New Michigan Court of Appeals decision involving direct hospital negligence, hospital policies, corporate designees, and Wrongful-Death Damages
The Michigan Court of Appeals issued an unpublished opinion in the Calo v. Dixit matter, which should be heeded as a warning for all hospitals and medical facilities. The case stems from a medical malpractice case brought in Macomb County Circuit Court alleging claims of medical malpractice against a surgeon along with both vicarious and direct liability claims against the hospital.
The claims against the hospital included the usual “failure to train and supervise” language and claims that the hospital violated the Public Health Code. At trial, the court permitted an inference of negligence for violations of the Public Health Code. The jury found among other things that the hospital was directly negligent. The hospital was held liable for failing to implement and enforce its own chain of command policies, which the jury found proximately caused the death of a 41-year-old patient from untreated necrotizing fasciitis following an abdominoplasty performed by a plastic surgeon with privileges at the hospital. A unanimous panel of the Michigan Court of Appeals affirmed the judgment.
The case involved many important legal issues, including damaging testimony from the hospital designee about the hospital’s policies – claiming they do not exist – when they did, in fact, exist. The hospital was bound to this admission and was sanctioned for its failure to produce the policy earlier.
Although the case is unpublished, the verdict and the Court of Appeals’ position should be a significant warning about medical malpractice litigation and hospital policies. This includes the potential liability for having policies that exist on paper, but are not actually known to, or invoked by the medical staff, as well as considerations in defending against claims involving the Michigan Public Health Code.
Notably, the verdict included damages for the patient’s future lost earning capacity. Ahead of the Michigan Supreme Court’s decision in Demott v. VHS Harper-Hutzel Hosp., Inc., 28 N.W.3d 708, 709 (Mich. 2025), the Court allowed the testimony of loss of financial support even though that figure was identical to the Plaintiff’s expert’s figure for loss of earning capacity (which does not account for personal consumption).
A. FACTUAL BACKGROUND AND ASSERTED CLAIMS
The decedent underwent surgery by a board-certified plastic surgeon and, after the removal of a postoperative drain, the patient presented to the hospital’s emergency room in septic shock and renal failure. The intensivists repeatedly suspected an intra-abdominal source and urged the original plastic surgeon to perform source-control surgery, but he disagreed and declined. The treating intensivists did not go up the chain of command in order to have another surgeon consult on the patient and did not take steps to obtain a second opinion until it was allegedly too late. The patient ultimately went into cardiac arrest and then subsequently passed away.
Plaintiff sued the surgeon for medical malpractice and the hospital for both vicarious and direct liability. The jury found the surgeon professionally negligent and the hospital directly negligent, and that each was a proximate cause of death. On appeal, the Court of Appeals affirmed in full.
B. MAJOR LEGAL ISSUES
i. Corporate-designees bind the hospital
The crux of plaintiff’s theory was that the hospital breached its own policy by failing to implement and enforce a chain of command policy that would have broken the deadlock between the intensivists and the surgeon. Plaintiff’s hospital-administration expert described the hospital’s alleged negligence as having a chain of command policy that is not enforced and not having a “speak out” policy to handle matters when medical providers witness an error in patient care and to have it addressed without fear of retribution.
The hospital in this case proffered a corporate designee to testify as the hospital’s policies. The at issue policy in this case was the hospital’s chain of command policy. The hospital’s corporate designee was the chief of surgery who testified that no chain of command policy existed. The hospital’s chain of command policy was produced after the corporate designee’s deposition and after more than two years of litigation. Multiple treating physicians acknowledged they had never read the hospital’s chain of command policy until after litigation was initiated.
The defense experts testified that ICU physicians already possessed full authority to obtain a second opinion and that they did not need to follow chain of command (presumably making the policy inapplicable).
After the policy was produced, upon motion by plaintiff, the trial court found the hospital in contempt, imposed monetary sanctions, and permitted reopening of discovery. The Court of Appeals affirmed both the sanctions and the denial of the hospital’s request to substitute a new corporate designee. The Court of Appeals invoked the federal 30(b)(6) principle and cited the analysis of the United States District Court for the Southern District of Florida in QBE Ins Corp v Jorda Enterprises, Inc, 277 FRD 676, 687-691 (SD Fla, 2012):
When a corporation’s designee legitimately lacks the ability to answer relevant questions on listed topics and the corporation cannot better prepare that witness or obtain an adequate substitute, then the “we-don’t-know” response can be binding on the corporation and prohibit it from offering evidence at trial on those points.
The Court of Appeals emphasized that once a corporate designee testifies to a lack of knowledge, the corporation is bound by that testimony and cannot “change its answer” with new evidence at trial. Except in this case, the trial court permitted the hospital the opportunity to call another corporate designee. Unfortunately, the hospital failed to avail itself of the opportunity.
ii. Public Health Code violations and the jury instruction for an inference of negligence
One of the major issues raised in the appeal is that the trial court instructed the jury under M Civ JI 12.01, which provided an inference of negligence. In this case it involved two Michigan Public Health Code provisions: MCL 333.21513(a) (imposes a hospital owner’s duty to ensure licensure, training, and supervision of staff and review of professional practices) and MCL 333.20201 (patient bill of rights).
The Court of Appeals held that there was no error in the trial court’s reading of the jury instruction and explained that “[u]nder Michigan law, [a] violation of a safety or penal statute creates a rebuttable presumption of negligence.” citing Zeni v. Anderson, 397 Mich 117, 128-129.
Applying Klanseck v. Anderson Sales & Serv., Inc., 426 Mich 78 (1986), the Court of Appeals held that the instruction under M Civ JI 12.01 was proper because:
1. the statute is intended to protect against the result of the violation;
2. the plaintiff is within the class intended to be protected by the statute; and
3. the evidence will support a finding that the violation was a proximate contributing cause of the occurrence.
The Court rejected the hospital’s argument that the jury instruction ran afoul of MCL 333.20203(2) and reasoned that the jury instruction only created an inference of negligence, not an independent or expanded remedy.
The Court of Appeals’ analysis of this issue is muddied by a prior appeal in which the Court held that the hospital “abandoned any challenge to plaintiff’s claim that the alleged statutory violations could lead to a rebuttable presumption of negligence.” However, the Court notes that despite its prior ruling on the issue, it did not prohibit the hospital from challenging the jury instruction and then reviewed the issue on its merits.
iii. Wrongful-Death Damages After Daher: Lost Earning Capacity vs. Loss of Financial Support
On appeal, the hospital argued that under Daher v. Prime Healthcare Servs-Garden City, LLC, 515 Mich 254 (2024), lost earning capacity damages are no longer recoverable under the Michigan wrongful-death act. The Court of Appeals agreed with the governing principle but rejected the hospital’s application of Daher.
This opinion is notable as we are waiting for the Michigan Supreme Court’s ruling on Demott.
The Court did not agree with the defense argument that because plaintiff’s economist testified to the identical figure for lost earning capacity as lost financial support, the verdict awarded lost earning capacity damages, which is improper pursuant to Daher. The Court of Appeals indicated that although plaintiff may not have always used the specific term, “loss of financial support” damages, it is apparent that plaintiff referred to lost earning capacity damages with the intention that loss of financial support were subsumed in this language. However, plaintiff’s expert’s figure for loss of earning capacity did not appear to account for personal consumption since it was the identical figure for loss of financial support.
The Court of Appeals noted that loss of financial support damages remain recoverable under MCL 600.2922(6) and that throughout trial, plaintiff had properly sought damages for the loss of financial support to the decedent’s two children and that the hospital had waived its challenge by not properly and timely objecting.
C. PRACTICAL GUIDANCE FOR HOSPITALS AND RISK MANAGERS
This case certainly brings to light several issues that should have risk managers, hospitals, and medical facilities reevaluating their current processes and considering these recommendations:
- Verify that every patient safety policy (chain of command, escalation, “speak up,” ICU conflict-resolution, etc.) is not merely adopted, but actually disseminated to staff. The relevant staff is then trained, the training is documented, and the policy is enforced. Perform periodic audits to ensure knowledge and enforcement.
- Integrate patient safety policies into training, medical staff education, and case review. Keep records documenting distribution (emails, newsletters, department meetings) in a format which can be produced in discovery, if necessary.
- Work with your attorneys early on to determine if there are any relevant hospital policies or procedures that must be disclosed and/or protected by court order.
- Treat a corporate-designee notice of deposition as a serious litigation event and make sure an appropriate designee is selected who can intelligently talk about the notice’s listed topics.
- Make sure your defense attorney addresses any claims of Public Health Code violations early in a case.
- Make sure your defense attorney preserves objections to lost earning capacity versus loss of financial support damages through motion to strike and specific objections to the verdict form and proposed jury instructions.
ABOUT THE AUTHORS
Sarah E. Cherry is a Partner at FBMJ and has spent her career defending medical professionals, including hospitals, physicians, mid-level providers, and nurses. She also handles professional licensing matters.
Silvia A. Mansoor is an Associate Principal at FBMJ. Her practice is focused on defending health care professionals and organizations in complex medical malpractice claims.
If you have any questions, please contact Sarah E. Cherry at scherry@fbmjlaw.com or Silvia A. Mansoor at smansoor@fbmjlaw.com.
SOURCES
Calo (Estate of Cathleen Allen) v. Dixit and Henry Ford Macomb Hospital, No. 369640 (Mich. Ct. App. Oct. 23, 2026) (unpublished).