Conservator had authority to release HCLA claims against doctor.

A disabled person’s conservator had the authority to enter into a consent agreement releasing the person’s HCLA claims against a doctor without approval from the probate court.

In Hamilton v. Methodist Healthcare Memphis Hospitals, No. W2022-00054-COA-R3-CV (Tenn. Ct. App. Oct. 16, 2023), plaintiff filed an HCLA suit as conservator on behalf of a disabled 24-year-old patient. In the original suit, plaintiff conservator named multiple defendants, including a doctor and defendant hospital. All claims against the hospital were based on its vicarious liability for the actions of the doctor.

At the end of a jury trial, the jury was unable to come to a unanimous verdict, and plaintiff conservator was granted a mistrial. The conservator thereafter entered into a consent agreement with the doctor whereby she agreed not to name the doctor as a defendant in any subsequent suit in exchange for the doctor not pursuing discretionary costs related to him being voluntarily dismissed from the original suit. The same day the consent agreement was signed, plaintiff refiled the HCLA claim against the hospital, naming the hospital as the sole defendant and alleging that it was vicariously liable for the actions of the doctor.

Defendant hospital filed a motion for summary judgment, alleging that because the only claims against it were vicarious liability claims, and because plaintiff had released the doctor from liability through the consent agreement, it would be improper to allow the plaintiff to proceed against only the hospital/principal. Plaintiff conservator countered by arguing that the consent agreement had no binding affect because it was not approved by the probate court. The trial court ultimately ruled that the conservator did have the authority to enter into the consent agreement and thus granted summary judgment to defendant hospital, which was affirmed on appeal.

The Court of Appeals began its analysis with the issue of whether the consent agreement signed by the conservator required probate court approval, as that issue was dispositive of the case. The conservator argued that the agreement “was not binding because she did not have the right to settle a claim without approval from the probate court.” In support of her argument, the conservator relied on an advisory opinion from the probate court wherein that court opined that court approval of a settlement by the conservator was mandatory, but the Court of Appeals noted that the advisory opinion relied heavily on law addressing conservators for minors.

The Court of Appeals first looked to both statutes and case law addressing the powers of a conservator, as well as the language of the order appointing the conservator in this case. Plaintiff conservator was authorized in the order “to dispose of property, execute instruments, make purchases, enter into contractual relationships, give or refuse consent to medical and mental examinations and treatment and/or hospitalization, and pursue legal causes of action on behalf of” the patient. The Court noted that language in a court order should be construed “in light of its usual, natural, and ordinary meaning,” and it rejected the conservator’s argument that the conservator lacked the authority to settle a case simply because the order did not specifically mention settlements. (internal citations omitted).

The Court reasoned:

We likewise interpret the probate court’s order of appointment in this case as authorizing the action taken by the conservator. She entered into a Consent Agreement agreeing not to name Dr. Rayder as a defendant in her re-filed complaint in exchange for his agreement to withdraw his motion for discretionary costs. “[S]ettlement agreements are contracts between the parties[.]” The order of appointment vested Ms. Hamilton with the power to “dispose of property, execute instruments, . . . enter into contractual relationships, . . . and pursue legal causes of actions on behalf of [Ms. McGill],” including “the power to collect, receive, and manage the monies, property, and effects of the Ward[.]” And, as Methodist aptly notes on appeal, Tennessee courts have found in other contexts that the authority to settle was encompassed by other powers. … Considering the language used in the probate court’s order of appointment, we conclude that it authorized Ms. Hamilton to enter into the Consent Agreement at issue.

(internal citations omitted).

Having found that the conservator had the authority to execute the consent agreement, the Court next considered plaintiff’s argument that the consent agreement required probate court approval. The Court pointed out that Tenn. Code Ann. § 34-1-121 gives a court power to approve settlements made on behalf of minors and persons with disabilities, but does not make such approval mandatory. While another code section makes the approval mandatory when the settlement is entered into on behalf of a minor, no such statute exists for persons with disabilities. Moreover, in a case decided fifteen years ago, the Court ruled that § 34-1-121 “gives a court the power to approve a settlement, but does not mandate that the court must approve all settlements.” In the time since that decision, the legislature has not made any effort to change that result, even though the statute has been amended in other ways since.

Based on the statutes, case law, and probate court order appointing plaintiff conservator, the Court found that the conservator had the authority to enter into the consent agreement, that court approval of the consent agreement was not required, and that the consent agreement was thus binding. The trial court’s ruling was accordingly affirmed.

This opinion was released four months after oral arguments in this case.

Note:  Chapter 55, Section 28 of Day on Torts: Leading Cases in Tennessee Tort Law has been updated to include this decision.

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