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Kopp v. Physician Group of Arizona, Inc.

Supreme Court of Arizona

July 9, 2018

Thomas Kopp, et al., Plaintiffs/Appellants,
v.
Physician Group of Arizona, Inc., et al., Defendants/Appellees. Melissa Ornelas, Plaintiff/Appellant,
v.
Physician Group of Arizona, Inc., et al., Defendants/Appellees. Maria Judith Gonzalez, et al., Plaintiffs/Appellants,
v.
Physician Group of Arizona, Inc., et al., Defendants/Appellees.

          Appeal from the Superior Court in Maricopa County The Honorable David M. Talamante, Judge Nos. CV2011-098899; CV2012-092733; CV2012-092734

         Memorandum Decision of the Court of Appeals, Division One Nos. 1 CA-CV 16-0227; 1 CA-CV 16-0228; 1 CA-CV 16-0232 (Consolidated) Filed June 8, 2017

          COUNSEL:

          H. Michael Wright, Lincoln M. Wright, Udall Shumway, P.L.C., Mesa; and J. Robert Tolman (argued), Tolman Law Firm, Tempe, Attorneys for Thomas Kopp, et al.

          John J. Checkett (argued), James G. Bennett, The Checkett Law Firm, PLLC, Scottsdale; and Kevin R. Myer, Campbell, Yost, Clare & Norell, P.C., Phoenix, Attorneys for IASIS Healthcare Corporation, IASIS Healthcare Holdings, Inc., and IASIS Finance, Inc.

          Stanley G. Feldman, Miller, Pitt, Feldman & McAnally, P.C., Tucson; and David L. Abney (argued), Ahwatukee Legal Office, P.C., Phoenix, Attorneys for Amicus Curiae Arizona Association for Justice/Arizona Trial Lawyers Association

          CHIEF JUSTICE BALES authored the opinion of the Court, in which VICE CHIEF JUSTICE BRUTINEL and JUSTICES PELANDER, TIMMER, BOLICK, GOULD, and LOPEZ joined.

          BALES CHIEF JUSTICE

         ¶1 Nearly seventy-five years ago, we held in DeGraff v. Smith that a dismissal with prejudice is a judgment on the merits that carries preclusive effect. 62 Ariz. 261, 269-70 (1945). We today hold that a stipulated dismissal with prejudice of an agent-surgeon does not preclude a party from asserting a claim against the surgeon's principal for its own independent negligence. This is true even when the independent negligence claim requires proof of the surgeon's negligence. This conclusion comports with our more recent holding in Chaney Building Co. v. City of Tucson that a stipulated dismissal does not trigger issue preclusion because only issues that have been "actually litigated" may be precluded. 148 Ariz. 571, 573 (1986). Thus, we disavow our holding in DeGraff insofar as that case and its progeny conclude that a stipulated dismissal with prejudice "operate[s] as an adjudication that [the dismissed party] was not negligent in the treatment of [the] plaintiff." Torres v. Kennecott Copper Corp., 15 Ariz.App. 272, 274 (1971).

          I.

         ¶2 Thomas Kopp, Melissa Ornelas, and Maria Judith Gonzalez (collectively, "Plaintiffs") underwent bariatric surgery performed by Dr. Eric Schlesinger, M.D., at Tempe St. Luke's Hospital. After experiencing post-operative complications, Plaintiffs filed medical malpractice actions against Physician Group of Arizona, IASIS Healthcare Corp., IASIS Healthcare Holdings, Inc., IASIS Finance, Inc., and St. Luke's Medical Center (collectively, the "Hospital") and Dr. Schlesinger. Plaintiffs' cases were later consolidated for discovery. Plaintiffs alleged Dr. Schlesinger was negligent in his surgical care and the Hospital was both vicariously liable for the doctor's negligence and independently negligent in the administration of its bariatric surgery program, including its hiring, selection, and credentialing.

         ¶3 Plaintiffs entered into a settlement agreement with Dr. Schlesinger, which required Plaintiffs to "dismiss with prejudice the pending claims against" him and further "preclude[d] the [Plaintiffs] from pursuing claims against the [H]ospital . . . based on a theory of vicarious liability or respondeat superior," although Plaintiffs could bring "independent claims" against the Hospital. Additionally, the agreement stated that "no past or present wrongdoing on the part of [Dr. Schlesinger] is implied or should be inferred" from the settlement agreement. Pursuant to the agreement, Plaintiffs dismissed with prejudice all claims against Dr. Schlesinger and "any claims against any co-defendants for vicarious liability," but in their stipulation specifically reserved independent claims against the Hospital.

         ¶4 The Hospital moved to dismiss most of the remaining claims, arguing they were derivative of Dr. Schlesinger's negligence. The trial court agreed and dismissed with prejudice Plaintiffs' negligent credentialing, hiring, and supervision claims, although it noted that "[a]ny independent negligence claims alleged against [the Hospital] survive the settlement with Dr. Schlesinger."

         ¶5 Affirming, the court of appeals stated that" [p]ursuant to both the plain terms of the settlement agreement and Torres, the dismissal of Plaintiffs' negligence claims against Dr. Schlesinger preclude[s] Plaintiffs from litigating [the Hospital's] alleged liability as vicariously derived from any alleged negligence of Dr. Schlesinger." Kopp v. Physician ...


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