actions the non-settling defendants might assert against the settling defendants.

Summary prepared by:
Michelle Leiker, JD
Associate General Counsel
Wisconsin Medical Society