Lawsuit Challenges Nonprofits' Protections
By Kathleen Burge
February 3, 2003
The future of the state's controversial limit on how much hospitals and other nonprofits can be forced to pay if they are sued may lie in the story a woman who slipped on the ice.
Janet Conners filed a lawsuit against Beverly's Northeast Hospital after she fell in an ice-rutted parking lot after the April Fool's Day snowstorm of 1997 and broke her leg. Although a jury awarded her $183,000 for her injury, a judge chopped the verdict down to $20,000, the limit under the state's "charitable immunity" cap.
Conners appealed, arguing that an idea adopted more than a century ago to protect public donations to charities should not now protect the modern, multi-million-dollar Northeast Hospital Corporation. This morning, the state's highest court is scheduled to hear her case.
In 1969, the Supreme Judicial Court had threatened to abolish charitable immunity altogether, which back then was absolute: nonprofits could not be sued. The Legislature rescinded the total immunity, but set a cap on damages of $20,000.
Legal experts say it's unlikely that the SJC, which found the cap constitutional in 1989, will now throw it out. Still, in that same decision, the justices called the $20,000 limit "paltry" but said any change should come from the Legislature and not the court. Although legislation has been filed sporadically since, it has not passed.
"Most states have gotten rid of it and most did it a long time ago," said Paul R. Schneider, Conners' lawyer. "Sometimes these bad rules get engraved in stone in the law."
The case is being watched not only by hospitals, schools, and cultural organizations, but by lawyers for alleged victims of clergy sexual abuse. The Archdiocese of Boston has raised the charitable immunity cap as a possible defense in the hundreds of priest sexual abuse cases, if the claims are not settled before trial.
The idea of legal immunity for charities dates from an 1846 decision in England, in which a court held that charitable funds shouldn't be diverted from the purpose for which they were donated. England soon rejected the doctrine, but in a 1876 case the Massachusetts SJC adopted it.
In that case, James McDonald sued Massachusetts General Hospital, arguing that the hospital's "house pupil" -- a student at Harvard Medical School -- incorrectly set his broken leg and left him permanently injured. The court, noting that the hospital was supported almost entirely by public and private charity, ruled that McDonald couldn't sue MGH.
"It has offered to him freely those ministrations which, as the dispenser of a public charity, it has been able to provide for his comfort, and he has accepted them," Justice Charles Devens wrote. "It has no funds which can be charged with any judgment which he might recover, except those which are held subject to the trust of maintaining the hospital."
The legal principle soon spread nationwide. But the Massachusetts Academy of Trial Attorneys argues that by the 1950s, asset-poor charities had evolved into sophisticated corporate entities, including organizations that no longer relied on donations but sold their services. States began rejecting their charitable immunity laws.
When Conners arrived for work the morning of April 2, 1997, the parking lot of the Northeast Hospital campus had not been sanded, her lawsuit alleges. Her fall left her permanently disabled, with a titanium rod implanted in her leg, Schneider said. She now has difficulty kneeling and running.
When Conners sued Northeast, its lawyers asked a judge to cap its liability at $20,000. But Conners' lawyers argued that the medical building adjacent to the parking lot where Conners was injured had no charitable purpose. The building, on land owned by Northeast Hospital, is filled with the offices of for-profit medical practices.
An Essex County jury ignored the cap and awarded Conners $183,000. But Superior Court Judge Barbara J. Rouse reduced the verdict to $20,000. She ruled that maintaining the property accomplishes the charitable purpose of the hospital.
Rouse ruled that Northeast had met its three-part burden, proving that it was a charitable organization in 1997; that Conners was injured in an activity directly carrying out the charitable purpose; and that she was not injured in an activity that was "mainly commercial."
"It is axiomatic that if the public cannot come into the Beverly Hospital campus, medical care and treatment cannot be provided," Rouse wrote in her decision.
Northeast was organized in 1893 as the nonprofit Beverly Hospital Corporation for "the care and treatment of the sick, especially the worthy poor of the Town of Beverly." Now the hospital is a subsidiary of Northeast Health Systems, a conglomerate that runs hospitals, nursing homes, doctors' offices, and other health-care businesses.
Conners' lawyer argues that by 1997, when she was injured, the company was no longer a charity but a successful business, carrying $20 million in liability insurance. That year, the parent company received more than $145 million in revenues, Schneider says, of which only $229,000 -- or about one-sixth of 1 percent -- came from charitable public contributions and income from endowments.
Lawyers for the Massachusetts Hospital Association argue that abolishing or changing the cap could devastate the financially troubled hospital industry. And if hospitals are no longer considered charities, the group argues, the state's oversight will be diminished.
"If this court were to rule that it wasn't a public charity, by implication it wouldn't be subject to all of the laws and oversight powers of the attorney general that are applicable to public charities," said attorney Lawrence B. Litwak.
Lawyers for the alleged victims of priest abuse believe the details of Conners' case differ from their claims. They argue that the activity at the heart of their lawsuits -- sexual abuse by clergy -- shouldn't be protected by the cap because it is contrary to the church's mission. And, they say, church officials were more than negligent in moving accused pedophiles from parish to parish -- they were reckless.
One of the lawyers, Roderick MacLeish Jr., argues that the cap doesn't reflect the realities of modern society, where some businesses, calling themselves charities, are protected by the cap.
"It really is anachronistic, unfair legislation," MacLeish said. "The Legislature has been disinclined to change it."
Kathleen Burge can be reached at email@example.com
This story ran on page B1 of the Boston Globe on 2/3/2003.
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