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Maryland Court of Special Appeals Rejects General Corporate Negligence and Apparent Agency Arguments in Medical Malpractice Case

Kimberley Hughes Johnson v. University of Maryland Medical System Corporation, et al.
No. 396 (March 21, 2017) Court of Special Appeals of Maryland

by Julia L. Houp, Law Clerk
Semmes, Bowen & Semmes (www.semmes.com)

Available at: http://www.mdcourts.gov/appellate/unreportedopinions/2017/0396s15.pdf

On June 24, 2012, Antonio Johnson arrived at Queen Anne’s Hospital (“Queen Anne’s”) complaining of prolonged chest pain. Mr. Johnson told the emergency room staff that he had a significant family history of premature coronary artery disease, and that he had a history of smoking. Queen Anne’s emergency room staff recommended Mr. Johnson for admission, but he elected to be discharged against medical advice.

Three days later, Mr. Johnson began experiencing severe chest pain while driving, so he stopped and called an ambulance. Mr. Johnson was taken to Chester River Hospital Center, Inc. (“CRHC”) and was examined by Henry Arakaky, M.D. During his examination, Dr. Arakaky referred to the medical records from Mr. Johnson’s visit to Queen Anne’s and performed several tests, including an EKG test.

On June 28, 2012, Dr. Arakaky discharged Mr. Johnson, diagnosing him with a hiatal hernia with atypical chest pain and gerd (gastroesophageal reflux disease). Dr. Arakaky instructed Mr. Johnson: “take protonix daily, t[y]lenol for pain as needed[,] follow up with pmd and cardiology referral for further investigation of etiology of pain.”

The following morning, Mr. Johnson died at his home. An autopsy revealed that Mr. Johnson died from “hypertensive and atherosclerotic cardiovascular disease.” The coroner found Mr. Johnson had significant blockages in several arteries in his heart.

On November 5, 2013, Mr. Johnson’s wife, Kimberley Johnson, and Mr. Johnson’s parents, Margaret Ann Johnson and Edward Carroll (hereinafter, “appellants”), filed suit against the University of Maryland Medical System Corporation (“UMMS”), University of Maryland Shore Regional Health, Inc. (UMSRH), and CRHC. Appellants alleged that competent medical care would have correctly diagnosed Antonio’s condition and saved his life.

The Circuit Court for Baltimore City granted a motion for summary judgment in favor of appellees, UMMS and UMSRH, and ordered the case transferred to the Circuit Court for Kent County for appellants to proceed against the remaining defendant, CRHC. Appellants appealed, asking the Court of Special Appeals of Maryland whether the circuit court erred in granting appellees’ motion for summary judgment.

Appellants argued under “general corporate negligence” that appellees were liable for the injuries Mr. Johnson sustained because appellees breached their duty “to put in place emergency room protocols for the evaluation and treatment of persons appearing in the emergency room with cardiac or cardiac-like symptoms.” In this case, CRHC was the only treating hospital, not UMSRH or UMMS, because UMSRH and UMMS are simply the parent and grandparent corporations of CHRC, respectively.

The Supreme Court has on many various occasions held true a general principle of corporate law regarding parent-subsidiary corporations, finding “that a parent corporation . . . is not liable for the acts of its subsidiaries.” E.g. United States v. Best Foods, 524 51, 61–62 (1998). Additionally, Maryland case law has found that a parent corporation is generally insulated from the debts, obligations, and torts of its subsidiaries, absent the piercing of the corporate veil1 “to prevent fraud or enforce a paramount equity.” Bart Arconti & Sons, Inc. v. Ames-Ennis, Inc., 275 Md. 295, 312 (1975).

Thus, the court held that even if CRHC had the duty as the treating hospital to establish protocols for the evaluation and treatment of individuals appearing in its emergency room with cardiac or cardiac-like symptoms, nothing in the law assumes the application of that duty to the parent or grandparent corporation of the hospital. Additionally, appellants provided no documentation that would support a standard of care theory for “parent entities” of a hospital. Therefore, the circuit court did not err in granting summary judgment on the theory of general corporate negligence.

The appellants also argued that appellees were liable under the principle of apparently agency. In order to assert a claim under the doctrine apparent agency, a plaintiff must express three elements: (1) Did the apparent principal create, or acquiesce in, the appearance that an agency relationship existed, (2) did the plaintiff believe that an agency relationship existed and rely on that belief in seeking the services of the apparent agent, and (3) were the plaintiff’s beliefs and reliance reasonable? Bradford v. Jai Med. Sys. Managed Care Orgs., 439 Md. 2, 18–19 (2014).

Here, appellants needed to demonstrate that (1) appellees “made representations that suggested that [CRHC] was its agent,” (2) Antonio believed that CRHC was appellees’ “agent and relied on that belief in seeking services from [CRHC], and (3) Antonio’s “belief was reasonable under the circumstances,” meeting, under the doctrine of apparent agency, both the required subjective and objective elements.

Appellants did not provide any evidence that Mr. Johnson had awareness of the affiliation between UMMS and CRHC, thus, Mr. Johnson could not have had any belief that CRHC was an agent of UMMS. Additionally, nothing in the records reveals that Mr. Johnson believed that CRHC was an agent of UMSRH. Therefore, appellants failed to present any evidence supporting the subjective element of a claim based on apparent agency. Therefore, the appellate court held that the circuit court did not err in granting summary judgment on the theory of apparent agency.

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1 At oral argument, appellants made clear that their theory of liability was not piercing the corporate veil.

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