U.S. Seventh Circuit - The FindLaw 7th Circuit Court of Appeals Opinion Summaries Blog

Court Upholds $15 Million Medical Malpractice Award

A federal appeals court upheld a $15 million judgment against a medical diagnostics company in Indiana, even though the state has a $1.25 million cap on medical malpractice awards.

In Webster v. CDI Indiana, LLC, the U.S. Seventh Circuit Court of Appeals said the defendant had not registered with the state as a qualified health care provider. That made all the difference.

The company had used an independent contractor, who was registered, but the appeals panel said health care facilities cannot escape liability by using independent contractors.

Registered Health Care Provider

The case stemmed from a misdiagnosis in November 2014. Courtney Webster went to the Center for Diagnostic Imaging for a CT scan.

A radiologist misread the scan, which revealed a cancerous tumor. A year and a half later, when the cancer was correctly diagnosed, it had spread to Webster's lungs and liver.

She and her husband sued CDI in federal court based on diversity jurisdiction. It was not the norm for Indiana medical malpractice claims, which are capped at $1.25 million under the Indiana Medical Malpractice Act.

But the trial court said the center was not a state-registered care provider, and liable for the misdiagnosis beyond the Indiana law.

Independent Contractor

On appeal, CDI argued that the radiologist was an independent contractor. The Seventh Circuit said that didn't matter, unless Webster knew about the contractual relationship.

"Accepting CDI's contrary argument would mean that health care facilities could easily evade liability by using independent contractor professional organizations to employ physicians," Judge Amy St. Eve wrote for the court.

The appeals court said a medical center cannot hold itself out as offering health care services, and escape liability by "creating a complex corporate arrangement of interrelated companies."

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