Colorado Supreme Court Round-Up (10/15/07)

No bullshit legal holidays this week, so the Court is back to its usual Monday morning release schedule.

Opinions:

1) In re Crow v. Penrose-St. Francis Healtcare Sys. (pdf, 27 pages) involved a three-year-old dispute between a doctor and a hospital over the issue of staff privileges. Dr. Jimmie Crow (I shit you not) was the on-call surgeon at Penrose-St. Francis Hospital one night in October 2004. The hospital asserts that Dr. Crow provided substandard treatment to an emergency room patient who ultimately died two years later.

The hospital initiated an internal peer review in accordance with provisions of the Colorado Professional Review Act (“CPRA”), which allows hospital peer review committees to determine whether a doctor “has provided substandard or inappropriate medical care.” C.R.S. 12-36.5-104(7)(a). The hospital summarily suspended Dr. Crow’s staff privileges pending the outcome of the review. Dr. Crow did not appeal the summary suspension.

The hospital’s peer review process has five steps. Three of those steps were completed in Dr. Crow’s case within six weeks. As a result of those steps, three separate hospital committees recommended termination of Dr. Crow’s staff privileges.

Step Four involves an evidentiary hearing. Almost three years after the peer review process began, the hearing has yet to take place and the doctor’s staff privileges remain suspended. The parties disagree over the reasons for the delay.

Dr. Crow filed suit against the hospital in district court in 2006. His complaint asserts various tort and contract causes of action arising from the hospital’s allegedly wrongful effort’s to terminate Crow’s privileges. The doctor sought money damages and an injunction against further attempts to end his staff privileges. The hospital moved to dismiss the case on ripeness grounds, arguing that the doctor must complete the internal peer review process as a condition to maintaining a lawsuit. The trial judge denied the motion, and the hospital filed an original action in the Supreme Court per C.A.R. 21.

The Supreme Court accepted original jurisdiction and today unanimously held that “common law claims arising out of the peer review procedure are subject to the exhaustion of administrative remedies requirement detailed in subsections 12-36.5-106(7) and (8). This statute requires that a governing board reach a final decision before a physician can challenge any aspect of the peer review process in court.” The court made its preliminary rule to show cause absolute and ordered the trial court to dismiss Dr. Crow’s lawsuit.

The Court ruled along the way that the lengthy delay in completing the peer review did not justify allowing Dr. Crow’s civil case to proceed. Rule 106 of the Colorado Rules of Civil Procedure is the proper vehicle for getting a court order compelling an administrative hearing, but Dr. Crow did not request Rule 106 relief in his complaint.

2) Town of Carbondale v. GSS Properties, LLC (pdf, 23 pages). GSS Properties bought fifty-five acres of land near Carbondale, Colorado on which it planned to build a combination mountain resort and ranch operation. Soon after buying the property GSS started construction and also began using pesticides for weed control.

The town of Carbondale sued in district court in 2001, alleging that GSS’s construction and weed control activities endangered the town’s water supply in violation of a municipal ordinance. The town requested that the court enjoin the activities until GSS complied with the watershed protection provisions of the ordinance.

The court set a trial date in October 2003. Per the court’s case management order, the deadline for pleading amendments was January 2002.

About four months before trial, GSS filed a motion for leave to amend its answer to include a new defense, namely that Carbondale’s watershed protection ordinance was preempted by state law. The trial court denied the motion to amend. The court also denied GSS’s motion for partial summary judgment, which was based in part on the preemption defense referenced in the motion to amend. On the first day of trial the court made it clear that the preemption defense was out.

Following a bench trial, the court ruled in the town’s favor and issued the requested injunction. The Colorado Court of Appeals reversed, holding that: (1) GSS “constructively amended” its answer by asserting the preemption defense in its motion for partial summary judgment; and (2) in any event, GSS should have been allowed to argue preemption at trial because the defense can’t be waived.

Today the Supreme Court unanimously sided with the trial judge. The court of appeals appeared to adopt a per se rule that raising an affirmative defense for the first time in a summary judgment motion automatically amends the defendant’s answer. The Supreme Court noted the general rule that “[i]f a defense is not raised in the answer or through a successful amendment of the answer, it is waived.” The court of appeals’ approach improperly creates a new and unauthorized vehicle for pleading amendments:

Rule 8 requires affirmative defenses to be set forth in the pleadings. C.R.C.P. 8(c). If the time for amending pleadings as a matter of course has expired, an amendment can occur with leave of the court, with written consent of the adverse party, or “[w]hen issues not raised by the pleadings are tried by express or implied consent of the parties.” C.R.C.P. 15(a)-(b). The court of appeals’ rule attempts to create a fourth way to amend — namely, by raising a defense in a motion for summary judgment and bypassing Rules 8 and 15 altogether.

Here, the town objected to GSS amending its answer on the ground that a preemption defense would generate much additional time and expense in discovery. Civil Rule 15(a) says that pleading amendments should be liberally allowed “where justice so requires,” but a court has discretion to reject a proposed amendment where the request comes late in the proceedings and would prejudice the other party. Here, the trial court acted within its discretion in refusing leave to amend.

The Supreme Court also rejected the court of appeals’ suggestion that a preemption defense cannot be waived by failure to plead it in a timely manner. Any affirmative defense can be waived except defenses that challenge the court’s subject matter jurisdiction. The latter sort of defense may be raised at any time during (or even after) the proceedings. In an issue of first impression, the Court ruled that GSS’s preemption defense was non-jurisdictional and therefore subject to waiver. The court left for another day the issue of whether a preemption defense grounded in federal law can qualify as jurisdictional.

Cert Petitions:

31 shot down, 2 granted:

1) The Court will decide these issues in C.C. v. People, No. 07SC742:

Whether the “self-inflicted injury” limitation on standing applies in Colorado.

If the self-inflicted injury limitation on standing applies in Colorado, whether it should have been applied in Petitioner’s case.

Whether section 19-3-503(8)(b), C.R.S. (2006), which provides for service by publication of a single notice in child welfare cases, is unconstitutional on its face and as applied to Petitioner.

2) The Court will review this issue in the workers’ comp case Resource I, LLC v. Fera, No. 07S583:

Whether the court of appeals erred in holding that Rule 16-10(F) of the workers’ compensation rules of procedure, 7 Colo. Code Regs. section 1101-3 (2007), and section 8-43-304(1), C.R.S. 2007, permit a claimant to pursue a claim for penalties against an employer for “unreasonableness” in denying prior authorization of medical treatment where the denial was made pursuant to the procedural requirements of Rule 16-10.

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