In its unreported opinion in Johnson v. University of Maryland Medical System Corporation, the Court of Special Appeals of Maryland declined to extend the “corporate negligence” doctrine to parent or grandparent corporations in a medical malpractice setting.

Johnson v. Univ. of Md. Med. Sys. Corp., 2017 WL 1057447 (Md.  Ct. Spec. App. March 21, 2017) (Unreported)

On March 21, 2017, the Maryland Court of Special Appeals issued its unreported opinion in Johnson v. University of Maryland Medical System Corporation.  In Johnson, the Court declined to extend the “corporate negligence” doctrine to parent or grandparent corporations in a medical malpractice case. Although the opinion is unreported, it lends guidance as to how Maryland courts may impose limitations on proper parties in medical malpractice cases.

The decedent in Johnson visited the emergency room at Chester River Hospital Center (“CRHC”) for severe chest pain.  He was examined by a doctor, and was discharged with instructions for further care.  The decedent passed away the following morning.  His wife and parents (the “Plaintiffs”) asserted a wrongful death claim and survival action in the Circuit Court for Baltimore City against CRHC, University of Maryland Shore Regional Health (“UMSRH”), and University of Maryland Medical System Corporation (“UMMS”) (collectively, the “Defendants”).  UMSRH and UMMS are the parent and grandparent corporations of CRHC, respectively.

Prior to trial, Defendants filed a motion for summary judgment.  The trial court ultimately granted the motion, despite Plaintiffs’ standard of care expert’s expressed opinion that the “standard of care was violated by CRHC, and likewise, its parent entities [,UMSRH and UMMS,] were equally responsible for failing to establish proper protocols for the evaluation of cardiac patients….”  See Johnson, 2017 WL 1057447, at *5.  It is noteworthy, however, that Plaintiff’s expert did not address the standard of care specific to “parent entities” of a hospital.  Id.  Plaintiffs appealed, arguing that the Circuit Court erred because Plaintiffs alleged sufficient facts to prove “general corporate negligence” on the part of Defendants.

The Court of Special Appeals disagreed, and affirmed summary judgment in favor of UMSRH and UMMS.  In its unreported decision, the Court noted that, in Maryland, hospitals have a duty to ensure a patient’s safety and well-being during their hospital stay, and that they may be held liable if they do not use the degree of care or skill that a reasonably competent hospital would use.  Citing to the Supreme Court of Pennsylvania, the Court of Special Appeals explained that, under a “corporate liability theory,” “a hospital owes ‘a duty to formulate, adopt and enforce adequate rules and policies to ensure quality care for patients.’” Id. at *4 (quoting Thompson v. Nason Hosp., 591 A.2d 703 (Pa. 1991)).

Here, CRHC was the hospital, not UMSRH or UMMS.  Therefore, relying upon the general principle that “a parent corporation is generally insulated from the debts, obligations, and torts of its subsidiaries,” the Court held that “neither UMM[S] nor UMSRH has any legal responsibility for the alleged ‘general corporate negligence’ of CRHC.”  Johnson, 2017 WL 1057447, at *4.

In light of this unreported decision, medical malpractice practitioners should closely examine the corporate relationships that exist between defendant hospitals and their parent companies to determine whether said parent companies owed a particular duty of care to the plaintiff, and, if so, whether there is a basis to assert that the parent companies are culpable under a theory of corporate liability.