IN THE SUPREME COURT OF IOWA No. 56 / 04-1724
Filed November 30, 2007
DENNIS L. CAWTHORN,
Appellant,
vs.
CATHOLIC HEALTH INITIATIVES IOWA CORP. d/b/a MERCY HOSPITAL MEDICAL CENTER, a Corporation,
Appellee.
On review from the Iowa Court of Appeals.
Appeal from the Iowa District Court for Polk County, Artis Reis,
Judge.
Plaintiff in medical malpractice case appeals from district court’s
order for conditional new trial and rejection of his claim for punitive
damages. The defendant cross-appeals from the district court’s ruling on
evidence issues. DECISION OF COURT OF APPEALS VACATED;
JUDGMENT OF DISTRICT COURT REVERSED ON CROSS-APPEAL;
CASE REMANDED.
Gary R. Fischer of Dreher, Simpson & Jensen, P.C., Des Moines,
and Verle W. Norris, Corydon, for appellant. 2
Thomas A. Finley, Jack Hilmes, and Kami M. Lang of Finley, Alt,
Smith, Scharnberg, Craig, Hilmes & Gaffney, P.C., Des Moines, and
Roberta M. Anderson of Schroeder & Anderson, Mason City, for appellee. 3
LARSON, Justice.
Dennis L. Cawthorn sued Catholic Health Initiatives Iowa Corp.
d/b/a Mercy Hospital Medical Center, as well as other defendants who
were later dismissed (including Dr. Daniel Miulli), for damages arising
out of the defendants’ treatment of the plaintiff. The jury returned a
substantial verdict for the plaintiff and allocated seventy percent of the
fault to Dr. Daniel Miulli, the plaintiff’s treating doctor (who had settled
prior to trial), and thirty percent to Mercy. Mercy moved for a new trial
on the ground the verdict was excessive. The district court ordered a
new trial unless the plaintiff agreed to a remittitur reducing the verdict of
$10,590,000 to $1,190,000. Cawthorn appealed, contending the trial
court abused its discretion in ordering the conditional new trial and in
refusing to submit his claim for punitive damages. Mercy cross-
appealed, claiming error in the admission of evidence of an independent
review of Dr. Miulli’s qualifications by the Iowa Board of Medical
Examiners (IBME). The court of appeals affirmed on Cawthorn’s appeal,
but did not address Mercy’s cross-appeal. We vacate the decision of the
court of appeals, reverse on Mercy’s cross-appeal, and remand for a new
trial.
I. Facts.
Dennis Cawthorn was treated at Mercy in May 2000 for a work-
related injury to his spine. Dr. Miulli performed surgery, but Cawthorn’s
pain persisted. On May 22, 2000, Cawthorn underwent a second
surgery to remove disc and bone fragments that were missed during the
first surgery. After the second surgery, Cawthorn’s pain worsened, and
he was readmitted to Mercy in June, suffering from pain, cold sweats, a
low-grade fever, and an “oozing drainage” at the point of the prior
surgeries. Cawthorn was again evaluated by Dr. Miulli who, instead of 4
performing recommended tests for infection, relied on week-old tests
showing no infection. He prescribed pain medication. Cawthorn was
released after four days, but his pain persisted at an eight on a scale of
one to ten.
II. The Issues.
The appeal and cross-appeal raise three issues: the court’s
conditional order for a new trial, its refusal to submit the issue of
punitive damages, and the court’s admission of evidence concerning the
IBME investigation of Dr. Miulli and resulting disciplinary hearing. The
IBME investigation had been prompted by concerns expressed to the
IBME by doctors who had doubts about Dr. Miulli’s care of patients in
cases unrelated to Cawthorn’s. An issue initially raised by Mercy in the
trial court, whether Iowa recognizes a claim against a hospital for
negligent credentialing of doctors practicing in the hospital, is not an
issue on appeal. We reverse and remand on the evidentiary issue raised
in Mercy’s cross-appeal and, therefore, need not address the district
court’s order for new trial based on the alleged excessiveness of the
verdict.
III. The Cross-Appeal.
Mercy cross-appealed from the district court’s admission of
detailed evidence of an investigation of Dr. Miulli by the IBME. Mercy
argues that this evidence was confidential under Iowa Code section
272C.6(4) (1999) and privileged under section 147.135. Mercy also
argues that any probative value of this information was outweighed by
the prejudice inherent in its admission. See Iowa R. Evid. 5.403.
Cawthorn’s purpose in producing evidence of the disciplinary
investigation was apparently two-fold: to show that Mercy should have
been aware that Dr. Miulli was not qualified to perform the surgery on 5
Cawthorn and to establish willful and wanton disregard for Cawthorn’s
rights as a patient so as to establish his right to punitive damages.
The plaintiff correctly points out that Dr. Miulli waived his right to
confidentiality under section 272C.6(4) for purposes of the disciplinary
proceedings. However, section 272C.6(4) bars the admission of
investigative materials and information in any proceeding other than
licensee discipline:
In order to assure a free flow of information for accomplishing the purposes of this section, and notwithstanding section 622.10, all complaint files, investigation files, other investigation reports, and other investigative information in the possession of a licensing board or peer review committee acting under the authority of a licensing board or its employees or agents which relates to licensee discipline are privileged and confidential, and are not subject to discovery, subpoena, or other means of legal compulsion for their release to a person other than the licensee and the boards, their employees and agents involved in licensee discipline, and are not admissible in evidence in a judicial or administrative proceeding other than the proceeding involving licensee discipline.
(Emphasis added.)
As we have said,
[i]t is obvious from the context, stated purpose and language of section [272C.6(4)] that the disclosure exception applies only when a disciplinary proceeding has been initiated. First, the statute makes a consistent distinction between investigation of a complaint and a disciplinary proceeding. Second, subsection 4 is part of a section dealing only with disciplinary hearings. Third, the stated objective of subsection 4 to assure a free flow of information for complaint and investigative purposes would be defeated if licensees had access to complaint files in these circumstances. Finally, disclosure for use of the information in private litigation would nullify the statutory bar to use of the information “in any judicial or administrative proceeding other than the proceeding involving licensee discipline.”
Doe v. Iowa State Bd. of Physical Therapy, 320 N.W.2d 557, 559–60 (Iowa
1982). 6
At trial, IBME’s investigator testified at length about Dr. Miulli’s
qualifications as a surgeon. However, Mercy’s counsel was not permitted
to cross-examine her on the basis of her reports prepared during the
investigation. The reason for this was that the confidential reports had
been subjected to a protective order in the disciplinary case, and the
district judge in Cawthorn’s trial denied Mercy access to them.
We have not previously considered section 272C.6(4) in light of
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IN THE SUPREME COURT OF IOWA No. 56 / 04-1724
Filed November 30, 2007
DENNIS L. CAWTHORN,
Appellant,
vs.
CATHOLIC HEALTH INITIATIVES IOWA CORP. d/b/a MERCY HOSPITAL MEDICAL CENTER, a Corporation,
Appellee.
On review from the Iowa Court of Appeals.
Appeal from the Iowa District Court for Polk County, Artis Reis,
Judge.
Plaintiff in medical malpractice case appeals from district court’s
order for conditional new trial and rejection of his claim for punitive
damages. The defendant cross-appeals from the district court’s ruling on
evidence issues. DECISION OF COURT OF APPEALS VACATED;
JUDGMENT OF DISTRICT COURT REVERSED ON CROSS-APPEAL;
CASE REMANDED.
Gary R. Fischer of Dreher, Simpson & Jensen, P.C., Des Moines,
and Verle W. Norris, Corydon, for appellant. 2
Thomas A. Finley, Jack Hilmes, and Kami M. Lang of Finley, Alt,
Smith, Scharnberg, Craig, Hilmes & Gaffney, P.C., Des Moines, and
Roberta M. Anderson of Schroeder & Anderson, Mason City, for appellee. 3
LARSON, Justice.
Dennis L. Cawthorn sued Catholic Health Initiatives Iowa Corp.
d/b/a Mercy Hospital Medical Center, as well as other defendants who
were later dismissed (including Dr. Daniel Miulli), for damages arising
out of the defendants’ treatment of the plaintiff. The jury returned a
substantial verdict for the plaintiff and allocated seventy percent of the
fault to Dr. Daniel Miulli, the plaintiff’s treating doctor (who had settled
prior to trial), and thirty percent to Mercy. Mercy moved for a new trial
on the ground the verdict was excessive. The district court ordered a
new trial unless the plaintiff agreed to a remittitur reducing the verdict of
$10,590,000 to $1,190,000. Cawthorn appealed, contending the trial
court abused its discretion in ordering the conditional new trial and in
refusing to submit his claim for punitive damages. Mercy cross-
appealed, claiming error in the admission of evidence of an independent
review of Dr. Miulli’s qualifications by the Iowa Board of Medical
Examiners (IBME). The court of appeals affirmed on Cawthorn’s appeal,
but did not address Mercy’s cross-appeal. We vacate the decision of the
court of appeals, reverse on Mercy’s cross-appeal, and remand for a new
trial.
I. Facts.
Dennis Cawthorn was treated at Mercy in May 2000 for a work-
related injury to his spine. Dr. Miulli performed surgery, but Cawthorn’s
pain persisted. On May 22, 2000, Cawthorn underwent a second
surgery to remove disc and bone fragments that were missed during the
first surgery. After the second surgery, Cawthorn’s pain worsened, and
he was readmitted to Mercy in June, suffering from pain, cold sweats, a
low-grade fever, and an “oozing drainage” at the point of the prior
surgeries. Cawthorn was again evaluated by Dr. Miulli who, instead of 4
performing recommended tests for infection, relied on week-old tests
showing no infection. He prescribed pain medication. Cawthorn was
released after four days, but his pain persisted at an eight on a scale of
one to ten.
II. The Issues.
The appeal and cross-appeal raise three issues: the court’s
conditional order for a new trial, its refusal to submit the issue of
punitive damages, and the court’s admission of evidence concerning the
IBME investigation of Dr. Miulli and resulting disciplinary hearing. The
IBME investigation had been prompted by concerns expressed to the
IBME by doctors who had doubts about Dr. Miulli’s care of patients in
cases unrelated to Cawthorn’s. An issue initially raised by Mercy in the
trial court, whether Iowa recognizes a claim against a hospital for
negligent credentialing of doctors practicing in the hospital, is not an
issue on appeal. We reverse and remand on the evidentiary issue raised
in Mercy’s cross-appeal and, therefore, need not address the district
court’s order for new trial based on the alleged excessiveness of the
verdict.
III. The Cross-Appeal.
Mercy cross-appealed from the district court’s admission of
detailed evidence of an investigation of Dr. Miulli by the IBME. Mercy
argues that this evidence was confidential under Iowa Code section
272C.6(4) (1999) and privileged under section 147.135. Mercy also
argues that any probative value of this information was outweighed by
the prejudice inherent in its admission. See Iowa R. Evid. 5.403.
Cawthorn’s purpose in producing evidence of the disciplinary
investigation was apparently two-fold: to show that Mercy should have
been aware that Dr. Miulli was not qualified to perform the surgery on 5
Cawthorn and to establish willful and wanton disregard for Cawthorn’s
rights as a patient so as to establish his right to punitive damages.
The plaintiff correctly points out that Dr. Miulli waived his right to
confidentiality under section 272C.6(4) for purposes of the disciplinary
proceedings. However, section 272C.6(4) bars the admission of
investigative materials and information in any proceeding other than
licensee discipline:
In order to assure a free flow of information for accomplishing the purposes of this section, and notwithstanding section 622.10, all complaint files, investigation files, other investigation reports, and other investigative information in the possession of a licensing board or peer review committee acting under the authority of a licensing board or its employees or agents which relates to licensee discipline are privileged and confidential, and are not subject to discovery, subpoena, or other means of legal compulsion for their release to a person other than the licensee and the boards, their employees and agents involved in licensee discipline, and are not admissible in evidence in a judicial or administrative proceeding other than the proceeding involving licensee discipline.
(Emphasis added.)
As we have said,
[i]t is obvious from the context, stated purpose and language of section [272C.6(4)] that the disclosure exception applies only when a disciplinary proceeding has been initiated. First, the statute makes a consistent distinction between investigation of a complaint and a disciplinary proceeding. Second, subsection 4 is part of a section dealing only with disciplinary hearings. Third, the stated objective of subsection 4 to assure a free flow of information for complaint and investigative purposes would be defeated if licensees had access to complaint files in these circumstances. Finally, disclosure for use of the information in private litigation would nullify the statutory bar to use of the information “in any judicial or administrative proceeding other than the proceeding involving licensee discipline.”
Doe v. Iowa State Bd. of Physical Therapy, 320 N.W.2d 557, 559–60 (Iowa
1982). 6
At trial, IBME’s investigator testified at length about Dr. Miulli’s
qualifications as a surgeon. However, Mercy’s counsel was not permitted
to cross-examine her on the basis of her reports prepared during the
investigation. The reason for this was that the confidential reports had
been subjected to a protective order in the disciplinary case, and the
district judge in Cawthorn’s trial denied Mercy access to them.
We have not previously considered section 272C.6(4) in light of
circumstances such as those in this case. However, the statute’s
provision that it is intended to “assure a free flow of information”
suggests that confidentiality should protect the source of information as
well as the person being investigated. Even more important is the
statute’s express prohibition from admission into evidence of any
investigative information in a “judicial or administrative proceeding”
other than the disciplinary case. We hold that section 272C.6(4)
prohibits admission of such investigative evidence and that introduction
of the IBME investigation, including the transcript of the IBME hearing
that was introduced at the trial, was improper. Further, we believe the
impact of this evidence was so great as to require a new trial and the
exclusion of all evidence of the IBME investigation.
Because we order a new trial on this issue raised in Mercy’s cross-
appeal, we do not address the plaintiff’s contention that the trial court
erred in ordering a new trial based on alleged excessiveness of the
IV. Punitive Damages.
The district court granted Mercy Hospital’s motion for directed
verdict on Cawthorn’s punitive-damage claim and denied his motion for
new trial on punitive damages. Because the submissibility of punitive
damages will likely arise again on retrial, we will address that issue now. 7
We review a district court’s ruling on a motion for directed verdict
for errors at law. Iowa R. App. P. 6.4; Riniker v. Wilson, 623 N.W.2d 220,
230 (Iowa Ct. App. 2000). “Where no substantial evidence exists to
support each element of a plaintiff’s claim, the court may sustain a
motion for directed verdict. Evidence is substantial when a reasonable
mind would accept it as adequate to reach a conclusion.” Riniker, 623
N.W.2d at 230 (citations omitted). The evidence is viewed in the light
most favorable to the party against whom the motion was directed. Id.
Iowa Code section 668A.1 (2003) governs the award of punitive
damages. Punitive damages may only be awarded when the plaintiff has
shown “by a preponderance of clear, convincing, and satisfactory
evidence, the conduct of the defendant from which the claim arose
constituted willful and wanton disregard for the rights or safety of
another.” Iowa Code § 668A.1(1)(a). Willful and wanton conduct is
shown when an
“actor has intentionally done an act of an unreasonable character in disregard of a known or obvious risk that was so great as to make it highly probable that harm would follow, and which thus is usually accompanied by a conscious indifference to the consequences.”
Kiesau v. Bantz, 686 N.W.2d 164, 173 (Iowa 2004) (quoting Vlotho v.
Hardin County, 509 N.W.2d 350, 356 (Iowa 1993)). Punitive damages
serve as a form of punishment, and as such, mere negligent conduct is
not sufficient to support such a claim. McClure v. Walgreen Co., 613
N.W.2d 225, 230–31 (Iowa 2000). Punitive damages are only recoverable
when the defendant acted with actual or legal malice.
“Actual malice may be shown by such things as personal spite, hatred, or ill-will and legal malice may be shown by wrongful conduct committed with a willful or reckless disregard for the rights of another.” . . . “Thus, merely objectionable conduct is insufficient. . . . To receive punitive 8 damages, plaintiff must offer evidence of defendant’s persistent course of conduct to show that the defendant acted with no care and with disregard to the consequences of those acts.”
Wolf v. Wolf, 690 N.W.2d 887, 893 (Iowa 2005) (quoting Jones v. Lake
Park Care Ctr., Inc., 569 N.W.2d 369, 378 (Iowa 1997), and Hockenberg
Equip. Co. v. Hockenberg’s Equip. & Supply Co., 510 N.W.2d 153, 156
(Iowa 1993)) (citation omitted).
Cawthorn does not contend that Mercy had any actual malice
toward him, but he argues that the record was sufficient for the court to
submit punitive damages on the basis of legal malice. We have defined
legal malice as wrongful conduct, committed with a willful or reckless
disregard for the rights of another. Wolf, 690 N.W.2d at 893.
Cawthorn’s claim for punitive damages rests on his contention that
Mercy Hospital was aware that Dr. Miulli was likely to injure a patient
through negligent treatment. Though evidence certainly exists that
Mercy Hospital was aware that Dr. Miulli’s competency was at issue, the
evidence does not support a finding of willful and wanton conduct, as
required by section 668A.1(1)(a).
Much of Cawthorn’s punitive-damage claim is based on the fact
that the Iowa Board of Medical Examiners investigated Dr. Miulli and,
ultimately, suspended his license to practice medicine. However, the
substance of the investigation was not made known to Mercy until after
Dr. Miulli treated Cawthorn. Peer review of Dr. Miulli prior to his
treatment of Cawthorn was generally positive. Prior to Cawthorn’s
treatment by Dr. Miulli, Mercy had received at least one complaint about
Dr. Miulli’s care, but an internal peer review committee did not identify
any practice problems regarding infection—the cause of the injuries 9
suffered by Cawthorn. Further, Mercy took steps to monitor Dr. Miulli’s
practice to ensure the safety of their patients.
Viewing the evidence in the light most favorable to Cawthorn’s
punitive-damage claim, we do not believe a reasonable fact finder could
find
by a preponderance of clear, convincing, and satisfactory evidence [that] the conduct of the defendant from which the claim arose constituted willful and wanton disregard for the rights or safety of another.
Iowa Code § 668A.1(1)(a). In other words, we do not find evidence to
support a claim that Mercy had intentionally done an act of such
unreasonable character as to make it highly probable that harm would
follow or that Mercy’s actions were accompanied by a conscious
indifference to the consequences. See Kiesau, 686 N.W.2d at 173.
We affirm the district court’s rulings denying Cawthorn’s
submission of his punitive-damages claim to the jury and denying a new
trial on that issue. We reverse on the cross-appeal and remand for a new
DECISION OF COURT OF APPEALS VACATED; JUDGMENT OF
DISTRICT COURT REVERSED ON CROSS-APPEAL; CASE
REMANDED.
All justices concur except Hecht, J., who takes no part.