Lossiah v. United States of America

Filing 22

ORDER overruling Deft's 20 Objections to the Memorandum and Recommendation; accepting the 18 Memorandum and Recommendations; and denying Deft's 9 Motion to Dismiss. Signed by District Judge Martin Reidinger on 4/10/2019. (ejb)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF NORTH CAROLINA
ASHEVILLE DIVISION
CIVIL CASE NO. 1:18-cv-00134-MR-DSC

CANDY LOSSIAH, Administratrix of
the Estate of ANTHONY EDWARD
LOSSIAH,

)
)
)
)
Plaintiff,
)
)
vs.
)
)
UNITED STATES OF AMERICA,
)
)
Defendant.
)
_______________________________ )

ORDER

THIS MATTER is before the Court on Defendants’ Motion to Dismiss
Complaint Pursuant to Fed. R. Civ. P. 12(b)(1) and 12(b)(6) [Doc. 9]; the
Magistrate Judge’s Memorandum and Recommendation [Doc. 18] regarding
the disposition of that motion; and the Defendant’s Objections to the
Memorandum and Recommendation [Doc. 20].
Pursuant to 28 U.S.C. § 636(b) and the standing Orders of Designation
of this Court, the Honorable David S. Cayer, United States Magistrate Judge,
was designated to consider the Defendant’s motion and to submit a
recommendation for its disposition.
On February 13, 2019, the Magistrate Judge filed a Memorandum and
Recommendation in this case containing conclusions of law in support of a

recommendation regarding the motion to dismiss. [Doc. 18]. The Magistrate
Judge advised the parties that they had fourteen (14) days, or until February
27, 2019, to file written objections to the recommendation. [Id.]. On February
19, 2019, Defendant sought and was granted by text order a seven-day
extension of time to file written objections to the recommendation, making
Defendant’s objections due on March 6, 2019. [Doc. 19]. On March 5, 2019,
Defendant

timely

filed

Objections

to

the

Memorandum

and

Recommendation. [Doc. 20]. On March 18, 2019, Plaintiff filed a Reply to
Defendant’s Objections. [Doc. 21].
The Court has reviewed the Memorandum and Recommendation and
the Defendant’s Objections thereto and based thereon concludes as follows.
It is undisputed that the Plaintiff’s decedent, Anthony Edward Lossiah
(“Lossiah”), was a police officer employed by the Eastern Band of Cherokee
Indians (EBCI) who was injured while on the job. This action is for medical
malpractice in the treatment Lossiah received for those injuries at the
Cherokee Indian Hospital (CIH or the Hospital), which malpractice allegedly
resulted in his death. The Workers’ Compensation action regarding the
death has already been settled.
With respect to Defendant’s Rule 12(b)(1) motion, the Magistrate
Judge recommended denial of that motion concluding that Plaintiff’s civil
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action for malpractice is not barred by the Workers’ Compensation Act (the
“Act”). [Doc. 18 at 4]. Namely, for purposes of this lawsuit under the Federal
Tort Claims Act (FTCA), the CIH medical personnel who treated Lossiah are
deemed to be employees of the Public Health Service (PHS) pursuant to the
EBCI’s Compact with the Department of Health and Human Services
(DHHS). Based thereon the Magistrate Judge concluded that “[f]or purposes
of this lawsuit” the medical personnel who treated Lossiah were not
employees of his employer (EBCI), and thus the limited remedy against one’s
employer under the Workers’ Compensation statute did not apply.
Defendant objects to that conclusion on the basis that CIH was “conducting
the business” of the EBCI, Lossiah’s employer, when Lossiah was treated at
the Hospital and thus the Hospital comes within the scope of the immunity of
N.C. Gen. Stat. § 97-9. [Doc. 10 at 17-21; Doc. 20 at 6, n. 3].
The Defendant’s objection is, in part, well taken. The fact (or rather
the legal fiction) that the CIH’s employees are “deemed to be” employees of
the PHS is not dispositive. That only serves to bring this action within the
confines of the FTCA, and therefore makes the United States the proper
defendant. However, “the United States is entitled to [any] protection of the
immunity” provided by any state law provision affording immunity to “a
similarly placed private employer.” Lomando v. United States, 667 F.3d 363,
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378-79 (3d Cir. 2011) (citing 28 U.S.C. § 2674). See also Schwarder v.
United States, 974 F.2d 1118, 1121-22 (9th Cir. 1992). This “private-party
analogue” allows the Defendant to step into the shoes of the CIH and avail
itself of all defenses the CIH would have had. FDIC v. Meyer, 510 U.S. 471,
477 (1994).
Section 97-9 of the Workers’ Compensation Act requires employers to
secure payment of compensation to their employees in accordance with the
Act and provides: “[W]hile such security remains in force, he or those
conducting his business shall only be liable to any employee for personal
injury or death by accident to the extent and in the manner herein specified.”
N.C. Gen. Stat. § 97-9 (emphasis added). “By its plain language, N.C.G.S.
§ 97-9 extends exclusivity protection beyond the employer to ‘those
conducting [the employer’s] business.’” Hamby v. Profile Products, L.L.C.,
361 N.C. 630, 636, 652 S.E.2d 231, 234 (2007). Typically, this provision
protects co-employees of an injured workers’ compensation claimant from
being sued where the co-employee’s negligence caused or contributed to
the claimant’s compensable injury. See Strickland v. King, 293 N.C. 731,
733, 239 S.E.2d 243, 244 (1977) (“[A]n employee subject to the Act whose
injuries arise out of and in the course of his employment may not maintain a
common law action against a negligent co-employee.”). In Hamby, the North
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Carolina Supreme Court found that the sole member-manager of an
employer was conducting the business of the employer where the membermanager was “exclusively charged with management” of the employer’s
business pursuant to the employer’s operating agreement. 361 N.C. at 63638, 652 S.E.2d at 235-36. Applying Hamby, the Defendant argues that the
CIH was conducting the business of the EBCI because “the Cherokee
Hospital is a component unit of the EBCI” and “the hospital is operated within
the structure of tribal governance created by the EBCI.” [Doc. 10 at 18].
Therefore, the Defendant concludes, “the exclusive remedy provision [of the
Act] extends to the Cherokee Hospital, and in turn the United States.” [Id. at
19].
Defendant’s argument oversimplifies the analysis necessary for
discerning the meaning of “those conducting his [the employer’s] business”
in § 97-9. North Carolina’s Workers’ Compensation Act was enacted for the
purpose of “provid[ing] certain limited benefits to an injured employee
regardless of negligence on the part of the employer, and simultaneously to
deprive the employee of certain rights that he had at common law.” Brown
v. Motor Inns of Carolina, Inc., 47 N.C. App. 115, 118, 266 S.E.2d 848, 849,
disc. rev. denied, 301 N.C. 86 (1980). As such, the Workers’ Compensation
Act embodies a certain policy trade-off. Underlying this trade-off are two
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crucial facts: (1) that an injured employee is in serious jeopardy because
his/her livelihood is at stake during any prolonged determination of an
employer’s liability, and (2) that the employer’s control over the workplace
puts the employer in a position to more easily prevent and avoid employee
injuries. Thus an employer is strictly liable for a workplace injury, but to an
extent less than common law liability in negligence. A cornerstone of this
trade-off, of course, is the employer’s control over the conditions of the
workplace and the employee’s work activities. For this reason, a parent
corporation of the employer corporation is not liable for a workplace injury,
absent a showing of direct or day-to-day control over the workplace activities
by the parent. Edwards v. GE Lighting Sys. Inc., 200 N.C. App. 754, 685
S.E.2d 146 (2009); Richmond v. Indalex, Inc., 308 F.Supp.2d 648 (M.D.N.C.
2004). Determining whether one is “conducting the employer’s business” is
a matter of analyzing the subject party’s control. An employer has control
over an employee’s co-worker.

Thus, the co-worker is conducting the

employer’s business, and the employer is liable pursuant to § 97-9.
Strickland, 293 N.C. at 733, 239 S.E.2d at 244. An LLC employer is liable
pursuant to § 97-9 for the actions of the LLC’s sole member-manager
because of the control that party has over the workplace and the conditions

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of the claimant’s employment. Hamby, 361 N.C. at 363-38, 652 S.E.2d at
235-36.
In the present case, the Cherokee Indian Hospital does not conduct
the EBCI’s business, as that phrase is intended by § 97-9. The CIH is not
involved in the day-to-day operations of the EBCI or charged with managing
the EBCI in any respect, much less with regard to the ECBI police
department or the conditions or circumstances of Lossiah’s employment.
The Hospital exists as a separate entity that is operated and controlled by its
own Board of the Cherokee Indian Hospital Authority (CIHA).1 The CIHA is
an umbrella body that operates the CIH, as well as other clinics and health
programs run for the EBCI. The Eastern Band of Cherokee Indians Code of
Ordinances (“Tribal Code”) Section 130B-5 sets forth the powers and duties
of the Governing Board of the CIHA. It provides, in part:
(1) The CIHA Governing Board shall be responsible
for direction and oversight of the Cherokee Indian
Hospital, and other health programs as may be
assigned to the CIHA by resolution of the Tribal
Council.
(2) In the oversight of assigned health programs, the
Governing Board shall have the authority to hire
an experienced chief executive officer (CEO) to
manage day-to-day operations of the programs.
The parties do not dispute that Lossiah was employed by the EBCI. The Government
concedes that the healthcare providers whose alleged negligence gave rise to the instant
case were employees of the CIH, not the EBCI. [Doc. 10 at 17; Doc. 20 at 6, n. 3].
1

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The CEO shall serve at the pleasure of the
Governing Board.
(3) The Board shall establish personnel policies and
procedures for employees of the programs it
administers…. The Board shall have the authority
to set rates of pay … as necessary to attract and
retain qualified staff. The Principal, Vice Chief and
Tribal Council shall not be involved in any
individual employee hiring, firing, and discipline
decisions.
(4) The Board shall, in consultation with the medical
staff, establish policies and procedures for the
delineation of clinical privileges, including a fair
hearing process for privilege restriction or
termination, and oversight of medical staff quality
improvement activities.
(5) The Board shall establish policies and
procedures for effective management and
delivery of health care, sufficient to ensure
accreditation of the Cherokee Indian Hospital and
other health programs as assigned by the Tribal
Council.
(6) The Governing Board shall develop long range
plans for improvement of patient care, within the
limits of available federal and Tribal funding….
(7) The Governing Board shall have full authority to
establish and amend the budget consistent with
patient needs for use of all funds received and
appropriated from federal, Tribal, and other
sources, subject to any priorities established by
the Tribal Council and any grant conditions or
restrictions….

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Tribal Code § 130B-5.

Further, the declaration of need for the CIHA

provides: “Improved performance and quality patient care require
professional management, free from inappropriate political influence or
interference with day-to[-]day personnel and patient care decisions. Health
system employees must be supervised in an impartial manner, under a fair
and efficient personnel policy, so they can provide quality medical care at a
reasonable cost.” Tribal Code § 130B-2(4)(c). As such, the Tribal Code
establishes the CIHA as a “component unit” distinctly separate from any
operation by or of the EBCI. As such, the CIH may come within the purview
of § 97-9 with regard to an injury to a nurse arising from a mishap in the
operating room (regardless of negligence), but not with regard to the medical
negligence that contributed to an injury of a person who happens to be an
employee of the EBCI.
Therefore, Defendant’s argument that this Court lacks subject matter
jurisdiction because the Act’s exclusivity provision applies to Defendant, as
it stands in the shoes of the CIHA under the FTCA, is without merit.
Defendant also objects to the Memorandum and Recommendation
based on the Magistrate Judge’s conclusion that the Settlement Agreement
resolving the Workers’ Compensation claim does not bar this action. The
Magistrate Judge reasoned that a wrongful death action can only be brought
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by the personal representative on behalf of the estate, citing Greer v.
Parsons, 331 N.C. 368, 416 S.E.2d 174 (1992), Graves v. Welborn, 260 N.C.
688, 133 S.E.2d 761 (1963), and other authorities, but that the personal
representative was not a party to the Settlement Agreement. [Doc. 10-1 at
1, 16].
Defendant objects, citing N.C. Gen. Stat. § 97-10.1, arguing that the
remedy pursuant to the Workers’ Compensation statute “shall exclude all
other rights and remedies of … the personal representative as against the
employer.” Id. [Doc. 20 at 15].
Defendant misses the mark in at least two respects. First, § 97-10.1
says nothing regarding the scope of this Settlement Agreement or any other
agreement. It simply states that the estate’s (personal representative’s)
claim against the employer, is governed by the Workers’ Compensation
statute and not by common law. That does not change the fact that the
personal representative was not a party to the agreement and thus did not
release the present claim.2

Notwithstanding the language Defendant cites in § 97-10.1, it is clear that a death claim
pursuant to the Workers’ Compensation Act is properly brought by certain beneficiaries,
not the estate or personal representative of the deceased. N.C. Gen. Stat. § 97-38. On
the other hand, a wrongful death medical malpractice claim, such as the present case,
can only be brought by the personal representative. N.C. Gen. Stat. § 28-18-2, Livingston
v. United States, 817 F.Supp. 601, 604 (E.D.N.C. 1993). It is not before this Court as to
whether the failure of the personal representative to execute the Settlement Agreement
left open any potential claim by the personal representative against the employer.
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Second, the Settlement Agreement is clear as to what it releases, and
it does not include this claim. It releases claims against any parties “charged
or chargeable with responsibility or liability … which … [Plaintiffs] ever had
or may have, by reason of or growing out of the terms and provisions of the
North Carolina Workers’ Compensation Act.” [Doc. 10-1 at 15]. This claim
asserts no liability growing out of the terms and provisions of the Workers’
Compensation Act. Quite the contrary, Plaintiff herein asserts a medical
malpractice claim entirely outside of any liability that arose pursuant to the
Act. As such, this claim is outside the scope of the claims released in the
Settlement Agreement.
Accordingly, the Court hereby overrules the Defendant’s Objections
and accepts the Magistrate Judge’s recommendation regarding the motion
to dismiss.
IT IS, THEREFORE, ORDERED that the Defendant’s Objections to the
Memorandum and Recommendation [Doc. 20] are OVERRULED; the
Memorandum and Recommendation [Doc. 18] is ACCEPTED; and the
Defendant’s Motion to Dismiss [Doc. 9] is DENIED.
IT IS SO ORDERED.

Signed: April 10, 2019

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