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Cravens v. Smith

July 6, 2010

MARILYN CRAVENS; WALTER CRAVENS, PLAINTIFFS, THE KNEIBERT CLINIC, LLC, PLAINTIFF - APPELLANT,
v.
RICHARD SMITH, M.D.; WEATHERBY LOCUMS TENENS, INC., DEFENDANTS - APPELLEES, AMERICAN CONTINENTAL INS. CO., DEFENDANT.



Appeal from the United States District Court for the Eastern District of Missouri.

The opinion of the court was delivered by: Smith, Circuit Judge.

Submitted: January 13, 2010

Before SMITH and COLLOTON, Circuit Judges, and KORNMANN,*fn1 District Judge.

The Kneibert Clinic, LLC ("Kneibert") filed suit against Dr. Richard Smith and Weatherby Locums Tenens, Inc. ("Weatherby"), alleging a claim of indemnification from Dr. Smith and Weatherby for a judgment incurred by Kneibert in a separate lawsuit brought by a patient allegedly harmed by the negligence of Kneibert and Dr. Smith. A jury rendered a verdict in favor of Dr. Smith and Weatherby. Kneibert appeals, asserting five reversible errors on the part of the district court.*fn2 We affirm.

I. Background

Kneibert is a physicians group that provides multiple medical services, including radiology. In 2000, Kneibert contracted with Weatherby to obtain an interim radiologist for its group. The contract obligated Weatherby to (1) present qualified physician candidates for Kneibert's approval; (2) pay all fees to the physician directly; (3) provide occurrence-based malpractice insurance with limits of one million to three million dollars for each physician placed with Kneibert; (4) allow Kneibert to retain any and all revenue that the physician generated; and (5) provide administrative assistance to obtain hospital privileges for the physician, if required. Pursuant to the contract, Dr. Smith was chosen as the new radiologist.

In July 2002, Marilyn and Walter Cravens filed a medical malpractice action in Butler County, Missouri, against Kneibert and Dr. Robert Young, a partner in the Kneibert Clinic ("Butler County action"). The Cravens alleged that Kneibert, through its agent, Dr. Young, was negligent in failing to diagnose Mrs. Cravens's breast cancer, ascertain the significance of the lump found in her breast, and remove the lump. The petition did not mention Dr. Smith-the radiologist-or Weatherby.

The Cravens filed an amended petition in August 2003; in that petition, they referenced Dr. Smith but did not name him or Weatherby as defendants. The amended petition alleged that Dr. Smith, as Kneibert's agent, performed radiological services in August 2000 by reading mammogram and ultrasound films.

To assist in prosecuting their claim, the Cravens retained Dr. Howard Ozer, an oncologist, as an expert witness. Dr. Ozer criticized Dr. Young's treatment, testifying that Dr. Young should have performed a biopsy despite receiving negative ultrasound and mammogram test results. He opined that a biopsy of a clinically suspicious palpable mass, like that detected by Dr. Young in Mrs. Cravens, should not have been delayed on the basis of a normal mammogram and ultrasound. Initially, Dr. Ozer was not asked to offer any opinions concerning the radiologist's standard of care. However, Dr. Ozer expressed his view that Dr. Smith's ultrasound report should not have been relied upon to forego a biopsy.

Kneibert tendered the defense of the claims related to Dr. Smith's medical service to Weatherby's insurance carrier, St. Paul Fire and Marine Insurance Company ("St. Paul").*fn3 St. Paul declined to provide a defense for Kneibert because Kneibert had exposure to liability based on the acts of Dr. Young and the radiology technician, who St. Paul did not insure. St. Paul did agree to defend any claims brought against Weatherby or Dr. Smith via a third-party petition.

During the course of the litigation, Kneibert lost its insurance coverage for the claim because its insurance carrier went into receivership. Following the loss of coverage, Kneibert's counsel suggested a proposed settlement to the Cravens' counsel under § 537.065 of the Missouri Revised Statutes. The December 16, 2003 letter addressed to the Cravens' counsel stated:

You have amended your Petition in this matter to include a claim that the mammogram and MRI w[ere] misinterpreted.

At the time the mammographer, Dr. Richard Smith, was furnished by Weatherby Locums, Inc., under contract to the Kneibert Clinic.

Under these circumstances we would like to suggest to our client, Kneibert Clinic, L.L.C., that it enter into an agreement with you whereby you would: A) dismiss your claim for respondeat superior liability against the Clinic as relates to Dr. Young; and B) enter into an agreement under Section 537.065 to limit your recovery against Kneibert to the insurance provided to Dr. Smith and Weatherby Locums by St. Paul Fire and Marine.

The Weatherby contract is attached; you will note that they are required to provide malpractice insurance for Dr. Smith, which they did through St. Paul. We have requested that St. Paul provide a defense and indemnification; they have refused.

To my knowledge they have no policy defenses whatsoever and the apparent reason for refusal is the statement, "it would be unclear as to what portion of the verdict was apportioned to the alleged acts of Dr. Smith[."]

I propose to, by the above method, make that clear and give you free access to summary judgment against Weatherby and Richard Smith such sum as you would care to "prove up to the Judge[."] You might look at my disaster in the Southern District, a copy of which opinion is attached[,] to see how easy it is when somebody is not paying attention as is the case with St. Paul's subsidiary (American Continental Insurance Company).

Based on the proposed settlement, Kneibert agreed not to defend the claims against it due to the alleged negligence of Dr. Smith and Weatherby. Kneibert further agreed not to contest any evidence that the Cravens chose to submit to the court on the issue of damages.

On January 27, 2005, Kneibert's counsel wrote a letter to confirm Kneibert's oral agreement with the Cravens' counsel, stating:

This will confirm our oral agreement.

You will:

(a) dismiss the case as against Robert Young, M.D.;

(b) we will enter into an agreement under ยง 537.065 in the form as ...


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