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Maryland Court of Special Appeals Affirms Lower Court’s Finding that Indemnification Provision Applied to Negligent Venipuncture of Phlebotomy Student

Board of Trustees of the Community College of Baltimore County v. Patient First Corp.
Case No. 568 (Aug. 29, 2014)
by Jhanelle A. Graham, Associate
Semmes, Bowen & Semmes (www.semmes.com)

Available at: http://www.mdcourts.gov/opinions/cosa/2014/0568s13.pdf

In Board of Trustees of the Community College of Baltimore County v. Patient First Corp., the Court of Special Appeals of Maryland was asked to determine (1) whether the circuit court erred in finding that the indemnification provision of an agreement required the Board of Trustees of the Community College of Baltimore County (“CCBC”) to indemnify Patient First Corporation (“Patient First”) for its defense of the negligence action; and (2) whether the circuit court abused its discretion in allowing testimony regarding the reasonableness of Patient First’s attorneys’ fees, and in awarding attorneys’ fees based on that testimony. After reviewing the record, the Honorable Judge Kathryn Grill Graeff affirmed the decision of the lower court in favor of Patient First.

This case arose from an agreement between Patient First Corporation (“Patient First”), appellee, and the Board of Trustees of the Community College of Baltimore County (“CCBC”), appellant. Pursuant to the agreement, Patient First allowed CCBC students to gain “supervised clinical experience” as phlebotomists at Patient First centers in the Baltimore area. The agreement, however, contained an indemnification provision, which provided that CCBC would indemnify Patient First for any liability arising from negligent acts of CCBC students.

On January 13, 2007, a CCBC student phlebotomist at a Patient First clinic accidentally stuck herself with a needle and then drew blood from a six (6)-year old child using the contaminated needle. The student subsequently tested positive for Hepatitis C, but the child’s test was negative for Hepatitis C. The child’s family filed a lawsuit against Patient First, and Patient First was required to pay $10,000 to settle the case. Patient First sought to enforce the indemnification provision of the agreement to recover its payment, as well as the attorneys’ fees incurred in defending the negligence action. The circuit court found that CCBC breached the agreement by failing to indemnify Patient First for its costs. It awarded $87,097.08, consisting of $10,000 paid toward the settlement of the lawsuit and the remainder toward attorneys’ fees.

Specifically, the Complaint asserted that the student “acted as an actual and/or apparent agent, servant and employee of” Patient First. It further asserted that the defendants, including both Patient First and the student, owed a duty of care, which included “the performance of a simple blood draw without injury and the protection of the Plaintiffs from contaminated needles.” On March 16, 2011, the parties reached a settlement agreement, in which Patient First agreed to pay $10,000 toward the $50,000 agreed upon. Pursuant to the Agreement, Patient First requested that CCBC indemnify it for the student’s negligence and reimburse Patient First for the $10,000 in settlement funds, as well as its attorneys’ fees in defending the lawsuit. CCBC refused Patient First’s request for indemnification. Patient First subsequently filed suit for breach of contract, alleging that CCBC’s “failure to indemnify Patient First as required by the . . . Agreement constitutes a breach of the Agreement.” Patient First sought $88,937.39 in damages, consisting of the $10,000 settlement payment and $78,937.39 in costs and attorneys’ fees. Although CCBC admitted that the student was negligent, it asserted in its answer that “[t]he contract does not indemnify [Patient First] against its own negligence,” and “[t]o construe the contract to indemnify [Patient First] for its own negligence would violate public policy.”

After hearing the testimony of the parties, the trial court determined that the experts who rendered opinions about the Patient First clinic all had a slightly different view of what supervision was required of the phlebotomy students. The lower court agreed with Patient First in finding that to determine whether Patient First breached the appropriate standard of care, “some expertise” was required because it was not “apparent on [the] face” of the Agreement. Because the court did not know the applicable standard of care, however, it could not “independently determine whether Patient First breached it.” Consequently, the lower court determined that liability was established based upon the breach by the student herself, but questioned whether the evidence was sufficient to show a breach by Patient First. Accordingly, the court awarded Patient First “the $87,097.08[,] which was the $10,000 paid in settlement plus the attorney’s fees in the third party action.”

On appeal, the Court of Special Appeals of Maryland noted that the contract at issue did not contain express language that CCBC would indemnify Patient First for its own negligence. Thus, before CCBC could rely on the presumption against indemnification for the indemnitee’s own negligence, the court would have to determine whether Patient First was negligent. In determining this question, the intermediate appellate court stated that a critical issue was identifying which party had the burden to prove the negligence or lack of negligence of Patient First. Citing the Ninth Circuit’s decision in Norddeutscher Lloyd v. Jones Stevedoring Co., 490 F.2d 648, 649 (9th Cir.1973), the Maryland intermediate appellate court stated that the indemnitor bears the burden of proof of establishing that indemnitee’s negligence precluded its recovery under an indemnification agreement. Further, without a jury finding that Patient First was negligent, or any other evidence of Patient First’s negligence, the circuit court properly found that CCBC was required to indemnify Patient First. Finally, perceiving no abuse of discretion in the circuit court’s finding that Patient First’s attorneys’ fees were reasonable, the intermediate appellate court held that the circuit court did not err in awarding these fees as damages against CCBC.