February 4, 2019
from the United States District Court for the Southern
District of Indiana, Indianapolis Division. No.
l:16-cv-02677-JMS-DML - Jane E. Magnus-Stinson, Chief Judge.
Wood, Chief Judge, and Easterbrook and St. Eve, Circuit
EVE, CIRCUIT JUDGE.
medical malpractice lawsuit arises from a radiologist's
negligence. Courtney Webster had a CT scan performed at CDI
Indiana, LLC's (CDI) diagnostic imaging facility in
Carmel, Indiana. The radiologist, an independent contractor
hired by Medical Scanning Consult- ants (MSC), missed
Courtney's cancer, which then festered for over a year
before being diagnosed.
and her husband, Brian Webster, sued CDI. CDI, in response,
insisted that the Websters could not hold it liable because
CDI did not directly employ the radiologist. The district
court rejected this argument and applied Indiana's
apparent agency holding in Sword v. NKC Hosp., Inc.,
714 N.E.2d 142, 152 (Ind. 1999), which instructs that a
medical provider is liable if a patient reasonably relied on
its apparent authority over the wrongdoer. The jury returned
a $15 million verdict in favor of the Websters. We agree with
the district court's analysis and so we affirm.
2009, Courtney had outpatient surgery for rectal cancer, and
by 2010, her medical examinations showed no further signs of
cancer. A few years later in October 2014, Courtney visited
her gastroenterologist complaining of constipation. She
underwent a colonoscopy, which revealed a large mass. The
gastroenterologist then referred Courtney for an abdominal
and pelvic CT scan. Radiation technologists conducted
Courtney's CT scan on November 17, 2014 at CDI's
Carmel facility, and radiologist Dr. Brian Walker issued his
report the following day. In his report, Dr. Walker did not
identify any mass, despite the images showing a mass in the
presacral space where Courtney's rectal cancer had
than two years later, Courtney again complained of
constipation. A scope performed in April 2016 revealed a
tumor, and a CT scan the following week showed that the tumor
had increased in size since the November 2014 CT scan. By the
time the cancerous mass was diagnosed, Courtney's cancer
had metastasized to her lungs and liver. The delay in
diagnosing Courtney's recurrent rectal cancer resulted in
a dramatic reduction of her prospects for survival.
a network of medical diagnostic imaging facilities throughout
the country, including Indiana. Relevant to this appeal, CDI
had entered into a services agreement with MSC under which
MSC provided independent contractor radiologists, such as Dr.
Walker, to interpret CDI's imaging studies at CDI's
October 2016, the Websters filed this medical malpractice
lawsuit against CDI in federal court based on diversity
jurisdiction. That is not the norm for Indiana medical
malpractice claims. Typically, such claims fall under
Indiana's Medical Malpractice Act (the Act), which limits
liability for registered qualified health care providers and
requires the presentation of a proposed complaint to a
medical review panel before an action can be commenced in
court. Thompson v. Cope, 900 F.3d 414, 424 (7th Cir.
2018); McKeen v. Turner, 71 N.E.3d 833, 834 (Ind.
2017) (per curiam). The Act sets up a voluntary,
state-sponsored liability insurance program imposing
statutory caps that limit a claimant's recoverable
damages, Plank v. Cmty. Hosps. of Ind., Inc., 981
N.E.2d 49, 51 (Ind. 2013), and provides that Indiana's
Patient Compensation Fund will pay amounts in excess of the
qualified health care provider's total liability,
Robertson v. B.O., 977 N.E.2d 341, 343 (Ind. 2012).
For a health care provider to be "qualified" under
the Act, it must register with Indiana's Department of
Insurance by filing proof of financial responsibility and
paying an annual surcharge that funds Indiana's Patient
Compensation Fund. Atterholt v. Herbst, 902 N.E.2d
220, 222 (Ind. 2009); Wisniewski v. Bennett, 716
N.E.2d 892, 895 (Ind. 1999).
CDI had not registered with Indiana's Department of
Insurance as a "qualified health care provider"
pursuant to the Act, the Websters sued CDI based on Indiana
Code § 34-18-3-1. That section states "[a] health
care provider who fails to qualify under this article is not
covered by this article and is subject to liability under the
law without regard to this article. If a health care provider
does not qualify, the patient's remedy is not affected by
this article." Unlike CDI, both MSC and Dr. Walker had
registered as qualified health care providers under the Act.
The Websters, therefore, filed a medical malpractice
complaint with the Indiana Department of Insurance against
Dr. Walker and MSC.
discovery in the CDI litigation, the Websters and CDI filed
cross-motions for summary judgment under Federal Rule of
Civil Procedure 56(a). In its motion, CDI argued that Dr.
Walker was not its apparent agent under Sword
because CDI did not employ or contract for Dr. Walker's
services, rather MSC did. In a well-reasoned and thorough
opinion, the district court concluded that the Supreme Court
of Indiana's apparent agency holding in Sword
applied to the circumstances of this case. Applying
Sword's apparent agency standard-which focuses
on the principal's manifestations and the patient's
reliance-the district court concluded, "[g]iven the
nature of health care services today, it is entirely possible
for a reasonable, prudent patient to conclude from
representations made by a medical center that the doctors and
health care professionals that service patients within the
center's facilities are agents or servants of the
center." Webster v. Ctr. for Diagnostic Imaging,
Inc., No. l:16-cv-02677-JMS- DML, 2017 WL 3839377, at *8
(S.D. Ind. Aug. 31, 2017). The district court denied the
parties' summary judgment motions because there were
"genuine issues of material fact in dispute as to
whether Dr. Walker was an apparent or ostensible agent of the
center" and whether CDI "may be held liable for any
of Dr. Walker's asserted negligent acts."
Id. at *9.
case proceeded to a jury trial, which lasted five days.
MSC's medical director testified that CDI was responsible
for every aspect of obtaining a patient's radiological
imaging study except for the actual interpretation of the
study itself. Further, the parties jointly stipulated that
CDI was responsible for the training, hiring, employing,
supervising, disciplining, and discharging of the radiation
technologists and non-physician personnel at CDI's Carmel
location. They also stipulated that MSC does business as CDI
and that MSC uses the trade name CDI and related trademarks
to assist in marketing its services as part of a national
provider network. Courtney testified that she had no idea
about the relationships among MSC, CDI, and Dr. Walker ...