Judge Robert Kugler, U.S. District Court for the District of New Jersey. (Photo: Carmen Natale/ALM)

The U.S. government has lost its bid for immunity in a medical malpractice suit concerning alleged negligence by a surgeon at a federally funded clinic. But a federal judge has ruled the government is entitled to a $250,000 cap on liability in connection with the alleged mishap.

The suit stems from an emergency cesarean section performed on Melissa Fiori-Lacivita by Ylbe Franco-Palacios, a physician with CompleteCare Health Network. A few days after the surgery, Fiori-Lacivita discovered she had a perforation in her colon and required another operation.

U.S. District Judge Robert Kugler of the District of New Jersey denied the motion by the U.S. government to be dismissed from the suit based on immunity under the New Jersey Charitable Immunity Act. Kugler said CompleteCare derives most of its funding from patient billing and government funding, and receives a minimal amount of charitable contributions. Its funding model undercuts the state Legislature's purpose of granting absolute immunity to charitable organizations, which was to protect against the diversion of charitable funds from the purpose for which they were donated, Kugler said.

But the statutory cap on damages is applicable to CompleteCare because it is “organized exclusively for hospital purposes,” Kugler said. He cited a 2016 ruling from the same court by Senior Judge Joseph Rodriguez, which found that CompleteCare had an exclusively hospital purpose in another medical malpractice case. In the 2016 case, a plaintiff who gave birth to a child with Down syndrome claimed she was not provided prenatal screening for that condition. The ruling in that case also limited damages to $250,000.

Franco-Palacios performed the C-section on Fiori-Lacivita at Inspira Medical Center in Vineland. Fiori-Lacivita, then 34 weeks pregnant, came to Inspira on Jan. 31, 2014, with a complaint of vaginal bleeding. She had received prenatal care from another doctor as a private patient, but Franco-Palacios, in the scope of her employment with CompleteCare, provided OB-GYN coverage to Inspira. Fiori-Lacivita delivered a healthy boy.

CompleteCare, a private nonprofit entity, provides health services regardless of insurance status or ability to pay. Its 19 locations in Southern New Jersey provide health care to medically underserved areas and populations, according to court papers. Medicaid pays 65% of its budget and Medicare provides another 5%.

At issue in the case were the government's claim for absolute immunity for CompleteCare under Section 7 of the New Jersey Charitable Immunity Act, and whether CompleteCare qualifies for a cap on damages under Section 8 of the act. The central question in the case is whether CompleteCare was organized with an “exclusively hospital” or “exclusively charitable” purpose.

Lawyers for Fiori-Lacivita argued persuasively against the government's claim for absolute immunity under Section 7 but offered little to challenge the government's argument for a damages cap under Section 8, Kugler said. The plaintiff's lawyers argued that the government was not entitled to assert an immunity defense because the plaintiff was not a “beneficiary” of CompleteCare's services. They focused on the fact that she received care from a private OB-GYN, Kugler said. But a person is a beneficiary, for purposes of the Charitable Immunity Act, if they are a “direct recipient” of the “good works” performed by the defendant, Kugler said.

But the government is not entitled to charitable immunity because an analysis of CompleteCare's finances does not include a substantial amount of charitable contributions, Kugler said. Less than 1% of CompleteCare's total revenue comes from nongovernmental, private funding, far below levels that New Jersey courts deem substantial, he said.

Also, the damages cap applies because CompleteCare is “organized exclusively for hospital purposes,” Kugler said, citing its wide range of health services, such as counseling, health screening and education and programs for mental health and substance abuse. He cited a 2015 state Supreme Court case, which said a hospital is no longer simply a facility where medical professionals treat patients but a place where members of the community receive emergency care and preventative services.

“We find that CompleteCare is similar to a typical and modern New Jersey hospital and entitles the Government to Section 8 immunity,” Kugler wrote.

Paul daCosta of Snyder, Sarno, D'Aniello, Maceri & daCosta in Roseland, who represents Fiori-Lacivita, could not immediately be reached for comment.

Assistant U.S. Attorneys Anne Taylor and Jessica Rose O'Neill represented the government. A spokesman for their office declined to comment.