A trial court will need to recalculate pre- and post-judgment interest in a case in which a doctor was awarded millions in damages after suing a Carmel hospital, the Indiana Court of Appeals has ruled.
On Wednesday, the appellate court affirmed, remanded and reversed in part in Rebecca J. Denman, M.D. v. St. Vincent Medical Group, Inc., St. Vincent Carmel Hospital, Inc., 20A-PL-1236.
In December 2017, a nurse employed by St. Vincent Carmel Hospital reported that, the prior evening, she had smelled alcohol on the breath of Dr. Rebecca J. Denman while Denman was on call and stopped at the hospital to check on a patient. About 10 days later, Denman’s employer, St. Vincent Medical Group, placed her on leave and required her to submit to an alcohol assessment, which ultimately led to an evaluation and six weeks of treatment.
Denman sued the hospital, nurse and SVMG collectively for, among other things, defamation, fraud, constructive fraud, negligent misrepresentation, tortious interference with an employment relationship and civil conspiracy.
Following the Marion Superior Court’s denial of the defendants’ motions for summary judgment and directed verdict, the jury found in Denman’s favor on all claims except civil conspiracy, awarding her $4.75 million.
After a hearing in May 2020, the trial court on June 19, 2020, issued a consolidated order addressing various pending post-trial motions. The court granted Denman’s request for an award of prejudgment interest, but at a rate of 8% rather than her requested 10%, and awarded her $235,726.04 — 8% on a reduced award of $3.5 million accruing through the date of judgment. But the court denied her request to add that award to the original money judgment, finding that a trial court “can award interest as part of overall judgment” but was not required to do so.
The trial court granted Denman’s motion for an award of prejudgment interest, but tolled accrual of post-judgement interest for several months pursuant to a COVID-19-related Indiana Supreme Court emergency order.
Defendants in the case then filed a motion to correct error or for remittitur, which the trial court granted in part, finding that the fraud/constructive fraud and negligent misrepresentation damages were duplicative.
In a consolidated appeal, the defendants raised three issues: whether the trial court should have granted a directed verdict on Denman’s defamation claim, three reliance-based claims of fraud, constructive fraud and negligent misrepresentation, and her claim of tortious interference with an employment relationship.
The Court of Appeals found no error in the trial court’s handling of the three issues and turned to appellate issues raised by Denman post-trial:
- Did the trial court err when it reduced the verdict and judgment against SVMG for fraud, constructive fraud and negligent misrepresentation from $2.25 million to $1 million?
- Was Denman entitled to post-judgement interest on the trial court’s award of prejudgment interest and, if so, was the trial court required to amend the original judgment to add the award of prejudgment interest to it?
- Did the trial court err when it temporarily suspended the accrual of post-judgment interest pursuant to the emergency order?
The Court of Appeals sided with trial court on the first issue but remanded the second.
“At issue in this appeal is Subsection 7 of the Statute,” Judge Robert Altice wrote, which states: “The court may award prejudgment interest as part of a judgment.”
Denman contended that the trial court, in refusing to amend the judgment as requested, misinterpreted Subsection 7, Altice wrote. She argued that the word “may” in Subsection 7 was intended to attach only to the clause “award prejudgment interest” and not to the latter phrase “as part of a judgment,” such that, while a trial court has discretion as to whether to award prejudgment interest, once it does so, it must add the prejudgment interest award to the judgment, upon which post-judgment interest then accrues.
“We agree with Dr. Denman to the extent that she is entitled to accrue post-judgment interest on her award of prejudgment interest, but disagree that the trial court was required to amend the judgment in the manner she suggests,” Altice wrote. “… We find that the June 18, 2020 award of prejudgment interest, upon which the trial court expressly entered judgment, constituted a ‘judgment for money’ within the meaning of Section 101, such that post-judgment interest automatically began to accrue on that date.”
The COA directed the trial court on remand to recalculate the prejudgment interest award based on the $4.75 million verdict, which award shall accrue post-judgment interest beginning June 19, 2020.
On the final issue brought by Denman, the Court of Appeals reversed the trial court’s remitter of damages, as it found that the Supreme Court’s emergency orders did not toll the accrual of post-judgement interest. It reversed and remanded to the trial court to recalculate post-judgment interest pursuant to statute.
Shortly after judgment was entered, the COVID-19 pandemic prompted the Supreme Court to enter a series of emergency orders. On March 13, 2020, the Supreme Court issued an order granting Marion County’s petition for emergency relief. Among other things, the order stated that “no interest shall be due or charged during the tolled period[,]” beginning March 16, 2020.
The Supreme Court reiterated this same provision 10 days later in a generally applicable order.
On March 30, 2020, the trial court applied the emergency orders to Denman’s case, stating “any post-judgment interest accruing on the final judgment is tolled during the pendency of the judicial emergency as declared by the Indiana Supreme Court, which shall last at least through May 1, 2020.”
“Dr. Denman contests as unconstitutional the trial court’s order tolling the accrual of post-judgment interest,” Altice wrote. “Her argument, as well as the trial court’s ruling, assumes the emergency orders mandated that post-judgment interest be tolled. But the emergency orders cannot reasonably be construed in such a manner.
“… The post-judgment interest statute is substantive rather than procedural, meaning it ‘creates, defines, and regulates rights’ rather than ‘prescrib[ing] the method of enforcing a right or obtaining redress’ for its invasion,” Altice continued “… An appellate court cannot change a rule of substantive law without a case before it.”
Altice continued, “Despite the potential breadth of the term ‘interest’ in the emergency orders, we do not interpret that language to include post-judgment interest. The words ‘tolled period’ are instructive, because post-judgment interest — being automatic and continuous — cannot be tolled. Our conclusion is in keeping with our practice of presuming that each branch of our government acts within their constitutionally prescribed boundaries.”
The Court of Appeals ruled that, in this case, the trial court erred in interpreting the emergency orders to apply to post-judgment interest because doing so would give the emergency orders effect beyond the power constitutionally and statutorily allocated to the courts.
“We would be foolish to infer such intent simply because the Court did not designate every type of ‘interest’ it was tolling,” Altice wrote. “Reason dictates that the Court did not intend its order to apply to post-judgment interest which is mandated by the legislature. This seems particularly likely in light of other, less invasive measures available to the Court if it intended to grant temporary post-judgment interest relief, i.e., requiring the deposit of post-judgment interest into clerks’ office or escrow accounts.”
Permitting grants of prejudgment interest, Altice said, would have cost litigants for a delay they did not cause.
“Post-judgment interest, on the other hand, arises just as automatically during a pandemic as it does any other time — and it will continue to do so until the legislature decides otherwise. For all these reasons, we find that the trial court erred in tolling the accrual of Dr. Denman’s post-judgment interest.”
The defendants are represented in the case by attorneys with Bose McKinney & Evans, while Denman was represented by Kathleen DeLaney of DeLaney & DeLaney.
“The Court of Appeals decision strongly affirms the correctness of the verdict and harm caused by St. Vincent’s, ruling in Dr. Denman’s favor on all issues in a unanimous opinion,” DeLaney said in an email to IL. “The jury’s $4.75 million verdict resoundingly vindicated Dr. Denman.
“Up to this point, St. Vincent’s post-verdict legal challenges have run up more than $1 million in interest on the judgment,” DeLaney continued. “Pursuant to the Court of Appeals ruling, each day that St. Vincent’s delays satisfying the judgment will cost more than $1,100 in additional daily interest. We hope that the Defendants will promptly pay Dr. Denman what they owe her and begin treating her fairly.”
The case is believed to be believed to be the first jury verdict in an Indiana Commercial Court case.