Jim Rice

APPEAL FROM: District Court of the Fourth Judicial District,

In and For the County of Missoula, Cause No. DV 05-410

Honorable Karen Townsend, Presiding Judge
COUNSEL OF RECORD:

For Appellant:

James P. O'Brien; O'Brien Law Office, P.C.; Missoula, Montana

For Appellee:

Gary Kalkstein, Travis B. Dye; Kalkstein, Johnson & Dye, P.C.; Missoula, Montana

______________________

Clerk

Justice Jim Rice delivered the Opinion of the Court. ¶1 Ann M. Brookins (Ann) appeals from three orders of the Fourth Judicial District Court. The first reopened discovery, while the other two granted summary judgment to the Mineral Community Hospital (the Hospital) on all of Ann's claims. We address the following issues and affirm: ¶2 1. Did the District Court err in reopening discovery? ¶3 2. Did the District Court err in granting summary judgment to the Hospital on the agency claims? ¶4 3. Did the District Court err in granting summary judgment to the Hospital on the joint venture claim? ¶5 4. Did the District Court err in granting summary judgment to the Hospital on the Consumer Protection Act Claim? ¶6 5. Did the District Court err in granting summary judgment to the Hospital on the negligent credentialing claim?

FACTUAL AND PROCEDURAL BACKGROUND

¶7 In early 1993, Ann gave birth to Allen Gotcher (Allen) at the Hospital in Superior. Dr. Frederick Mote (Dr. Mote) was Ann's obstetrician and delivered Allen. Medical complications arose prior to and after Allen's delivery, leading to problems with Allen's brain development. In 2005, Ann, individually and on behalf of Allen, sued Dr. Mote and the Hospital. She subsequently settled her claims with Dr. Mote. This appeal arises out of pre-trial rulings made by the District Court in Ann's litigation with the Hospital. ¶8 At the time of Allen's birth, Dr. Mote was living in Superior for a second time. He originally moved to Superior from Oregon in early 1992 to take employment at the Hospital, but his stay was short-lived. In April 1992, Dr. Mote was charged in the State of Oregon with sexual abuse of a minor and endangering the welfare of a minor. He resigned his employment with the Hospital and returned to Oregon to face the charges. ¶9 Dr. Mote's legal difficulties were reported in local newspapers, the Mineral Independent and Missoulian, throughout the spring and summer of 1992. The Hospital wrote an "Open Letter to the Mineral County Community" in the Mineral Independent, explaining that the Hospital was taking steps to ensure patient safety. The Mineral Independent reported Dr. Mote's departure from Superior, and later reported that he had pleaded guilty to misdemeanor sexual abuse of a child. As part of his sentence, Dr. Mote attended a rehabilitation facility in Minnesota that specialized in sexual addiction. ¶10 In September 1992, the Montana Board of Medical Examiners (the Medical Board) and Dr. Mote entered an agreement providing that Dr. Mote would keep his medical license, subject to a 15-year probationary period and a prohibition on treatment of minor patients unless a third party was present. Dr. Mote returned to Superior but the Hospital determined not to rehire him as an employee. Dr. Mote opened a private practice in his home. After review, the Hospital extended credentials for Dr. Mote to use the Hospital's facilities as an independent physician. A letter from Madelyn Faller (Faller), the Hospital's chief administrative officer during the early 1990's, advising the public of these circumstances was published in the Mineral Independent. ¶11 Ann hired Dr. Mote as her obstetrician immediately following his return to Superior. Ann was living in St. Regis and was approximately four months pregnant. Ann's mother, Fran Brookins (Fran), was a registered nurse at the Hospital. According to Fran, she and Ann discussed whether Dr. Mote should be Ann's doctor given his conviction in Oregon. Ann decided to hire Dr. Mote because his home-office was close to Ann's residence and she was concerned about not being able to make it to a Missoula hospital when it came time to deliver her child. All of Ann's prenatal appointments with Dr. Mote were conducted at his home-office. The only times Ann recalled going to the Hospital prior to delivery were for ultrasound procedures and blood tests. These were performed by Hospital staff without Dr. Mote being present. ¶12 Allen was born in February of 1992, and Dr. Mote delivered him at the Hospital. Medical complications persisted during Allen's pre-delivery, delivery, and post-delivery periods, which may have caused brain development problems. Allen has since been diagnosed with brain damage, resulting in learning difficulties. ¶13 In April 2005, Ann, individually and on behalf of Allen, sued Dr. Mote and the Hospital. Ann claimed malpractice against Dr. Mote for his care of Allen, assault and battery for his performance of unnecessary pelvic exams on Ann, and "unauthorized sexual contact with Allen during Dr. Mote's delivery, examination and subsequent circumcision" in violation of the restrictions placed on his medical license. Against the Hospital, Ann alleged it was vicariously liable for Dr. Mote's negligence under agency and joint venture theories, and directly liable under the Consumer Protection Act and negligent credentialing theories for allowing Dr. Mote to use its facilities. After Ann settled her claims against Dr. Mote and the District Court dismissed him with prejudice in August 2007, the lawsuit was dormant for over a year thereafter, but moved forward after the District Court ordered Ann to file a status report. ¶14 During the ensuing discovery process, neither party adhered to the court-ordered deadlines. The District Court issued three scheduling orders extending deadlines, and the parties agreed between themselves to extend deadlines on several occasions. The parties eventually became embroiled in two disputes, resulting in a discovery standoff. The first concerned the Hospital's failure to provide complete M. R. Civ. P. 26(b)(4) disclosures for the three expert witnesses it retained to compare a 1993 MRI with a 2000 MRI of Allen's brain by the May 11, 2010 deadline. In correspondence to Ann's counsel, defense counsel explained that because the Hospital could not locate the 1993 MRI, the experts could not compare it with the 2000 MRI and thus, disclosures could not be completed by the deadline. The search culminated in the Hospital subpoenaing St. Patrick Hospital in Missoula (where the 1993 MRI had taken place) to produce a copy of the 1993 MRI. ¶15 The second dispute pertained to the deposition of two of Ann's experts. The Hospital repeatedly asked Ann for times her experts could be deposed, but Ann's counsel was resistant to allow their depositions before receiving the Hospital's expert disclosures, believing it would give the Hospital an unfair advantage. Throughout the summer of 2010, the parties continued these back and forth demands. Eventually, St. Patrick advised the parties that, pursuant to protocol, the 1993 MRI had been destroyed following a seven year storage period. With no opportunity for its experts to analyze the earlier MRI, the Hospital moved to name a different expert. ¶16 Ann moved to exclude any expert witnesses the Hospital had not fully disclosed by the May 11, 2010 deadline—namely, the expert hired to replace its MRI experts— asking the court to strictly enforce the discovery deadlines. The Hospital countered that Ann should not benefit from strict enforcement of the scheduling order because she had routinely missed deadlines. The Hospital also pointed out that its disclosure was delayed by circumstances out of its control—the search for the 1993 MRI that was destroyed by St. Patrick Hospital. The Hospital moved to extend discovery, or alternatively, to exclude Ann's experts it had not deposed. ¶17 After a hearing, the court issued an order extending discovery deadlines. The court stated that both parties' request to exclude the other side's expert witness was "extreme" and found the Hospital's failure to provide full disclosures was "excusable in light of the late discovery that the films of the 1993 MRI had been destroyed." The court further held that Ann's delay in presenting her experts for deposition was "also excusable" since the Hospital had not made its expert disclosures. Ann moved the court to reconsider its ruling, arguing the court had erred, inter alia , by extending discovery deadlines after they had closed without a finding of "excusable neglect." The court entered an order clarifying that it found both parties' failure to comply with discovery was due to "excusable neglect." ¶18 Discovery proceeded, including two depositions which are particularly relevant to this appeal. Ann deposed Faller, who testified that as the Hospital's chief administrative officer she had used a recruiting service to initially contact Dr. Mote. Following Dr. Mote's resignation and resolution of his criminal charges, Faller said the Hospital decided not to rehire him. Faller contacted the treatment center Dr. Mote attended in Minnesota and was advised that Dr. Mote "was not a pedophile and that he would not reoffend." As to re-credentialing Dr. Mote as an independent physician after his return to Superior, Faller testified that Dr. Mote was required to submit an application, about which Fallen was questioned extensively. ¶19 The Hospital deposed Ann's expert on hospital credentialing, Dr. Daniel Boatman (Dr. Boatman). Dr. Boatman had submitted his expert disclosure about three years earlier. The disclosure explained that the "standard practice" in hospitals before credentialing a doctor required, inter alia:

[A] query to the National Practitioner Data Bank, verification of medical school education, verification of licensure in any and all other states the physician indicates licensure in and status, verification of DEA licensure status, and any restrictions, request for professional references and a series of questions on the medical staff application regarding drug or alcohol use or criminal convictions.

STANDARD OF REVIEW

¶21 In recognition of the district court's "inherent discretionary power to control discovery" and its "authority to control trial administration[,]" we review discretionary pre-trial and discovery rulings for abuse of discretion. Anderson v. Werner Enterprises, Inc., 1998 MT 333, ¶ 13, 292 Mont. 284, 972 P.2d 806. Further, in interpreting discovery rules, "this Court will reverse the trial judge only when his or her judgment may materially affect the substantial rights of the complaining party and allow the possibility of a miscarriage of justice." Anderson, ¶ 13. "We will not reverse the District Court when it reaches the right result, even if for the wrong reason." Palmer v. Bahm, 2006 MT 29, ¶ 20, 331 Mont. 105, 128 P.3d 1031. ¶22 We review summary judgment rulings de novo. Estate of Willson v. Addison, 2011 MT 179, ¶ 11, 361 Mont. 269, 258 P.3d 410. We apply the same M. R. Civ. P. 56 criteria as the district court to determine "whether the moving party has established both the absence of any genuine issues of material fact and entitlement to judgment as a matter of law." Estate of Willson, ¶ 11. The district court's conclusions of law are reviewed for correctness, while findings of fact are reviewed to determine whether they are clearly erroneous. Estate of Willson, ¶ 11.

DISCUSSION

¶23 1. Did the District Court err in reopening discovery? ¶24 Ann offers two arguments in support of her position that the District Court erred by extending discovery deadlines. First, Ann argues that the Hospital waived its right to an extension by failing to request an extension until after discovery had closed. However, the record demonstrates that Ann did not make this waiver argument in district court. "In Montana, the general rule is that an issue which is presented for the first time to the Supreme Court is untimely and cannot be considered on appeal." Day v. Payne, 280 Mont. 273, 276-77, 929 P.2d 864, 866 (1997). The rule is "rooted in fundamental fairness to the parties and to the trial court[.]" Gary & Leo's v. Dept. of Lab. & Indus., 2012 MT 219, ¶ 16,_Mont. __, __ P.3d __ (citing Day, 280 Mont. at 276-77, 929 P.2d at 866). The District Court was never presented with a waiver argument, and thus the argument must be denied as untimely. ¶25 Secondly, Ann argues the District Court erred by concluding the circumstances constituted "excusable neglect" justifying an extension of discovery. The Hospital counters that the appropriate standard is not "excusable neglect," but rather, "good cause," and that under either standard the District Court acted properly within its broad discretion when it reopened discovery. ¶26 Discovery deadlines are governed by the Montana Rules of Civil Procedure. M. R. Civ. P. 16(b)(3)(A) provides that a scheduling order "must limit the time to join other parties, amend the pleadings, complete discovery, and file motions." The rule also states that a "schedule may be modified only for good cause and with the judge's consent." M. R. Civ. P. 16(b)(4) (emphasis added). M. R. Civ. P. 6(b) provides that a court may extend a deadline "after the time has expired if the party failed to act because of excusable neglect." (Emphasis added.) The parties argue over whether the "good cause" standard of M. R. Civ. P. 16(b)(4) or the "excusable neglect" standard of M. R. Civ. P. 6(b) applies to the modification of scheduling orders. There is a difference between the two standards, as "[g]ood cause is a more liberal standard than excusable neglect . . . ." N.W. Truck & Trailer Sales, Inc. v. Dvorak, 265 Mont. 327, 333, 877 P.2d 31, 34 (1994) (noting that "good cause" was used instead of "excusable neglect" in rule of appellate procedure to "provide greater flexibility to district courts in reviewing motions for extending time for filing a notice of appeal."). ¶27 Rule 16 applies to scheduling orders generally, and Rule 16(b)(4) provides the "good cause" standard for modification of scheduling orders. We have commonly applied this Rule in discovery deadline modification cases, even where discovery has closed. See e.g. Lindey's, Inc. v. Prof. Consultants, Inc., 244 Mont. 238, 243, 797 P.2d 920, 923-24 (1990) (holding that the district court "did not err in finding there was not good cause to amend the scheduling order" after the original deadlines had already passed); In re Marriage of Smith, 270 Mont. 263, 270-71, 891 P.2d 522, 526-27 (1995) (affirming district court ruling denying the extension of discovery beyond scheduling order deadline because the appellant failed to show "good cause" to modify the scheduling order); Farmers Coop. Assn. v. Amsden, LLC, 2007 MT 286, ¶ 22, 339 Mont. 445, 171 P.3d 690 (2007) (affirming district court's denial of plaintiff's motion to amend complaint after deadline set out in scheduling order for amendment had passed because plaintiff did not show "good cause" for delay). This precedent is consistent with federal court precedent. ¶28 It appears that we have not previously considered the overlapping nature of the two rules, which both address extensions of time. Rule 6 provides an excusable neglect standard and conflicts with Rule 16, which provides a good cause standard. Rule 6 is a more general rule which governs the computation and extension of time for the rules, court orders, or statutes that do not specify a method of computing time. See M. R. Civ. P. 6(a). Rule 16 specifically governs scheduling orders that include discovery deadlines. See M. R. Civ. P. 16(b). "When a general statute and a specific statute are inconsistent, the specific statute governs, so that a specific legislative directive will control over an inconsistent general provision." Mosley v. Am. Express Fin. Advisors, Inc., 2010 MT 78, ¶ 20, 356 Mont. 27, 230 P.3d 479 (citation omitted). The "good cause" standard found in M. R. Civ. P. 16(b)(4) is the appropriate standard for a district court to apply in determining whether to modify a scheduling order, even after deadlines have passed. ¶29 "Good cause is generally defined as a 'legally sufficient reason' and referred to as 'the burden placed on a litigant (usu. by court rule or order) to show why a request should be granted or an action excused.'" City of Helena v. Roan, 2010 MT 29, ¶ 13, 355 Mont. 172, 226 P.3d 601 (quoting Black's Law Dictionary 251 (Bryan A. Garner ed., 9th ed., West 2009)). We have stated that "good cause" is a flexible standard, and whether it is present "will necessarily depend upon the totality of the facts and circumstances of a particular case." City of Helena, ¶ 13. We conclude there was a "legally sufficient reason" for the District Court to modify the scheduling order. It found that both parties' conduct led to the passing of the discovery deadlines without necessary discovery being completed, and that a discovery standoff had occurred. Concluding that "[b]oth parties had a justifiable reason for their respective failures to comply," the District Court brought the dispute to a détente by reopening discovery so that Ann could receive a complete disclosure from the Hospital's expert and the Hospital could depose Ann's experts. This is the kind of "trial administration" matter that is within the proper "inherent discretionary power" of the district court. Anderson, ¶ 13. We conclude the District Court did not abuse its discretion in reopening discovery. ¶30 2. Did the District Court err in granting summary judgment to the Hospital on Ann's agency claims? ¶31 The District Court held that there was not an actual agency relationship between Dr. Mote and the Hospital because the undisputed facts established that Dr. Mote was not actually employed by the Hospital at the time he treated Ann and Allen. As to ostensible agency, the District Court held that the undisputed facts established that the Hospital took no actions that would have led a reasonable person to believe Dr. Mote was its employee. The District Court reasoned that the Hospital went out of its way to inform the public that Dr. Mote was no longer employed by the Hospital. Ann argues these rulings were error because genuine issues of fact exist as to whether the Hospital severed its employment relationship with Dr. Mote following his return to Superior, and whether the Hospital's actions of allowing Dr. Mote to use its facilities would lead a person to believe Dr. Mote was a Hospital employee.

A. Actual Agency ¶32 Montana statute provides that an "agency is actual when the agent is really employed by the principal." Section 28-10-101(1), MCA. "An individual is an employee of another when that other has the right to control the details, methods, or means of accomplishing the individual's work." Butler v. Domin, 2000 MT 312, ¶ 29, 302 Mont. 452, 15 P.3d 1189 (collecting Montana cases). We utilize four factors to determine whether a hospital has "right of control" over a doctor, so as to form an employment relationship: (1) direct evidence of right or exercise of control, (2) method of payment, (3) furnishing of equipment, and (4) right to fire. Butler, ¶ 29 (citation omitted). Our cases provide guidance on the issue of actual agency between a doctor and a hospital. ¶33 In Kober v. Stewart, 148 Mont. 117, 417 P.2d 476 (1966), we reversed summary judgment because genuine issues of material fact existed as to factors (1), (2), and (3). A patient sued a radiologist and Billings Deaconess Hospital after he broke his leg while getting X-rays. Kober, 148 Mont. at 118, 417 P.2d at 477. We noted a factual issue under factor (1) because the patient had not chosen the radiologist and the radiologist was working "on call" at the Hospital. Kober, 148 Mont. at 123, 417 P.2d at 479. As to factor (2), we noted that the X-ray department was owned and operated by the Hospital, which shared profits generated by the radiology department. Kober, 148 Mont. at 123, 417 P.2d at 479. As to factor (3), we noted that the Hospital employed all of the X-ray technicians and furnished the equipment. Kober, 148 Mont. at 123, 417 P.2d at 479. ¶34 Conversely, we upheld summary judgment in favor of the hospital in Butler. A patient sued two anesthesiologists and St. Patrick Hospital after he contracted an infectious disease in his spine while receiving steroid injections for back pain. Butler, ¶¶ 7-9. As in Kober, the patient in Butler did not choose his anesthesiologists, who were chosen by the Hospital. However, unlike the in-house, "on call" radiologist in Kober, the anesthesiologists did not have offices within the hospital, performed their own billing services, and did not share income with the Hospital. Butler, ¶ 31. We held that when "viewed in a light most favorable to [the patient]," the evidence failed to raise material issues of fact as to actual agency because under these facts it was not reasonable to infer that the "Hospital had the right to control or exercised control over the details, methods, or means of accomplishing [the anesthesiologists'] work." Butler, ¶ 32. ¶35 Here, the undisputed facts fall far short of establishing an employment relationship between Dr. Mote and the Hospital. Dr. Mote resigned his employment with the Hospital months before he started treating Ann. The Hospital did not rehire him upon his return to Superior. When he opened a home-office, Ann chose Dr. Mote to be her obstetrician, and saw him at his home-office for all prenatal visits. Ann never saw Dr. Mote at the Hospital prior to the delivery. Dr. Mote did not have office space at the Hospital, billed for his own services, and did not share any revenue with the Hospital. These undisputed facts do not raise a genuine issue as to whether the Hospital "had the right to control or exercised control over the details, methods, or means of accomplishing" Dr. Mote's work. Butler, ¶ 31. Summary judgment was appropriate.

B. Ostensible Agency ¶36 An "ostensible agency" relationship arises "when the principal intentionally or by want of ordinary care causes a third person to believe another to be the principal's agent when that person is not really employed by the principal." Section 28-10-103(1), MCA. The acts of the principal, not the putative employee, are the focus of an ostensible agency inquiry. Sunset Point Partn. v. Stuc-O-Flex Intl., Inc., 1998 MT 42, ¶ 22, 287 Mont. 388, 954 P.2d 1156. A patient's belief that her doctor is a hospital employee must be reasonable. Sunset Point Partn., ¶¶ 23-24; Butler, ¶¶ 37, 39. ¶37 We have decided two cases involving claims of ostensible agency between a doctor and a hospital. In Estates of Milliron v. Francke, 243 Mont. 200, 203, 793 P.2d 824, 826-27 (1990), a patient claimed an ostensible agency between a radiologist and a hospital in Roundup because

the hospital agreed to provide adequate space, equipment, and personnel for the radiology department; it sent and collected bills on behalf of the radiologist; and provided the radiologist with an office at the hospital. The radiologist had no separate office in Roundup, rather he privately consulted in hospitals and would travel around to those hospitals, including Roundup Memorial, performing work as a radiologist.

the advertising, offering for sale, or distribution of any services, any property, tangible or intangible, real, personal, or mixed, or any other article, commodity, or thing of value, wherever located, and includes any trade or commerce directly or indirectly affecting the people of this state.

The fact that a restraint operates upon a profession as distinguished from a business is, of course, relevant in determining whether that particular restraint violates the Sherman Act. It would be unrealistic to view the practice of professions as interchangeable with other business activities, and automatically to apply to the professions antitrust concepts which originated in other areas.

It would be a dangerous form of elitism, indeed, to dole out exemptions to our antitrust laws merely on the basis of the educational level needed to practice a given profession, or for that matter, the impact which the profession has on society's health and welfare. Clearly, the more appropriate and fairer course is to examine the nature and conduct involved in the profession on a case by case basis together with the context in which it is practiced.

We do not consider the Legislature's use of "trade or commerce" in defining the application of the act to exhibit an intent to include the actual performance of medical services or the actual practice of medicine. If we were to interpret the act as such, the legislative enactments and well-developed body of law concerning medical malpractice would become obsolete. While we are aware of the expense and difficulty in maintaining a medical malpractice action, we do not think [Michigan's Consumer Protection Act] was meant by the Legislature to be an alternative to its specific statutory scheme addressing medical malpractice claims.

[T]he integration of a modern hospital becomes readily apparent as the various boards, reviewing committees, and designation of privileges are found to rest on a structure designed to control, supervise, and review the work within the hospital. The standards of hospital accreditation, the state licensing regulations, and the [hospital's] bylaws demonstrate that the medical profession and other responsible authorities regard it as both desirable and feasible that a hospital assume certain responsibilities for the care of the patient.

My understanding is that Dr. Mote had been convicted of a sexual offense committed upon a minor, had DEA license restrictions and had a history of malpractice. Assuming one or more of these "red flags" to be the case, failure to request a list of privileges granted to him by other hospitals or to insist on evidence of training of changes in behavior is a violation of the standard of care for hospitals. Without a copy of the hospital governing bylaws, medical staff bylaws and the credentials file for Dr. Mote, however, I cannot render an opinion about the medical staff privileges granted as a violation of the standard of care for hospitals.

Ann's counsel: Do you know does the medical staff have an obligation, as part of assessing credentials and quality, to ensure quality is brought into the community? Do they have an obligation to determine the malpractice history of a physician who is applying for staff privileges?
Faller: The chairman of the medical staff perhaps has an obligation.

JIM RICE We concur: MIKE McGRATH
JAMES C. NELSON
MICHAEL E WHEAT
BRIAN MORRIS