Weyers v. Cmty. Mem'l Hosp., Inc.

30 Neb.App. 520

971 N.W.2d 155

Velma WEYERS and Gilbert Weyers, appellants,

v.COMMUNITY MEMORIAL HOSPITAL, INC., doing business as Syracuse Area Health et al., appellee.

No. A-21-132.

Court of Appeals of Nebraska.

Filed January 25, 2022.

Christopher S. Bartling, Lincoln, of Bartling & Hinkle, P.C., for appellants.

Robert A. Mooney, Omaha, and Emily E. Palmiscno, of Sodoro, Mooney & Lenaghan, L.L.C., for appellee.

Pirtle, Chief Judge, and Riedmann and Welch, Judges.

Pirtle, Chief Judge.

INTRODUCTION

The district court for Otoe County granted the motion for summary judgment of Community Memorial Hospital, Inc. (CMH, Inc.); Velma Weyers and Gilbert Weyers (collectively appellants) appeal from that order. For the reasons that follow, we affirm.

BACKGROUND

In February 2018, Velma underwent knee surgery at CMH, Inc., in Syracuse, Nebraska. The day after surgery, while Velma was recovering at the hospital, she fell from a hospital bed while under sedation and was injured. In December 2019, appellants filed a complaint against "[CMH, Inc.,] doing business as Syracuse Area Health, Community Memorial Hospital, and Community Memorial Hospital District." The complaint alleged that Velma was entitled to compensation under theories of negligence and res ipsa loquitur, and Gilbert raised a related loss of consortium claim. The complaint also waived the right to a medical review panel "to the extent that any Defendant is registered and is qualified under the Nebraska Hospital-Medical Liability Act" (NHMLA), see Neb. Rev. Stat. § 44-2801 et seq. (Reissue 2021).

In January 2020, CMH, Inc., filed a motion to dismiss or, in the alternative, a motion for summary judgment. Summarized, the motion alleged that the complaint identified the wrong defendant, as CMH, Inc., which is a private nonprofit corporation created to service the debt of the separate legal entity, Community Memorial Hospital District (CMHD). The motion alleged that CMH, Inc., "does not do business as Syracuse Area Health, Community Memorial Hospital, or [CMHD]." According to the motion, CMHD was the proper defendant, as it was the entity that employed health care providers and entered into a physician-patient relationship with Velma.

The district court convened for a hearing on the motion in March 2020. Appellants moved for a continuance to conduct further discovery, which was granted. The court reconvened in June 2020, at which time appellants again moved for a continuance to conduct further discovery, which motion was also granted. CMH, Inc., objected to the request, noting, "This is a political subdivision tort claim and the political subdivision was not properly served with a claim...." Appellants sent interrogatories, conducted depositions, and collected documentation regarding the legal relationship between the named defendant, CMH, Inc., and the nonparty, CMHD.

The record shows that CMHD is a "community hospital" created pursuant to Neb. Rev. Stat. § 23-3547 (Reissue 2012) and is a political subdivision of the State of Nebraska. CMHD was created by resolution of the Otoe County Board of Commissioners in January 1973, following the results of a special election in June 1972. Prior to November 2018, CMHD operated "Community Memorial Hospital," which was the hospital where Velma sustained her injury. CMHD opened a new hospital in November 2018 which operates as "Syracuse Area Health."

CMH, Inc., filed articles of incorporation with the Nebraska Secretary of State in August 1992, identifying the nature of its business as "Medical Care Facility Leasing."

Article III of the 1992 articles provides the following:

The exclusive purpose for which the corporation is organized is to provide for, erect, own, lease, furnish, equip and manage lands, grounds, and buildings located in and for the exclusive possession, use, and benefit of Community Memorial Hospital District, a body politic and corporate of the County of Otoe in the State of Nebraska.

Article V provides that CMH, Inc., "shall have no members" and "shall be managed by the Board of Directors." Article VI provides that "[a]fter payment of all outstanding liabilities and obligations of the corporation other than obligations to [CMHD], the corporation shall donate and give to [CMHD] the assets which the corporation then possesses."

CMH, Inc., restated its corporate bylaws in August 2015, stating its purpose "to act on behalf of and for the benefit of [CMHD]." The 2015 bylaws reiterated that CMH, Inc., "shall be managed by its Board of Directors" but added the following provision:

[T]he Board of Directors shall not take the following action(s) without obtaining the prior approval of the [CMHD] Board of Directors:

a. Sell all or substantially all of [CMH, Inc.’s] assets.

b. Enter into any financing or loan agreement encumbering [CMH, Inc.’s] assets.

c. Enter into any affiliation agreement or other arrangement with another hospital entity.

d. Amend these Restated Bylaws.

Under the 2015 bylaws, "a Director may be removed with or without cause by vote of the [CMHD] Board of Directors." Further, "[n]o Director shall receive compensation for his or her service as a Director." The articles also provide for various officers and respective duties, adding that "[CMHD] employees and other individuals may assist [CMH, Inc.’s] officers in the performance of their duties hereunder as may be from time to time requested."

The president and chief executive officer of CMHD, Michael Harvey, identified CMH, Inc., as a "debt-servicing corporation" which services CMHD's debts. Harvey explained that as a political subdivision, CMHD cannot obtain a bank loan and instead would need voter approval to issue bonds if it wanted to take on substantial debt. However, CMH, Inc., as a private corporation, is able to obtain private financing without voter approval. Harvey explained that once CMH, Inc., obtained funding and purchased property, it was necessary for CMH, Inc., to retain ownership as "collateral for the loan."

The record contains two lease agreements between CMH, Inc., and CMHD. Under the first lease agreement and supplemental lease agreement, executed in 1992, CMH, Inc., leased property to CMHD for the operation of Community Memorial Hospital in exchange for a monthly rent payment of $12,100. The agreement further provided that the base rent could be increased "[i]n the event Basic Rent is not sufficient in amount" to cover payments on the outstanding loan obligations. The lease was to "continue until the payment in full of all principal and interest on the Notes and any indebtedness or obligations ... issued to refund the Notes." The term " ‘Notes’ " was defined as CMH, Inc.’s "Construction Notes, Series 1992, in the initial amount of $950,000 issued pursuant to the Trust Agreement." The term " ‘Trust Agreement’ " was defined as "the Trust Agreement between [CMH, Inc.,] and [National Bank of Commerce Trust and Savings Association] dated September 1, 1992, pursuant to which the Notes were issued."

Under the second lease, executed in 2016, CMH, Inc., once again leased property to CMHD in exchange for a "contribution," which was defined as "the amounts, however characterized, as are contributed by [CMHD] to [CMH, Inc.,] from time to time and used by [CMH, Inc.,] to acquire some or all of the Real Estate and/or the Project." The "project" was defined as "the construction of a replacement hospital facility in Syracuse, Nebraska." The agreement further provides that "[CMHD] agrees to make additional rental payments ... in an amount equal to the aggregate principal amount of the Obligations and ... an amount equal to interest on the Obligations." The term "obligations" was defined as "any evidence of indebtedness incurred by [CMH, Inc.,] for purposes of financing or refinancing the Hospital, which is expected to consist of (but shall not be limited to) interim construction and permanent financing to be provided through one or more loans from USDA." The term "hospital" was defined as "the Real Estate, Improvements, and Personal Property currently existing on the property or to be constructed in the future by either [CMH, Inc.,] or [CMHD]." The 2016 lease also contains a provision granting CMHD an option to purchase the hospital property for $1 provided that no debt obligations remain outstanding.

Corroborating the terms of the lease agreements, Harvey testified that the rent payments CMHD paid to CMH, Inc., were determined by the amount of the loan payments CMH, Inc., was making on CMHD's behalf. Harvey further testified that CMHD was responsible for "[a]ll operational expenses of the hospital and clinics" and that CMH, Inc., did not have any control over the business of "seeing and treating patients in exchange for a fee." In his affidavit, Harvey attested that "[a]t all times material to the allegations of the Complaint, [CMH, Inc.,] did not employ any healthcare physicians, nurses, or staff [and] [n]o healthcare provider-patient relationship existed between [CMH, Inc.,] and patients of [CMHD], including [Velma]."

The court reconvened in August 2020, electing to consider the evidence and treat CMH, Inc.’s motion as a motion for summary judgment. In January 2021, the court entered an order granting CMH, Inc.’s motion for summary judgment. The court observed that CMHD, and not CMH, Inc., was doing business as Community Memorial Hospital when Velma was injured. The court found that CMH, Inc., "is not a hospital or licensed healthcare facility ... did not employ any medical personnel and did not provide medical care to [Velma]." Thus, the court found, CMH, Inc., "cannot be sued for negligence or loss of consortium" because CMH, Inc., "owed no duty to [Velma]."

The court went on to note that a plaintiff is generally allowed to amend a lawsuit to add a new defendant, "unless it would be futile," citing Bailey v. First Nat. Bank of Chadron , 16 Neb. App. 153, 741 N.W.2d 184 (2007). The court found that granting leave to amend the complaint in this case would be...