Newman v. Select Specialty Hospital-Arizona, Inc. (4/7/2016)

April 19, 2016

Arizona Court of Appeals Division One holds that costs that may be recovered under the Adult Protective Services Act are limited to taxable costs as defined in A.R.S. § 12-332.

A patient sued a hospital alleging violations of Arizona’s Adult Protective Services Act (APSA), and seeking compensatory and punitive damages.  While in the hospital’s care, the patient, a quadriplegic, developed a pressure sore on his lower back which became so severe that it caused ongoing complications.  A jury awarded the patient $250,000 in compensatory damages but the trial court granted a directed verdict for the hospital on the issue of punitive damages, finding that the patient had not offered sufficient evidence from which the jury could find that the hospital had acted with an evil mind.  The patient requested $388,400 in attorney fees under the APSA (A.R.S. § 46-455(H)(4)), which had been twice amended since the patient’s stay at the hospital.  The trial court applied the version of § 46-455(H)(4) in effect while the patient was in the hospital and awarded $112,500 in attorney fees.  The patient also asked for an award of “costs of suit” under § 46-455(H)(4) but the trial court awarded only those costs recoverable under A.R.S. § 12-332.  Both the patient and the hospital appealed from the award of attorney fees, and the patient appealed the directed verdict and the award of costs. 

The Court of Appeals reversed the trial court’s directed verdict on the issue of punitive damages but affirmed the trial court on the issues of fees and costs.  The Court noted that under Arizona law, a defendant acts with an evil mind when it is aware that its actions create a substantial risk of harm to others but it consciously proceeds with its tortious conduct in “deliberate contravention” of the victim’s rights.  The Court found that the patient had presented evidence that required treatments and assessments of his wound were not performed for long periods of time and that this was evidence from which a reasonable jury could conclude by clear and convincing evidence that the hospital consciously disregarded a known risk of substantial harm in violation of the patient’s rights. 

On the issue of attorney fees, the hospital contended that the version of § 46-455(H)(4) in effect at the time of the verdict should be applied.  The Court considered three versions of the statute: the 2005 version, in effect during the patient’s stay in the hospital, the 2010 version, in effect when the patient filed his claim, and the 2012 version, in effect at the time of the verdict.  Both the 2005 and 2010 versions allowed for an award of attorney fees but the 2012 version does not.  The Court concluded that the 2012 version could not apply because the right to an award of attorney fees is a substantive right and a statute may not apply retroactively to impair a substantive right absent express language permitting retroactive application, which the 2012 version did not contain.  Because a plaintiff’s rights under the APSA vest at the time an APSA claim is filed, the Court concluded that the 2010 version of § 46-455(H)(4) should have been applied.  Although the trial court incorrectly applied the 2005 version, the Court affirmed the award, finding that the amount of attorney fees awarded was permissible under the 2010 version and that the trial court had not abused its discretion with respect to its determination of reasonableness. 

Finally, the Court rejected the patient’s argument that the APSA permitted the trial court to award all costs incurred while pursuing his APSA suit, including travel expenses and copying costs.  The Court found that although “costs of suit” is not defined in the APSA, “costs” is a term of art, which is defined under Arizona law by A.R.S. § 12-332.  The Court found no basis upon which it could conclude that the Legislature intended to authorize the broader recovery of costs under the APSA and determined that applying the definition of costs found in § 12-332 did not restrict or limit any remedy provided by the APSA.  The Court affirmed the award of costs and remanded the case to the trial court for further proceedings on the issue of punitive damages.

Presiding Judge Gemmill authored the opinion of the Court, in which Judges Jones and Portley joined.