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Sanctions based on HCLA Certificate of Good Faith Denied

Where defendant pharmacists alleged comparative fault against a doctor and filed a certificate of good faith that complied with all the necessary requirements of the statute, the trial court’s decision to deny sanctions based on the allegation that the “certificate of good faith was supported by the written statement of an incompetent expert witness” was affirmed, even though the doctor’s motion for summary judgment had been successful. The Court of Appeals explained that “nothing in the express language of section 29-26-122 requires that a party asserting fault against another guarantee that his or her expert is competent or that the claim will ultimately prevail.”

In Smith v. Outen, No. W2019-01226-COA-R3-CV (Tenn. Ct. App. Oct. 9, 2020), plaintiff filed an HCLA suit against defendant pharmacists for dispensing the wrong medicine to plaintiff. In her complaint, plaintiff stated that when her doctor realized she had been given the wrong medicine by the pharmacists, he ordered her to stop the medicine immediately. Defendant pharmacists filed an answer alleging comparative fault against the doctor, asserting that he should have had plaintiff taper off the medication rather than stop it immediately. The pharmacists’ attorney filed a certificate of good faith supporting their comparative fault allegation, as required by the HCLA, and plaintiff amended her complaint to add the doctor as a defendant.

The doctor moved for summary judgment, and “after neither Plaintiffs nor Defendants disclosed expert witnesses who would offer testimony against” the doctor, the trial court granted summary judgment. Thereafter, the doctor filed a motion to compel defendant pharmacists to “disclose the signed written statement of the expert relied on in executing [the pharmacists’ attorney’s] certificate of good faith, pursuant to section 29-26-122(d)(2).” The pharmacists disclosed their expert statement, which was signed by Stephen Herndon, one of the defendant pharmacists. The doctor then filed a motion asking the trial court to “deem the certificate of good faith insufficient and impose sanctions on [defendants] for violating sections 29-26-122(d)(2) and (3),” arguing that Mr. Herndon was “unqualified to testify about the standard of care applicable to a family physician…or medical causation of injuries[.]” The trial court denied the motion for sanctions, and the Court of Appeals affirmed.

Tenn. Code Ann. § 29-26-122 governs HCLA certificates of good faith, with subsections (a) and (b) containing the statutory requirements, and subsection (d) providing a way for an opposing party to obtain the expert statement upon which the certificate was based and a means for seeking sanctions when the statute has been violated. While § 29-26-122(d) “provides a mechanism for a party to obtain the statement underlying a certificate of good faith when the party prevails at the summary judgment stage on the basis of the opposing party’s failure to offer competent expert proof,” the Court noted in its opinion that a summary judgment dismissal “itself… provides no basis for sanctions; it merely triggers a party’s ability to obtain additional information upon which to determine if the good faith certificate requirement was violated.”

In this case, the doctor argued that “unless [the pharmacist defendants] acted in ‘complete compliance’ with section 29-26-122 (and by incorporation therein, section 29-26-115), he [was] entitled to an award of sanctions.” The pharmacists asserted, though, that sanctions were uncalled for here as they “met both the letter and the spirit of section 29-26-122’s good faith requirement.”

The Court of Appeals began its analysis by pointing out that the purpose of the certificate of good faith requirement is to “ensure that a good faith basis exists for the filing of the lawsuit.” While “good faith” is not defined in the HCLA, it is “frequently defined in the negative, i.e., it represents the absence of bad faith.” (internal citation omitted). Further, good faith requirements in other contexts “have not mandated perfection” and have been “analogized…to a due diligence requirement.” (internal citations omitted). In a previous case, the Court of Appeals held that “in order to meet the good faith standard required by section 29-26-122, there was no requirement that a plaintiff have, at the commencement of the action, all of the expert testimony that may be needed on all issues, or conduct discovery and make a prima facie case prior to suit being filed.” (internal citation and quotations omitted). Further, in another case seeking sanctions related to the certificate of good faith, the Court previously held that “the fact that the medical expert’s opinion may ultimately not be accepted is not a basis for concluding that the attorney violated the certificate of good faith statute.” (internal citation omitted).

Based on this background and the facts of this case, the Court held that the trial court did not err in refusing to grant sanctions here, and that the “trial court’s order makes clear that it found that [the pharmacy defendants] ‘sufficiently complied’ with section 29-26-122 so as to constitute a good faith effort.” The Court noted that the certificate of good faith that was filed contained all the statutory requirements, and that while it did not use the statutory language verbatim, the expert “appropriately attested to his competence.”

The doctor argued that the Court should consider whether Mr. Herndon, who signed the expert statement, was ultimately deemed competent to testify in the case when considering sanctions. He asserted that “a certificate of good faith violates section 29-26-122 unless the expert or experts who signed the written statement in support thereof were competent under section 29-26-115(b) to testify as to every necessary element contained in section 29-26-115(a).” His argument was that if an expert was wrong in his assertion of competence, the certificate of good faith was noncompliant and sanctions were appropriate. The Court rejected this assertion, explaining:

[S]ections 29-26-122(d)(2) and (3) do not condition sanctions on simply the dismissal of the health care liability action based on a lack of expert proof; rather, this fact is simply the triggering mechanism that allows a party to seek additional information to determine if section 29-26-122 was violated. …Tennessee caselaw has specifically held that a party may act in good faith prior to the filing of their lawsuit even without all of the proof necessary to ultimately prove their claim. And again, the certificate of good faith is not a guarantee that a claim will ultimately prove to be meritorious, as the requirement occurs during the very initial stages of litigation. …[T]he plain language of section 29-26-122 requires only that the expert believe that he or she meets the competency requirement. …[N]othing in this express language of section 29-26-122 requires that a party asserting fault against another guarantee that his or her expert is competent or that the claim will ultimately prevail. …The purpose of the good faith certificate…is intended only to be a barrier against the prosecution of frivolous lawsuits.

(internal citations and quotations omitted).

Applying that rationale, the Court found that “the only thing that Mr. Herndon’s statement was required to state with respect to competency was that he believed he was competent, which it did.” The Court noted that Mr. Herndon was a pharmacist, and the injuries in this case were “directly connected to the dispensation of medication,” so this was “not a case where a party attempted to support its allegation of medical negligence with the ‘expert’ testimony of a person completely outside of the medical profession.” Even though the defendant pharmacists’ claim ultimately failed and Mr. Herndon’s competency as an expert was questioned, the Court ruled that “the records support[ed] that Mr. Herndon had a good faith basis to believe he was competent to assert fault against [the doctor] at the time the certificate of good faith was filed.” The trial court’s decision to deny sanctions was thus affirmed.

As this case notes, there are few appellate opinions addressing sanctions under this provision of the HCLA, but the Court here did a good job of analyzing the intent of the statute and applying it correctly. Expert competency can be highly contested in HCLA cases, and an ultimate ruling that an expert is not competent does not equate to an inference that the certificate of good faith was not filed in compliance with the statute. This opinion properly refuses to interpret the statute to require sanctions in every HCLA case dismissed on summary judgment based on a lack of proper expert testimony.

NOTE:  this opinion was released less than three months after oral argument.

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