Health Care Case Law Update

Health Care Authority for Baptist Health v. Davis, --- So. 3d. ----, 2013 WL 2149493 (Ala. Feb. 28, 2014). -

The Supreme Court of Alabama reversed itself on re-hearing of its May 2013 opinion to affirm a judgment for a plaintiff in a medical malpractice case. The University of Alabama Board of Trustees formed the Health Care Authority for Baptist Health (the “Authority”) as a public corporation created by the Health Care Authorities Act (“HCA”) for UAB Health System to operate facilities owned by Baptist Health under an affiliation agreement. The plaintiff sued the Authority and two physicians for medical malpractice. Summary judgment for the physicians was unopposed, granted, and not appealed. The jury returned a $3,200,000 verdict against the Authority. The trial court denied the Authority’s request for application of a $100,000 statutory damages cap based on Ala. Code § 11-93-2 and entered the judgment, and the Authority appealed, raising State immunity under Section 14 of the Alabama Constitution and the HCA’s cap on damages. While the case has interesting facts on which malpractice was found, the legal questions of immunity are central to the opinion. In this case of first impression, the Court held that the “Authority” did not enjoy sovereign immunity under Section 14 of the Alabama Constitution, and further held as unconstitutional any attempt by the legislature to apply a $100,000 damages cap for health care authorities enabled by the HCA, as denying constitutional rights to a jury trial.

Following the established premise that Section 14 was only intended to protect immediate or strictly governmental agencies of the State from lawsuit, the Court applied the HCA and the unique facts of this case to the Staudt factors used to determine whether a public corporation is entitled to State immunity: (1) the character of the power delegated to the body, (2) its relation to the state; and (3) the nature of the function performed. As to the nature of such a Health Care Authority’s function, the Court observed that providing healthcare is not unique to government, as is law enforcement (for example). The Court acknowledged that the same Board established UAB Health System to do the same function, and it was noted in dissent that the Authority was created to further the medical and academic missions of UAB Health System, which enjoys sovereign immunity along with the Board. The Court also acknowledged the powers of imminent domain and immunity for anti-competitive conduct but noted those protections are granted without Section 14 immunity, and can be granted to any entity. These factors were outweighed, however, by certain provisions of the enabling legislation, the HCA.