July 14, 2009 – Wisconsin does not recognize a bystander’s claim for negligent infliction of emotional distress arising from medical malpractice, the Wisconsin Supreme Court held on July 10 in Phelps v. Physicians Insurance Co., 2009 WI 74.

The court determined that this claim is an independent cause of action not described among the permissible theories of recovery for medical malpractice listed in Wis. Stat. Chapter 655.

But dissenting justices disputed that Ch. 655 is the exclusive remedy for medical malpractice, contending that case law provides avenues for relief outside of that statute.

The justices also divided over the proper application of the “documentary exception” to the deference an appellate court gives to the factual findings of a circuit court.

A baby’s death

Gregory Phelps’ wife was admitted to St. Joseph’s Hospital of Milwaukee following complications with her pregnancy. Partly due to the care of physician Matthew Lindemann, then a first-year unlicensed resident employed by the Medical College of Wisconsin Affiliated Hospitals (MCWAH), one of the Phelpses’ twins died.

Following a bench trial, Lindeman was found 80 percent causally negligent and the hospital 20 percent causally negligent. The trial court awarded $200,000 for “emotional distress bystander” damages to Phelps who witnessed the death of his child during delivery.

On appeal, the Wisconsin Supreme Court remanded the case for a determination of whether Lindemann was a “borrowed employee” of the hospital. If so, recovery against Lindemann, as an employee of a health-care provider, would be capped under Wis. Stat. § 893.55(4)(b).

The trial court ruled that Lindemann was a “borrowed employee” under the four-part test set forth in Seaman Body Corp. v. Industrial Commission of Wisconsin, 204 Wis. 157 (1931). A “borrowed employee” is one that (1) actually or impliedly consents to work for the borrowing employer, (2) was performing the work of borrowing employer at time of injury, (3) subjects the details of his or her work to the borrowing employer’s primary control, and (4) works primarily for the benefit of the borrowing employer.

Because it was reviewing a paper record comprising the parties’ written submissions, the court of appeals did not defer to the circuit court’s findings of fact. Rather, the court of appeals applied Seaman independently and reversed the determination regarding Lindemann’s “borrowed employee” status. Consequently, the court of appeals held that the caps of Ch. 655 were irrelevant.

Documentary exception

Before the supreme court, a majority of justices said that the court of appeals should have deferred to the trial court’s conclusions under Seaman, overturning them only if they were clearly erroneous. The majority reviewed the trial court’s findings and declared each was sufficiently supported by the record.

Justice Ann Walsh Bradley, in dissent, said the basis for an appellate court’s deference is that the circuit court makes firsthand evaluations of witnesses’ credibility. Therefore, “when a circuit court’s inferences and findings of fact are based solely on a paper record rather than on an evaluation of oral testimony, an appellate court does not apply the clearly erroneous standard,” she wrote of this “documentary exception.”

Accordingly, Bradley said the court of appeals decided Lindemann’s status correctly.

In response, the majority said that deference is given not just because the circuit court has a superior position to view witnesses. Rather, the majority argued, the deference furthers efficient use of an appellate court’s time.

Bradley accused the majority of overruling the line of cases establishing the documentary exception “sub silencio and without explanation.” But the majority responded that the exception only applies to “inferences the circuit court draws from ‘established or undisputed facts’ based solely on a documentary record.

In this case, the majority said, the underlying facts are in dispute and the circuit court resolved that dispute by exercising its fact finding function. Those findings receive the clearly erroneous standard of review even if they are based solely on documentary evidence, the majority said.

“Although the majority insists that the underlying facts are disputed, a close look at the majority’s analysis reveals that what is really disputed are the legal consequences of the facts,” Bradley remarked, noting the many facts pertaining to Lindemann’s employment agreement on which the parties agree.

The majority rebutted, “If the facts are not in dispute, why did a majority of this court previously remand this case for fact finding? In addition, the differing findings of the circuit court and court of appeals demonstrate that evidence in the record both supports and detracts from the determination that Lindemann was St. Joseph’s borrowed employee.”

Unrecognized claim

Concluding that Lindemann was an employee of a health care provider, the court majority considered the effect Ch. 655 and sec. 893.55 (4) had on Phelps’ bystander claim.

The court resolved the issue by adopting the lead opinion from Finnegan v. Wis. Patients Comp. Fund, 2003 WI 98, which held that Ch. 655 exclusively governs all claims arising out of medical malpractice and the legislature did not include bystander claims among those described in 655.005 (1) or 655.007. Consequently, Phelps’ claim is not recognized in Wisconsin.

In dissent, Bradley cited to the concurring and dissenting opinions in Finnegan.  Chief Justice Shirley Abrahamson, concurring in Finnegan, observed that several supreme court rulings held Ch. 655 does not govern every claim connected to medical malpractice.

Abrahamson had noted that the court found parents could sue their child’s therapists for negligent infliction of emotional distress resulting from malpractice in treating the child in Johnson v. Rogers Memorial Hospital, 2001 WI 68.

Similarly, Abrahamson pointed out that the court refused to read chapter 655 as governing all malpractice claims against a health provider when it permitted a patient to assert the defense of malpractice against a claim for payment of services in Northwest General Hosptial v. Yee, 115 Wis. 2d 59 (1983).

In line with these precedents, Bradley said that Phelps’ claim is governed by Bowen v. Lumbermens Mutual Casualty Co., 183 Wis. 2d 627 (1994).

“In Bowen this court set forth three factors for determining whether a plaintiff could recover on his or her bystander claim for negligent infliction of emotional distress,” Bradley wrote, listing the factors as (1) the victim’s injury was fatal or severe; (2) the victim and the plaintiff are related as spouses, parent-child, grandparents-grandchild or siblings; and (3) the plaintiff observed the incident and injury or the scene soon after the incident with the injured victim at the scene.