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A challenge to nonprofits

Suit by family of patient who died seeks exception to law shielding charities

The family of a patient who died after obesity surgery is using a novel legal strategy to demand $8.5 million from Beth Israel Deaconess Medical Center, maintaining that the state's cap on financial damages against hospitals does not apply to the case.

The decades-old charitable immunity law limits damages against nonprofit institutions to $20,000, and judges have refused to override the law. In a case two years ago, the Supreme Judicial Court overturned a $4.1 million award ordered by a lower court against Brigham and Women's Hospital, saying it could be held liable for only $20,000 in the case of a severely brain-damaged Dover teenager.

But lawyers for the family of Howard Reid, who died after surgery at Beth Israel Deaconess in January 2004, argue that the Boston hospital advertised the weight-loss procedure on the radio and in newspapers as safe and effective, essentially operating as a commercial entity rather than a nonprofit.

''Our view is that these stomach banding procedures are profit centers, that the hospitals advertise, they make promises, they do all things businesses do," said John Swomley of Boston, one of the Reid family attorneys.

Paul McTague of the Boston law firm Martin, Magnuson, McCarthy, & Kenney, who represents the hospital, said he could not discuss details of the case, but that he does not believe the facts support overriding the charitable immunity cap.

Trial lawyers routinely have complained that the law unfairly protects hospitals, schools, and nonprofit groups found liable for wrongful conduct. Malpractice lawyers have circumvented the monetary limit by filing negligence lawsuits against doctors, who are not protected by the cap and who carry multimillion-dollar insurance policies.

In some cases, they have sued hospitals and asked judges to overturn the cap. In several recent cases, state courts have ruled that only the Legislature can modify the cap.

But Swomley and Kimberly Winter, a Weston attorney who also represents Reid's family, believe a Supreme Judicial Court decision in August bolsters their argument.

In that case, a patient, Georgia Darviris, sued her surgeon, Dr. James Petros, for negligence under the state's consumer protection statute, 93A, which allows consumers to sue businesses for unfair and deceptive trade practices. Chief Justice Margaret Marshall wrote that while plaintiffs could not sue medical providers solely for negligence under consumer protection laws, such statutes may be applied to the entrepreneurial aspects of medical care, including advertising and billing. The statute allows consumers to collect damages from a business, and in some cases collect triple damages if the violations are found to be intentional.

Winter said the Reid case could clarify whether it is possible for patients to sue nonprofit hospitals under the 93A statute.

In November, Reid family attorneys sent a letter to Paul Levy, chief executive of Beth Israel Deaconess, as required by the consumer protection law, demanding a settlement of $8.5 million. In February, the family filed its lawsuit, claiming negligence against three doctors and the hospital as well as consumer protection law violations by the hospital.

The $8.5 million figure is based on a complex formula that takes into account Howard Reid's age, earning potential, and family obligations to his wife, son, and three stepchildren.

''Charitable immunity is a tough-as-nails cap," said David White-Lief, a malpractice attorney in Boston. ''But the court has clearly said there are opportunities to break through the charitable cap on the business side."

Legislators here and in other states adopted charitable immunity caps on the belief that nonprofits should be able to use their limited funds for charitable purposes, and not divert them to settle lawsuits.

But Marc Perlin, associate dean at Suffolk University Law School, said other states are gradually abolishing their charitable immunity statutes. The reasons vary, but some lawmakers say the legal system should not treat hospitals differently than other corporations, especially as hospitals merge into large organizations that increasingly market their products and compete for patients.

Paul Wingle, spokesman for the Massachusetts Hospital Association, said state and federal rules allow nonprofit hospitals to advertise. Regulators have not advised them that such promotion puts their charitable status at risk, Wingle said.

Howard Reid's death on Jan. 6, 2004 -- one of six deaths or serious complications related to obesity surgery reported to Massachusetts public health officials since 1998 -- remains a mystery. The 37-year-old computer technician and Harvard University security guard weighed more than 300 pounds when he opted for a type of surgery called gastric banding, which is generally considered safer than traditional stomach stapling.

The surgeon, Dr. Daniel Jones, threaded a silicone band around Reid's stomach, dividing it into a large portion and a small pouch for food, greatly reducing the amount his stomach could accommodate. But as Jones was removing his surgical instruments, Reid's heart stopped pumping. In an attempt to restart it, doctors at one point connected Reid to a bypass machine, but he never regained consciousness and died two days later.

In February of last year, state health investigators found that Beth Israel Deaconess properly cared for Reid, but they declined to release details of the investigation.

Hospital spokeswoman Judy Glasser said an internal hospital review reached the same conclusion.

Yolanda Mason-Reid, Howard Reid's wife, and her attorneys do not agree with those findings. While Winter would not discuss details of the case, she said that Beth Israel Deaconess did not keep its advertised promise to provide adequate equipment, facilities, and staff for Reid's operation.

McTague, the hospital's lawyer, pointed out that state public health officials did not find any equipment or staff deficiencies.

Jones, who performed the surgery, is not named in the lawsuit. The family is suing the hospital and three doctors who were on the anesthesia staff. Two of those doctors have left the hospital for unrelated reasons, Glasser said.

Mason-Reid said her family is struggling emotionally. She is angry because she doesn't believe the hospital was prepared to deal with the emergency during her husband's surgery.

''In order to get any justice for Howard, you have to hit them in their pocketbooks, where it hurts," she said. ''I don't want this to happen to anyone else. I want people to be aware of what happened to Howard and be fully aware of the risks and investigate these procedures."

Liz Kowalczyk can be reached at kowalczyk@globe.com.

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