source: Caselaw Access Project

author: GARY R. WADE, J.,

license: Public Domain

text:
    SHELBY COUNTY HEALTH CARE CORPORATION d/b/a Regional Medical Center v. NATIONWIDE MUTUAL INSURANCE COMPANY.
    Supreme Court of Tennessee, at Jackson.
    April 6, 2010 Session.
    Oct. 13, 2010.

      Parks Tedford Chastain and Gordon C. Aulgur, Nashville, Tennessee, for the appellant, Nationwide Mutual Insurance Company.
    Curtis H. Goetsch and Gary Carlton McCullough, Germantown, Tennessee, for the appellee, Shelby County Healthcare d/b/a Regional Medical Center.
    Benjamin K. Lauderback, Hanson R. Tipton, and Sarah Larkin, Knoxville, Tennessee, for the amicus curiae, Tennessee Municipal League Risk Management Pool.
    Melanie M. Stewart and Matthew S. Russell, Germantown, Tennessee, for the amicus curiae, Tennessee Defense Lawyers Association.
    Edward Knight Lancaster and Julie Pe-digo Bowling, Columbia, Tennessee, for the amicus curiae, Tennessee Farmers Mutual Insurance Company.
    Robyn E. Smith and William Beesley Hubbard, Nashville, Tennessee, for the amicus curiae, Tennessee Hospital Association.
   OPINION

GARY R. WADE, J.,

delivered the opinion of the Court,

in which CORNELIA A. CLARK, C.J., JANICE M. HOLDER, WILLIAM C. KOCH, JR., and SHARON G. LEE, JJ., joined.

Kevin L. Holt, injured in an automobile accident in Arkansas, was first taken by ambulance to an Arkansas hospital and then transported to the Regional Medical Center in Memphis, where he incurred $38,823.02 in expenses. Shelby County Health Care Corporation, the operator of the Regional Medical Center, filed affidavits for a lien as prescribed by statute. Thereafter, Nationwide Mutual Insurance Company, which had medical coverage for Holt with limits of $5,000, paid $1,290 for ambulance services and $3,710 to the Arkansas hospital. Shelby County Health Care Corporation sued Nationwide for impairment of its lien, seeking as recovery the entire amount due for its medical services to Holt. The trial court awarded $5,000 in damages. The Court of Appeals revised the amount of the judgment to $33,823.02. Because we have determined that liens under the Hospital Lien Act do not attach to medical payment benefits paid pursuant to an insurance policy, the judgment of the Court of Appeals is reversed and the cause is dismissed.

Facts and Procedural History

On May 29, 2006, Kevin L. Holt (“Holt”) sustained head trauma in an automobile accident in Arkansas. He was initially taken by ambulance to the Regional Medical Center of Northeast Arkansas, but the nature of his injuries required his transfer to the Regional Medical Center in Memphis, a hospital operated by the plaintiff, Shelby County Health Care Corporation (“the Med”). On the day following the accident, Holt was discharged. While the record does not disclose the extent of Holt’s injuries or the details of the treatment provided by the Med, the cost of its medical services amounted to $33,823.02. Holt was covered by a policy of insurance issued by the defendant, Nationwide Mutual Insurance Company (“Nationwide”), which included medical payment benefits up to $5,000.

On June 9, 2006, the Med filed an Affidavit for Hospital Lien as authorized by statute. The affidavit, signed by the Med’s manager of insurance collections, named as “liable for the charges, costs, and expenses of hospital care, treatment and maintenance” both Holt and the “Municipal Health Benefit Fund,” an entity located in North Little Rock, Arkansas. Six days later, the Med notified by letter both Holt and the Municipal Health Benefit Fund of the affidavit. On September 25, 2006, the Med filed an amended affidavit adding Nationwide as a responsible party. Nationwide, the Municipal Health Benefit Fund, and Holt were sent notice of the amended affidavit within three days. After the filing of the lien, Nationwide made two medical benefit payments for medical care related to the accident— $1,290 to Medic One for ambulance services and $3,710 to the Regional Medical Center of Northeast Arkansas — which exhausted the medical benefits available under the policy.

On November 20, 2007, the Med — aware that Nationwide’s $5,000 coverage limit had been exhausted — filed suit claiming that Nationwide had impaired its hospital lien by making payments to Medic One and the Arkansas hospital. The Med sought to recover $33,823.02, the full amount of Holt’s hospital care costs. In response, Nationwide acknowledged that the Med had filed an affidavit for a hospital lien but denied any impairment of the lien.

Both the Med and Nationwide filed motions for summary judgment. In its motion for summary judgment, the Med contended that a hospital lien, by the terms of the statute, may be validly asserted against “claims” or “demands” arising out of an insurance contract, that unauthorized payments under a contract without approval of the lien holder constituted impairment of a hospital lien, and that the Med had a statutory right to recover the full cost of its services arising from Holt’s care in the event of an impairment, regardless of any limitations on coverage. In its motion for summary judgment, Nationwide offered four alternative arguments based upon the terminology of the applicable statute: first, that there was no valid hospital lien against Nationwide because there had been no “judgment, settlement, or compromise,” as contemplated by the statute, on the claim; second, that even if the lien was valid, the direct payments to other medical service providers did not constitute an impairment of a lien because they were not made pursuant to a “judgment, settlement, or compromise;” third, that even if Nationwide did impair a valid lien, the Med’s statutory right to recover was capped by statute at $1,666, one-third of the value of the policy; and fourth, that even if the Med was entitled to recover more than $1,666, it could not recover beyond the $5,000 limit of the policy.

Because no material facts were in dispute, the trial court -granted summary judgment, concluding that the Med had a valid lien and that Nationwide had impaired the lien, but that the Med was entitled to recover only $5,000, the limits of the medical coverage. The Med appealed the ruling, arguing a statutory entitlement to the full $33,823.02. In response, Nationwide contended that the Med was not entitled to any recovery at all. The Court of Appeals, relying on a prior unpublished opinion, ruled that, under Tennessee Code Annotated section 29-22-104(b)(1) (2000), the lien had been impaired by Nationwide and' the Med was entitled to recover the full “reasonable cost of ... hospital care, treatment and maintenance.” When Nationwide requested a rehearing, the Court of Appeals filed an amended opinion correcting a misstatement of fact in its initial ruling, but otherwise denied relief. This Court granted an application for permission to appeal by Nationwide to consider the validity of the hospital lien, whether the lien had been impaired, and, if so, the extent of liability.

Standard of Review and Statutory Interpretation

Initially, a summary judgment may be granted only when there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Tenn. R. Civ. P. 56.04; Hannan v. Alltel Publ’g Co., 270 S.W.3d 1, 5 (Tenn.2008); Byrd v. Hall, 847 S.W.2d 208, 214 (Tenn.1993). The scope of review of a grant of summary judgment is well-established. Because our inquiry involves a question of law, no presumption of correctness attaches to the judgment, and our task is to review the record to determine whether the requirements of Rule 56 of the Tennessee Rules of Civil Procedure have been satisfied. Hunter v. Brown, 955 S.W.2d 49, 50-51 (Tenn.1997); Cowden v. Sovran Bank/Cent. S., 816 S.W.2d 741, 744 (Tenn.1991).

Further, when interpreting a statute, we “must first ascertain and then give full effect to the General Assembly’s intent and purpose” in drafting those sections. Waldschmidt v. Reassure Am. Life Ins. Co., 271 S.W.3d 173, 176 (Tenn.2008). Our chief concern is to carry out the legislature’s intent without unduly broadening or restricting the statute. Houghton v. Aramark Educ. Res., Inc., 90 S.W.3d 676, 678 (Tenn.2002) (quoting Owens v. State, 908 S.W.2d 923, 926 (Tenn.1995)). We presume that every word in a statute has meaning and purpose and should be given full effect if so doing does not -violate the legislature’s obvious intent. In re C.K.G., 173 S.W.3d 714, 722 (Tenn.2005) (quoting Marsh v. Henderson, 221 Tenn. 42, 424 S.W.2d 193, 196 (1968)). When the statutory language is clear and unambiguous, we simply apply its plain meaning. Eastman Chem. Co. v. Johnson, 151 S.W.3d 503, 507 (Tenn.2004). When a statute is ambiguous, however, we may refer to the broader statutory scheme, the history of the legislation, or other sources to discern its meaning. Colonial Pipeline Co. v. Morgan, 263 S.W.3d 827, 836 (Tenn.2008).

The Hospital Lien Act

Hospital lien statutes have been adopted in over forty states, with the oldest such statute having been enacted in Nebraska in 1927. Bergan Mercy Health Sys. v. Haven, 260 Neb. 846, 620 N.W.2d 339, 345 (2000). Tennessee’s Hospital Lien Act (the “HLA”), ch. 527,1970 Tenn. Pub. Acts 529 (codified as amended, Tenn.Code Ann. §§ 29-22-101 to -107 (2000)), was adopted in 1970 and captioned “AN ACT to create for hospitals a lien upon all causes of action for damages accruing to persons having received care and treatment for illness or injuries and to provide the procedure for the perfecting, recording, enforcement and release of such lien.” Id. at 529. In the ensuing decades, the HLA has been amended a handful of times, but has not been substantially altered. As a result, the version of the HLA in effect at all times pertinent to this litigation is largely the same as the original enactment.

In a 1994 opinion, the Attorney General surveyed the legislative debate accompanying the enactment of the HLA in an effort to discern its purpose:

In enacting this legislation, the legislature indicated that the purpose of this Act is to create liens for hospitals to ensure that hospital bills are paid. The legislature recognized that hospitals were losing funds from providing care to individuals who later collected a settlement or judgment for their injuries but failed to pay their hospital bills. The legislature noted that this Act would help keep hospital costs down by setting up an orderly method for the establishment of liens on such settlements or judgments.

Tenn. Att’y Gen. Op. No. 94-067 (May 13, 1994) (citations omitted); see also Martino v. Dyer, No. M1999-02397-COA-R3-CV, 2000 WL 1727778, at *2 (Tenn.Ct.App. Nov. 22, 2000) (quoting Tenn. Att’y Gen. Op. No. 94-067). Other sources have identified policies warranting hospital lien statutes. For example, the Arkansas Supreme Court observed that its statute “was enacted for the very humane purpose of encouraging physicians, hospitals and nurses to extend their services and facilities to indigent persons who suffer personal injuries through the negligence of another, by providing the best security available to assure compensation for services and facilities.” Buchanan v. Beirne Lumber Co., 197 Ark. 635, 124 S.W.2d 813, 815 (1939); see also Bashara v. Baptist Mem’l Hosp. Sys., 685 S.W.2d 307, 309 (Tex.1985) (observing that a hospital lien statute is to provide an additional method of securing payment for medical services, thus ensuring the prompt and adequate treatment for accident victims); Cmty. Hosp. v. Carlisle, 648 N.E.2d 363, 365 (Ind.Ct.App.1995) (“By allowing health care providers direct interests in funds collected by personal injury patients, the statute furthers the important policy of reducing the amount of litigation ... otherwise ... necessary to secure repayment of the health care debts.”). Because this rationale had been attributed to hospital lien statutes that preceded our 1970 enactment and is widely accepted as a reasonable basis for similar statutes, see 40A Am.Jur.2d Hospitals and Asylums § 9 (2008), we are persuaded that our General Assembly also embraced a “humane purpose” by adopting the HLA.

First, Tennessee Code Annotated section 29-22-101(a) sets forth who may file a lien and what a lien may be filed against:

Every person, firm, association, corporation, institution, or any governmental unit, including the state of Tennessee, any county or municipalities operating and maintaining a hospital in this state, shall have a lien for all reasonable and necessary charges for hospital care, treatment and maintenance of ill or injured persons upon any and all causes of action, suits, claims, counterclaims or demands accruing to the person to whom such care, treatment or maintenance was furnished, or accruing to the legal representatives of such person in the case of such person’s death, on account of illness or injuries giving rise to such causes of action or claims and which necessitated such hospital care, treatment and maintenance.

(Emphasis added.) Secondly, section 29-22 — 101(b) sets a cap on a lien holder’s recovery:

The hospital lien, however, shall not apply to any amount in excess of one third (1/3) of the damages obtained or recovered by such person by judgment, settlement or compromise rendered or entered into by such person or such person’s legal representative by virtue of the cause of action accruing thereto.

(Emphasis added.) Finally, section 29-22-104 recognizes the right of recovery for an impairment of the lien:

(a) No release or satisfaction or any action, suit, claim, counterclaim, demand, judgment, settlement or settlement agreement, or any of them, shall be valid or effectual as against such lien unless the lienholder shall join therein or execute a release of the lien.
(b)(1) Any acceptance of a release or satisfaction of any such cause of action, suit, claim, counterclaim, demand or judgment and any settlement of any of the foregoing in the absence of a release or satisfaction of the lien referred to in this chapter shall prima facie constitute an impairment of such lien, and the lien-holder shall be entitled to an action at law for damages on account of such impairment, and in such action may recover from the one accepting such release or satisfaction or making such settlement the reasonable cost of such hospital care, treatment and maintenance.

(Emphasis added.)

Case Law

Since the passage of the HLA, courts have occasionally been called upon to interpret its terms. For example, in University of Tennessee v. Prudential Insurance Co., No. 03A01-9611-CV-00345, 1997 WL 119582 (Tenn.Ct.App. Mar. 18, 1997), the unpublished opinion relied upon by our Court of Appeals, the issue was whether a hospital lien had been impaired by Prudential’s payment of medical coverage directly to the insured motorist. In that case, the court did not limit the hospital lien to settlements or judgments in tort. In consequence, Prudential, which had constructive notice of the hospital lien and nevertheless paid directly to the insured the hospital expenses covered by the policy, was ordered to pay the full amount of the hospital’s claim. Observing that when the hospital sought damages for the “impairment of its lien,” in contrast to damages for the “enforcement of the lien,” the court held that the statute did not limit the amount of the award to “one-third of the damages obtained or recovered.” Id. at *3; see TenmCode Ann. § 29-22-101(b). In a 2000 case involving a hospital lien claim in the context of an automobile liability insurance settlement, rather than a medical benefits payment, our Court of Appeals appears to have more narrowly construed the HLA “as providing hospitals with a mechanism to ensure that those people who recover damages [only] for injuries pay their hospital bills out of those recoveries.” Martino, 2000 WL 1727778, at *2 (emphasis added).

In Progressive Specialty Insurance Co. v. University of Alabama Hospital, 953 So.2d 413 (Ala.Ct.App.2006), the Alabama Court of Appeals, much like the ruling in Prudential, held that under its statutory scheme a hospital lien was applicable to medical benefit payments. Progressive paid medical benefits directly to the insured despite having constructive notice of a hospital lien in the amount of $27,898.57. The Alabama court, rejecting an argument by Progressive that the lien was invalid because their statute applied only to causes of action or claims in tort and not to insurance contracts, concluded that because “a lien attaches to all actions, claims, counterclaims, and demands that accrue to a patient on account of the injuries for which he or she was treated ..., the terms ‘claim’ and ‘demand’ are not limited ... solely to tort claims....” Id. at 415. Significantly, Alabama’s hospital lien statute, Ala.Code § 35-11-870 (1991), does not contain a reference to “damages” as does Tennessee Code Annotated section 29-22-101(b).

More recently, in Shelby County Health Care Corp. v. Globe American Casualty Co., 638 F.Supp.2d 882 (W.D.Tenn.2008), the court addressed a claim by the hospital for the impairment of its lien. The insured, who had medical coverage through Globe American with a limit of $1,000, was injured and taken to the hospital by Air Evac LifeTeam. The hospital provided treatment for approximately two months at a cost of over $724,000. Air Evac submitted a bill, and Globe American paid the extent of its coverage, exhausting the medical benefits under the policy. The hospital sought damages for the impairment of its lien in the entire amount of the medical services rendered. Id. at 883-84. Concluding that the statute did not create a lien in favor of the hospital against the $1,000 payment made, the district court held that no “ ‘causes of action, suits, claims, counterclaims, or demands ae-cru[ed]’ to [the insured], as benefits under [the] policy were paid directly to Air Evac.” Id. at 884 (quoting Tenn.Code Ann. § 29-22-101(a)). The district court distinguished the holding in Prudential, wherein the insurer had paid the medical costs covered by the policy directly to the insured, and explained as follows:

Section 29-22-101(b) is also in line with this view, in that it limits hospital liens to one third “of the damages obtained or recovered by such person by judgment, settlement or compromise rendered or entered into by such person.” Tenn. Code Ann. § 29-22-101(b) (emphasis added). It is undisputed that there was no judgment, settlement or compromise obtained or recovered by [the insured]. Further, § 29-22-104(b)(1) contemplates the acceptance of a release or satisfaction of the injured’s claim or settlement of the cla[i]m without a release or satisfaction of the hospital lien as prima facie proof of the impairment of the lien. Here, neither [the insured] nor the [insurer] nor Air Evac entered into any release or settlement so as to constitute such an impairment under the Tennessee statute.

Id. at 884-85.

While instructive, these cases do not address the fundamental question before us today: that is, whether the General Assembly of this state intended to extend hospital liens to medical benefits provided for in an automobile insurance policy.

Analysis

The Med argues that because Nationwide has impaired its lien under these statutory provisions, it is entitled to recover the full cost of Holt’s medical treatment. Because the HLA only authorizes the attachment of hospital liens to “damages” obtained by persons to whom care, treatment or maintenance is furnished, or to their legal representatives in the case of their death, we must disagree.

Pursuant to section 29-22-101(a), a hospital lien may be applied to “any and all causes of action, suits, claims, counterclaims or demands accruing to the person to whom such care, treatment or maintenance was furnished, or accruing to the legal representatives of such person in the case of such person’s death.” In other words, the plain language of the statute permits the perfection of a lien in favor of a hospital against specific rights of recovery accruing to the patient (or in the event of death, his or her representative) and related to the injuries that resulted in hospitalization. While this language, standing alone, might reasonably be construed as broad enough to encompass medical payment benefits, both Nationwide and amicus Tennessee Defense Lawyers Association (“TDLA”) stress that it must be read in conjunction with subsection (b), which provides that the hospital lien “shall not apply to any amount in excess of one third (1/3) of the damages obtained or recovered by such person by judgment, settlement, or compromise rendered or entered into ... by virtue of the cause of action accruing thereto.” Nationwide argues that its “MedBen payments to medical providers did not constitute a payment of damages to such person which are obtained or recovered as a judgment, settlement, or compromise.” This construction of the statute is consistent with that of the Court of Appeals in the Martino case, which interpreted section 29-22-101 “as providing hospitals with a mechanism to ensure that those people who recover damages for injuries pay their hospital bills out of those recoveries.” 2000 WL 1727778, at *2 (emphasis added).

Preliminarily, Holt’s obligations to the ambulance service and the Arkansas hospital were not “causes of action, suits, claims, [or] counterclaims,” as those terms are used in the statute. While the phrase “cause of action” can, at times, be difficult to define, cf. Creech v. Addington, 281 S.W.3d 363, 378-79 (Tenn.2009), a common thread among the definitions provided by a variety of sources, is that a “cause of action” is associated with a right of one party to sue another. See Black’s Law Dictionary 251 (9th ed.2009) (providing three definitions for “cause of action”: “a factual situation that entitles one person to obtain a remedy in court from another person”; “[a] legal theory of a lawsuit”; and “[l]oosely, a lawsuit”); The Law Dictionary 61 (6th ed.1986) (describing “cause of action” as “a flexible term, the definition of which is occasionally controversial” and defining it both as “[a]n aggregation of facts which will cause a court to grant relief, and therefore entitles a person to initiate and prosecute a lawsuit” and “[t]he concurrence of a right belonging to a plaintiff, and a wrong committed by a defendant, which breaches the right and results in damage”); Webster’s Third New International Dictionary Unabridged 156 (1993) (defining “cause of action” as “the ground on which the plaintiffs case is based”). Causes of action may arise out of insurance contracts, most notably when one party breaches the terms. There is no indication in this record, however, that the payment made to the medical service providers was pursuant to a “cause of action,” as opposed to Nationwide’s voluntary performance of its contractual duty. Examples of causes of action arising out of contracts include causes of action for breach, declaratory judgment actions seeking construction of terms, or actions seeking rescission based on fraud. A contractual duty alone, absent grounds for suit, is not a “cause of action.”

Further, there was no “suit,” as the term is used in the HLA. See Black’s Law Dictionary 1572 (defining “suit” as “[a]ny proceeding by a party or parties against another in a court of law”). The same rationale extends to the terms “claims” and “counterclaims.” While “claim,” standing alone, is broad indeed, that term is immediately followed by “counterclaims,” leading us to conclude that the General Assembly meant a “claim for relief,” as used in the litigation setting. See Black’s Law Dictionary 281-83 (defining “claim” and “claim for relief’ in terms of enforceability by a court). Because there was no litigation between Nationwide and the other medical service providers, there have been no claims or counterclaims.

The last possible basis for the lien under the terms of the statute is that the rights of recovery by the ambulance service and the Arkansas hospital could be characterized as “demands.” A “demand” is defined as “[t]he assertion of a legal or procedural right.” Black’s Law Dictionary 495. In our view, the term “demands” qualifies as ambiguous in the context of “causes of actions, suits, claims, [or] counterclaims,” and should be construed in a manner consistent with the other terms within the HLA, all of which pertain to an insured’s potential claim against a responsible tortfeasor who caused his or her injury or illness.

Several reasons lead us to the conclusion that the term “demands” does not include medical benefits. Section 29-22-101(b) limits the amount of recovery for a hospital lien to no more than “one-third (1/3) of the damages obtained or recovered ... by judgment, settlement, or compromise.” The term “damages” has been generally defined as “[a] pecuniary compensation or indemnity, which may be recovered in the courts by any person who has suffered loss, detriment, or injury, whether to his person, property, or rights, through the unlawful act or omission or negligence of another.” Black’s Law Dictionary 389 (6th ed.1990). Because an insurer’s payment of medical benefits pursuant to its contract with the insured does not meet the traditional definition of “damages,” it is unlikely that our General Assembly contemplated hospital liens as to coverage of that nature. The bill’s caption provides additional guidance in our effort to ascertain legislative intent: “AN ACT to create for hospitals a lien upon all causes of action for damages accruing to persons having received care and treatment for illness or injuries and to provide the procedure for the perfecting, recording, enforcement and release of such lien.” 1970 Tenn. Pub. Acts 529 (emphasis added); see Hyatt v. Taylor, 788 S.W.2d 554, 556 (Tenn.1990) (“In seeking legislative intent courts should look to the entire statute including the caption and policy statement.”).

Further, the legislative history lends credence to our determination that medical benefits payable under an insurance policy are not subject to a hospital lien. For example, when asked during the Senate floor debate whether the Act “only applies to insurance cases,” the bill’s sponsor, Senator Farris, responded that “it would be a recovery on a tort action. If you recovered funds in a court action, whether they were paid by the insurance company or if the plaintiff recovered from any cause, then there’s a lien on his recovery.” Statement of Sen. Farris, Senate Session, Feb. 18, 1970. Similarly, the House sponsor of the bill stated that it would create a hospital lien “on the recovery of any settlement or judgment of a lawsuit,” and that the Act “would apply to any lawsuit that dealt with a hospital where a person had been injured and as a result of that injury they incurred hospital costs and were involved in a lawsuit dealing with those bills.” Statement of Rep. Blank, House Session, Feb. 20, 1970. Finally, there was no mention of “medical benefits” whatsoever in comments recorded in the Senate and the House. All of this suggests that the General Assembly limited the attachment of hospital liens to recovery by an injured person from a responsible tortfeasor.

We conclude, therefore, that the statutory hospital lien does not extend to payments made pursuant to the medical payment benefits provision of an insurance policy. The Court of Appeals’ opinion in University of Tennessee v. Prudential Insurance Co., 1997 WL 119582 at *2, which held that the HLA provides for hospital liens that attach to contractual medical payment proceeds as well as to tort damages, is hereby overruled. Based upon our holding, it is not necessary to address whether the Med’s lien was impaired by Nationwide.

Conclusion

Because the attachment of liens under the HLA is limited to the recovery of “damages,” the Med did not have a valid lien on the medical payment insurance proceeds that Nationwide paid to the third party service providers. The judgment of the Court of Appeals is, therefore, reversed and summary judgment is granted to Nationwide. Costs are assessed to Shelby County Health Care Corporation and its surety, for which execution may issue if necessary.

      . See Act of April 24, 1991, ch. 254, 1991 Tenn. Pub. Acts 431 (establishing that if a lien is not yet perfected "at the time an ... entity reaches a settlement and obtains a release of liability on or pays a claim filed by a ... person against such ... entity," the later-perfected lien "shall not apply to or create any additional liability on the part of the ... entity paying the settlement or claim"); Act of March 23, 1988, ch. 666, 1988 Tenn. Pub. Acts 347 (increasing fee for filing of lien from $1.00 to $10.00 and fee for filing release of lien from $0.50 to $2.00); Act of April 20, 1987, ch. 262, 1987 Tenn. Pub. Acts 486 (changing time for filing lien from twenty to 120 days from date of patient's discharge); Act of February 28, 1980, ch. 534, 1980 Tenn. Pub. Acts 228 (changing the phrase "workmen’s compensation” to "workers' compensation”).

      . A lien created by statute is limited in operation and effect by its terms and can be enforced only in the circumstances provided for in the legislation. Phifer v. Gulf Oil Co., 218 Tenn. 163, 401 S.W.2d 782, 785 (1966); Rent-A-Car Co. v. Belford, 163 Tenn. 590, 45 S.W.2d 49, 51 (1932).


author: WILLIAM C. KOCH, JR., J.,

text:
    Joann ABSHURE et al. v. METHODIST HEALTHCARE-MEMPHIS HOSPITALS.
    Supreme Court of Tennessee, at Jackson.
    April 7, 2010 Session.
    Oct. 20, 2010.

      Al H. Thomas and Kenneth R. Besser, Memphis, Tennessee, for the appellants, Joann Abshure and Billy Jack Abshure.
    William L. Bomar, Buckner P. Wellford, and Jacob A. Dickerson, Memphis, Tennessee, for the appellee, Methodist Healthcare-Memphis Hospitals.
   OPINION

WILLIAM C. KOCH, JR., J.,

delivered the opinion of the Court,

in which CORNELIA A. CLARK, C.J., JANICE M. HOLDER, GARY R. WADE, and SHARON G. LEE, JJ., joined.

This appeal involves a vicarious liability claim against a hospital based on the conduct of an emergency room physician. A patient and her husband filed a medical malpractice suit in the Circuit Court for Shelby County against a hospital and two physicians, one of whom had treated the patient in the hospital’s emergency room. Among other things, the complaint broadly alleged that the hospital was vicariously liable for the conduct of its agents. After the plaintiffs voluntarily dismissed their claims against both physicians for the second time, the hospital sought the dismissal of the vicarious liability claims on the ground that the plaintiffs’ claims against its apparent agent, the emergency room physician, were barred by operation of law. The trial court granted the hospital’s motion, and the Court of Appeals affirmed the dismissal of the vicarious liability claims against the hospital. Abshure v. Upshaw, No. W2008-01486-COA-R3-CV, 2009 WL 690804, at *5 (Tenn.Ct.App. Mar. 17, 2009). We granted the Tenn. R.App. P. 11 application filed by the patient and her husband to determine whether their vicarious liability claims against the hospital should be dismissed under the facts of this case. We have determined that the lower courts erred by dismissing the vicarious liability claims against the hospital.

I.

Joann Abshure, a woman in her mid-sixties with a family history of colon and pancreatic cancer, complained of bloating and changes in her bowel patterns to Dr. Whitney T. Slade, her primary care physician. Dr. Slade advised her to have a colonoscopy. Dr. Jeremiah Upshaw performed the colonoscopy as an outpatient procedure on May 2, 2001 at the GI Diagnostic and Therapeutic Center in Memphis. Dr. Upshaw used a pediatric scope that was smaller in diameter and more flexible than a standard scope and reported in his operative notes that he encountered “an extremely tortuous colon with evidence of pelvic adhesions making the procedure more difficult.”

Ms. Abshure experienced significant abdominal discomfort after she returned home. When Dr. Upshaw’s office made a follow-up telephone call on May 3, 2001, Ms. Abshure reported that she had a great deal of soreness in her abdomen. Ms. Abshure began to have diarrhea on May 4, 2001, and the diarrhea was replaced by constipation on May 5, 2001. On May 6, 2001, while attempting to have a bowel movement, Ms. Abshure felt a popping sensation in her side.

Ms. Abshure’s abdominal pain intensified, and she began to experience rectal pain and pressure. She became extremely nauseated and began vomiting. In response to his wife’s worsening condition, Billy Jack Abshure called an ambulance, and Ms. Abshure was transported to Methodist Healthcare-Memphis Hospitals (“Methodist Hospital”).

After Ms. Abshure arrived at the emergency room of Methodist Hospital at approximately 10:00 a.m. on May 6, 2001, she was examined by Dr. Luther C. Ogle III. The Abshures informed Dr. Ogle that Ms. Abshure had undergone a colonoscopy four days earlier on May 2, 2001, and they also told him about the popping sensation Ms. Abshure had experienced, as well as her abdominal and rectal pain and pressure.

Dr. Ogle noted Ms. Abshure’s abdominal distention and ordered lab work, acute abdominal X-rays, and a CT scan of Ms. Abshure’s abdomen. When the lab work and X-rays indicated that pancreatitis was unlikely and failed to reveal the presence of intraperitoneal air, Dr. Ogle ordered a series of enemas for Ms. Abshure before he received the results of the CT scan. Ms. Abshure was given two enemas between 1:55 p.m. and 2:35 p.m. After an attending nurse removed a fecal impaction, Ms. Abshure received a third enema at 4:40 p.m.

By this time, Ms. Abshure was experiencing extraordinary pain and was administered stronger pain medication. After the CT scan revealed the presence of free intraperitoneal air and fluid in Ms. Ab-shure’s upper abdomen and the appearance of air and stool in the pelvis adjacent to her sigmoid colon, Dr. Clay Jones performed an emergency exploratory laparot-omy that revealed a perforation of the sigmoid colon with fecal contamination of the peritoneum with secondary peritonitis. Dr. Jones performed a colostomy on Ms. Abshure and left her surgical incision open after packing the wound with gauze and abdominal pads.

While Ms. Abshure was recovering in the intensive care unit, she developed adult respiratory distress syndrome and sepsis. Many specialists were called in, including an infectious disease expert, a cardiologist, a pulmonologist, and an internist. Dr. Jones eventually closed the surgical incision on May 30, 2001, and Ms. Abshure was discharged from Methodist Hospital with a colostomy on May 31, 2001.

Ms. Abshure filed suit in the Shelby County General Sessions Court against Methodist Hospital and Drs. Upshaw and Ogle. However, she voluntarily dismissed this suit on August 28, 2002. Less than one year later, on June 23, 2003, the Ab-shures filed suit in the Circuit Court for Shelby County against Methodist Hospital and Drs. Ogle and Upshaw. The defendants filed timely answers denying liability.

On December 17, 2003, Dr. Upshaw moved for a summary judgment on the ground that the Abshures had been provided a reasonable opportunity to present expert testimony on negligence and causation and had failed to do so. Dr. Ogle likewise moved for a summary judgment on September 16, 2004. Before the trial court acted on the pending motions for summary judgment, the Abshures decided to voluntarily dismiss their claims against Drs. Upshaw and Ogle for the second time. On July 8, 2005, the trial court entered an order dismissing the Abshures’ claims against Drs. Upshaw and Ogle.

On May 2, 2008, nearly three years after the Abshures’ voluntary dismissal of their claims against Drs. Upshaw and Ogle, Methodist Hospital filed a “motion to dismiss and/or for summary judgment.” In this motion and in a supplemental memorandum of law, based upon the deposition of the Abshures’ medical expert, Methodist Hospital argued that the Abshures’ only claim against the hospital was premised on the hospital’s vicarious liability for the acts of Dr. Ogle. The hospital then argued that the Abshures’ claims against Dr. Ogle were now barred by operation of law by the statute of repose for medical malpractice actions and by Tenn. R. Civ. P. 41.01(2).

On July 2, 2008, the trial court filed a detailed order granting Methodist Hospital’s motion for summary judgment on four grounds. First, the trial court concluded that Methodist Hospital did not have adequate notice of the Abshures’ vicarious liability claim because the allegations in their complaint were deficient. Second, the trial court concluded that the Abshures could not pursue their vicarious liability claims against Methodist Hospital because the statute of repose had extinguished their claims against Dr. Ogle. Third, the trial court concluded that the Abshures could not pursue their vicarious liability claims against Methodist Hospital because, by operation of Tenn. R. Civ. P. 41.01(2), their second voluntary nonsuit of their claims against Dr. Ogle extinguished their claims against him by operation of law. Fourth, the trial court concluded the Ab-shures’ second voluntary nonsuit conferred an affirmative substantive right on Dr. Ogle precluding an assessment of liability against him.

The Abshures appealed to the Court of Appeals. In an opinion filed on March 17, 2009, the appellate court determined that the Abshures had adequately pleaded their vicarious liability claim. Abshure v. Upshaw, No. W2008-01486-COA-R3-CV, 2009 WL 690804, at *6 (Tenn.Ct.App. Mar. 17, 2009). The court also held that “where an initial claim is timely filed, the expiration of the statute of repose will not extinguish a claim for vicarious liability by operation of law where the plaintiff voluntarily nonsuits his action....” Abshure v. Upshaw, 2009 WL 690804, at *7.

However, the Court of Appeals also determined that by taking the second voluntary nonsuit, “the Abshures’ right of action against Dr. Ogle has been extinguished by operation of law and ... the Abshures have conferred upon Dr. Ogle an affirmative substantive right that precludes an assessment of liability against him.” Abshure v. Upshaw, 2009 WL 690804, at *8. Accordingly, the court affirmed the summary judgment because Methodist Hospital could not, as a matter of law, be held vicariously liable for Dr. Ogle’s actions. See Abshure v. Upshaw, 2009 WL 690804, at *7-10.

We granted the Abshures’ Tenn. R.App. P. 11 application for permission to appeal. Before this Court, the Abshures insist that the limitations on a principal’s vicarious liability for acts of its agents do not apply to the circumstances of this case. Methodist Hospital responds that the Court of Appeals properly applied those limitations in this case. Methodist Hospital also argues that the Court of Appeals erred by concluding that the Abshures’ complaint sufficiently states a claim for vicaiious liability.

II.

The facts material to the disposition of this case are not disputed. Accordingly, a motion for summary judgment provides a proper vehicle for addressing the dispositive legal issues presented by the parties. Methodist Hospital is entitled to a summary dismissal of the Abshures’ vicarious liability claims only if the facts and the inferences reasonably drawn from the facts, viewed in the light most favorable to the Abshures and discarding all countervailing evidence, demonstrate that it is entitled to a judgment as a matter of law. Griffis v. Davidson Cnty. Metro. Gov’t, 164 S.W.3d 267, 283-84 (Tenn.2005); Pero’s Steak & Spaghetti House v. Lee, 90 S.W.3d 614, 620 (Tenn.2002).

Because summary judgments involve questions of law, they are not entitled to the presumption of correctness on appeal. Maggart v. Almany Realtors, Inc., 259 S.W.3d 700, 703 (Tenn.2008); Cumulus Broad., Inc. v. Shim, 226 S.W.3d 366, 373 (Tenn.2007). Rather, the reviewing courts must make a fresh determination regarding whether the requirements of Tenn. R. Civ. P. 56 have been satisfied. Green v. Green, 293 S.W.3d 493, 514 (Tenn.2009); Eskin v. Bartee, 262 S.W.3d 727, 732 (Tenn.2008).

III.

Methodist Hospital’s liability to the Ab-shures, if in fact Methodist Hospital can be found liable to the Abshures, rests on vicarious liability claims. Accordingly, as a threshold issue, we will address the hospital’s argument that the Court of Appeals erred by reversing the trial court’s conclusion that the Abshures had not sufficiently pleaded their vicarious liability claim. While the Abshures’ complaint falls short of a textbook example of a vicarious liability claim, we agree with the Court of Appeals’ conclusion that it satisfies the minimum pleading requirements.

A.

Tenn. R. Civ. P. 8.01 requires that a pleading in a civil case set forth a claim for relief that contains “(1) a short and plain statement of the claim showing that the pleader is entitled to relief; and (2) a demand for judgment for the relief the pleader seeks.” Vicarious liability claims are not among the claims that are subject to the heightened pleading requirements in Tenn. R. Civ. P. 9.02.

An essential purpose of a pleading is to give notice of the issues to be tried so that the opposing party will be able to prepare for trial. Keisling v. Keisling, 92 S.W.3d 374, 377 (Tenn.2002); Poster v. Andrews, 182 Tenn. 671, 677, 189 S.W.2d 580, 582 (1943). While a complaint need not contain detailed allegations of all the facts giving rise to the claim, Givens v. Mullikin ex rel. Estate of McElwaney, 75 S.W.3d 388, 399 (Tenn.2002), it must show that the “pleader is entitled to relief.” Adams v. Carter Cnty. Mem’l Hosp., 548 S.W.2d 307, 308-09 (Tenn.1977). Thus, a complaint must contain sufficient factual allegations to articulate a claim for relief. Rawlings v. John Hancock Mut. Life Ins. Co., 78 S.W.3d 291, 300 (Tenn.Ct.App.2001). The facts pleaded, and the inferences reasonably drawn from these facts, must raise the pleader’s right to relief beyond the speculative level. See 5 Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure § 1216, at 235-36 (3d ed. 2004) (“Federal Practice and Procedure ”) (“[T]he pleading must contain something more ... than ... a statement of facts that merely creates a suspicion [of] a legally cognizable right of action.”); see also Donaldson v. Donaldson, 557 S.W.2d 60, 61 (Tenn.1977) (quoting Federal Practice and Procedure § 1216).

When the courts are called upon to analyze the adequacy of a pleading, they should construe the pleading liberally in favor of the pleader. Holloway v. Putnam Cnty., 534 S.W.2d 292, 296 (Tenn.1976). Reviewing courts should avoid construing pleadings in an artificial, technical sense. Rawlings v. John Hancock Mut. Life Ins. Co., 78 S.W.3d at 300. They should construe the pleading’s language fairly and naturally, Rawlings v. John Hancock Mut. Life Ins. Co., 78 S.W.3d at 300, and should give effect to the substance of the pleading rather than its form. Brown v. City of Manchester, 722 S.W.2d 394, 397 (Tenn.Ct.App.1986); Usrey v. Lewis, 553 S.W.2d 612, 614 (Tenn.Ct.App.1977).

B.

The Abshures’ complaint contains a short, plain statement asserting a claim against Methodist Hospital based on the acts of its agents. Paragraph 20 states:

Defendant Methodist Healthcare Memphis Hospital was negligent in not seeing that proper care was furnished to Plaintiff Abshure, and further Methodist Healthcare Memphis Hospitals’ agents and/or employees were negligent in the medical care and attention rendered to Plaintiff and did not exercise the degree of care, skill, and diligence used by medical facilities and their staff generally and under the circumstances which presented themselves, including but not limited to the choice of medical techniques employed by Methodist Healthcare Memphis Hospitals in caring for Plaintiff.

(emphasis added). The complaint also alleges that the Abshures contacted an ambulance to be taken to Methodist Hospital and that Ms. Abshure was treated by Dr. Ogle after she arrived at Methodist Hospital. The complaint expressly identifies the nurses at Methodist Hospital as employees of the hospital and is broad enough to include, at least by implication, Dr. Ogle as a potential agent of the hospital. The Abshures also alleged that Dr. Ogle’s actions in treating Ms. Abshure while she was a patient of Methodist Hospital were medically negligent and caused a worsening of Ms. Abshure’s condition resulting in serious and permanent harm.

At no point during the proceedings below did Methodist Hospital assert that it lacked sufficient information to either admit or deny the allegations contained in Paragraph 20 of the Abshures’ complaint. To the contrary, the hospital categorically declared in its answer that “[a]ll allegations found in paragraph 20 are denied.” If Memphis Hospital had concerns about the vagueness of the reference to agents in Paragraph 20, Tenn. R. Civ. P. 12.05 provided them with a vehicle for obtaining a more definite statement. The record contains no indication that Methodist Hospital pursued this course.

The better course would have been for the Abshures to allege specifically that Dr. Ogle was acting as an agent of the hospital when he treated Ms. Abshure in the emergency room. However, this lack of specificity is not fatal to the Abshures’ complaint. We agree with the Court of Appeals that Paragraph 20 of the complaint put Methodist Hospital on notice that the Abshures were holding the hospital liable for the conduct of its agents and that Dr. Ogle was potentially one of those agents.

IV.

The central issue in this case is whether the Abshures’ complaint against Methodist Hospital asserting vicarious liability for the conduct of the hospital’s agents, including Dr. Ogle, must be dismissed because the Abshures’ direct claims against Dr. Ogle became barred after they filed their complaint against Methodist Hospital. This is not the first time this Court has been confronted with questions regarding the limitations that should be placed on the ability of plaintiffs to pursue vicarious liability claims against a principal without also pursuing claims directly against the agent.

A.

It has long been recognized in Tennessee that a principal may be held vicariously hable for the negligent acts of its agent when the acts are within the actual or apparent scope of the agent’s authority. It is also generally recognized that a plaintiff may sue a principal based on its vicarious liability for the tortious conduct of its agents without suing the agent. Even where the agent’s conduct is the sole basis for the principal’s liability, the agent remains a “proper, but not a necessary” party. Thus, a plaintiff is free to sue the agent, the principal, or both. This common-law framework is well-established in Tennessee law.

Notwithstanding the general rule permitting a plaintiff to file suit against the principal, the agent, or both, the courts have recognized that there are certain circumstances in which it would be improper to permit a plaintiff to proceed solely against a principal based on its vicarious liability for the conduct of an agent. The orderly development of the common-law in Tennessee has identified four such circumstances. These circumstances include: (1) when the agent has been exonerated by a finding of non-liability; (2) when the plaintiff has settled its claim against the agent; (3) when the agent is immune from suit, either by statute or by the common law; and (4) when the plaintiffs claim against the agent is procedurally barred by operation of law before the plaintiff asserts a vicarious liability claim against the principal.

This case requires us to revisit these limitations on a plaintiffs right to pursue a vicarious liability claim against a principal. Methodist Hospital insists that' the Ab-shures should be precluded from pursuing their vicarious liability claim because their claim against Dr. Ogle is now barred by operation of Tenn. R. Civ. P. 41.01(2) and by the expiration of the savings statute, Tenn.Code Ann. § 28-1-105(a) (2000). The Abshures assert that dismissing their vicarious liability claim against the hospital is unwarranted. Both Methodist Hospital and the Abshures contend that their respective positions align neatly with Tennessee’s common law with regard to limitations on vicarious liability suits against principals for the acts of their agents.

B.

The first common-law limitation to emerge in Tennessee regarding a plaintiffs ability to pursue a vicarious liability claim against a principal appeared in D.B. Loveman Co. v. Bayless, 128 Tenn. 307, 160 S.W. 841 (1913). A former employee who was accused of stealing filed suit against his former employer and two fellow employees. The claims against the employer were predicated on acts of the employees. A jury returned a plaintiffs verdict against the employer but returned a defendant’s verdict in favor of the two employees. D.B. Loveman Co. v. Bayless, 128 Tenn. at 309-12, 160 S.W. at 841-42.

This Court vacated the judgment against the employer on the ground that it was untenable to hold the principal vicariously liable for improper acts of its agents when the agents themselves had been found not to have committed any improper acts. See D.B. Loveman Co. v. Bayless, 128 Tenn. at 312-13, 160 S.W. at 842. Accordingly, we adopted the following rule:

When the [principal] is sued solely for misfeasance, or nonfeasance, on the part of his [agents], being liable for their conduct only under the doctrine of re-spondeat superior, a verdict, permitted to stand in favor of such [agents], either in an action where they are sued with the [principal], or in a prior action, entitles the [principal] to a discharge from such claimed liability.

D.B. Loveman Co. v. Bayless, 128 Tenn. at 312, 160 S.W. at 842. We also explained the reasons for this rule as follows:

The reason on which the conclusion rests, in cases involving [principal and agent], is that where the [agent] by whose act the injury occurred is exonerated it is contradictory and absurd to find the [principal] guilty on the same evidence; that the [agent]’s liability is primary, that of the [principal] secondary, or derivative, depending wholly on his [or her] duty to respond for the fault of his [or her] [agent] in the line of his employment.... [Everyone] is entitled to his [or her] day in court, and no more, on the same cause of action; that he [or she] has enjoyed this right when he [or she] has contested the matter with persons committing the wrong and primarily liable, and has been cast in such suit; that to permit him [or her] after this to contest the matter with one only secondarily liable would be to give him [or her] two suits upon the same cause of action.

D.B. Loveman Co. v. Bayless, 128 Tenn. at 315-16, 160 S.W. at 843.

In 2002, this Court restated the holding in D.B. Loveman v. Bayless as follows: “[a] principal may not be held vicariously liable under the doctrine of respondeat superior based upon the acts of its agent ... when the agent has been exonerated by an adjudication of non-liability.” Johnson v. LeBonheur Children’s Med. Ctr., 74 S.W.3d 338, 345 (Tenn.2002). Thus, where “the injured party sue[s] the actual wrongdoer and los[es] the action on a merits determination, the judgment in that case preclude^] the injured party from suing the merely vicariously responsible party, as his liability [is] purely derivative.” 1 Lawrence A. Pivnick, Tennessee Circuit Court Practice § 5:16, at 537 (2010).

C.

Tennessee’s courts have recognized a second limitation on a plaintiffs ability to assert a vicarious liability claim against a principal for the conduct of its agents. This limitation occurs when “the injured party extinguishes the agent’s liability by conferring an affirmative, substantive right upon the agent that precludes assessment of liability against the agent.” Johnson v. LeBonheur Children’s Med. Ctr., 74 S.W.3d at 345. Alternatively, Tennessee courts have recognized that plaintiffs should not be permitted to pursue a vicarious liability claim against a principal when they have settled with the agent and have agreed not to pursue a claim against the agent. See, e.g., Tutton v. Patterson, 714 S.W.2d 268, 269, 271 (Tenn.1986); Craven v. Lawson, 534 S.W.2d 653, 654, 656-57 (Tenn.1976); Stewart v. Craig, 208 Tenn. 212, 218, 344 S.W.2d 761, 763 (1961); Olympia Child Dev. Ctr., Inc. v. City of Maryville, 59 S.W.3d 128, 134-35 (Tenn.Ct.App.2001); McGee v. Wilson Cnty., 574 S.W.2d at 747; see also Rankhorn v. Sealtest Foods, 63 Tenn.App. at 721, 479 S.W.2d at 652 (noting that this limitation does not apply to a plaintiff who nonsuited her claim against the agent who received no “satisfaction or recovery”).

While our courts have not clearly explained the reasons why plaintiffs who settle their claims against an agent should not be permitted to pursue vicarious liability claims against the principal, the reasons for this rule have been discussed by others. The District of Columbia Court of Appeals has noted that

[b]etween the late nineteenth and mid-twentieth century, a majority of courts adopted the common law rule that a valid release of an agent for tortious conduct releases the principal when the plaintiffs claim is based on vicarious liability. The rationale articulated ... rested on different theories, but the driving force behind the common law rule appeared to be that in the absence of the rule a plaintiff could receive more than one satisfaction for her injury.

Convit v. Wilson, 980 A.2d 1104, 1115-16 (D.C.2009) (footnotes omitted) (footnote added). In addition, the Restatement (Third) of Torts: Apportionment of Liability provides that a settlement with an agent will extinguish a principal’s liability for the actions of the agent, even though a mere voluntary dismissal will not. See Restatement (Third) of Torts: Apportionment of Liability § 7 cmt. j, at 69 (2000); Restatement (Third) of Torts: Apportionment of Liability § 16 cmt. d, at 136-87; see generally Restatement (Third) of Torts: Apportionment of Liability § 16 reporters’ note cmt. d, at 144-45 (addressing the complexities caused by settlements including issues related to indemnification between agents and principals and windfalls for plaintiffs).

D.

The third limitation on a plaintiffs ability to assert a vicarious liability claim against a principal arises when the agent is immune from suit under the common law or by statute. The foundational case for this exclusion is Raines v. Mercer, 165 Tenn. 415, 55 S.W.2d 263 (1932). The case involved a woman who was injured while riding as a passenger in an automobile driven by her flaneé. The woman filed suit against her future father-in-law claiming that he was vicariously liable for the negligence of his son. After the plaintiff married her fiancé, her father-in-law argued that he could not be held liable for the conduct of his son based on the common-law “marital unity” rule. Raines v. Mercer, 165 Tenn. at 417-19, 55 S.W.2d at 263-64.

This Court held that “[t]he marital unity extinguished the right of action against her husband, and, since she could not recover from him, she could not recover from his father.” Raines v. Mercer, 165 Tenn. at 420-21, 55 S.W.2d at 264. Later, the Court used similar reasoning in cases involving child-parent immunity bars. In these cases, the Court held that a minor child may not recover damages against a parent’s employer based on the parent’s negligent acts. Smith v. Henson, 214 Tenn. 541, 551-52, 381 S.W.2d 892, 897 (1964); Graham v. Miller, 182 Tenn. 434, 436-42, 187 S.W.2d 622, 623-26 (1945).

The most recent case involving the immunity limitation to vicarious liability claims is Johnson v. LeBonheur Children’s Medical Center. The case involved a medical malpractice claim against a Memphis hospital based on the acts of two physicians who were practicing at the hospital as part of the University of Tennessee College of Medicine’s resident training program. The hospital asserted, among other things, that it could not be held liable for the acts of the resident physicians because, as state employees, these physicians were immune from suit. Both the trial court and the Court of Appeals concluded that the hospital could be held vicariously liable for the acts of the resident physicians. Johnson v. LeBonheur Children’s Med. Ctr., 74 S.W.3d at 341-42.

Responding to the hospital’s argument based on the resident physician’s immunity, this Court acknowledged that vicarious liability claims against a principal may be barred “when the right of action against the agent is extinguished by operation of law.” Johnson v. LeBonheur Children’s Med. Ctr., 74 S.W.3d at 345. However, we concluded that the patient’s claims against the hospital were not extinguished by operation of law (the statutory immunity of the individual resident physicians) because the physicians’ employer was still subject to liability before the Board of Claims. Johnson v. LeBonheur Children’s Med. Ctr., 74 S.W.3d at 345-46. Even though the private hospital could not seek indemnification from the agents, we concluded “that a private hospital may be held vicariously liable under the doctrine of respon-deat superior solely for the acts of a state-employed physician resident when that resident is ... the agent ... of the hospital.” Johnson v. LeBonheur Children’s Med. Ctr., 74 S.W.3d at 346-47.

E.

During the years since Johnson v. Le-Bonheur Children’s Medical Center was decided, both plaintiffs and principals have tested the limits of the practical application and scope of the exclusion of vicarious liability claims against principals “when the right of action against the agent is extinguished by operation of law.” Johnson v. LeBonheur Children’s Med. Ctr., 74 S.W.3d at 345. Because rights of action may be extinguished by operation of law in many different ways, the courts have been given the opportunity to address circumstances in which a plaintiffs claim against an agent has been barred by operation of legal principles that do not involve either common-law or statutory immunity. Two of these cases dealt with the procedural bars associated with the statute of repose and the res judicata doctrine.

In 2008, the Court of Appeals addressed a circumstance in which the plaintiffs claim against an agent became barred by operation of a statute of repose. Huber v. Marlow, No. E2007-01879-COA-R9-CV, 2008 WL 2199827 (Tenn.Ct.App. May 28, 2008) (Tenn. R.App. P. 11 application voluntarily dismissed). The plaintiffs filed suit against the principal based on the principal’s own negligence. However, the plaintiffs failed to include in their complaint a vicarious liability claim against the principal based on the conduct of its agents. When the plaintiffs realized that the principal’s liability arose from the negligence of its agent, they attempted to amend their complaint to assert a vicarious liability claim against the principal. By that time, however, the statute of repose had run with regard to the claims that the plaintiffs could have asserted against the agent. The Court of Appeals held that the plaintiffs could not amend their complaint to add a vicarious liability claim against the principal because their claims against the agent had been extinguished by operation of law — the running of the statute of repose. Huber v. Marlow, 2008 WL 2199827, at *3-4.

Last year, this Court addressed the question of whether the operation of the doctrine of res judicata with regard to claims against agents prevented the plaintiffs from pursuing a vicarious liability claim against the principal. Creech v. Addington, 281 S.W.3d 363 (Tenn.2009). While this case has a complicated procedural history, it is essentially a late amendment case similar to Huber v. Marlow.

The plaintiffs in Creech v. Addington, who claimed that they had been swindled in a complicated real estate investment scheme, sued numerous defendants, including a principal and its agents. While the complaint contained claims based on alleged misrepresentations by each of the defendants, it did not assert that the principal was vicariously liable for the misrepresentations of its agents. Creech v. Addington, 281 S.W.3d at 371-72 & nn. 10-11. Eventually, the plaintiffs attempted to amend their complaint to add a vicarious liability claim against the principal. By that time, however, their claims against the agents had been extinguished by the doctrine of res judicata. Creech v. Addington, 281 S.W.3d at 371-72, 376-83. We concluded that the plaintiffs could not pursue their vicarious liability claim against the principal because the doctrine of res judicata had extinguished their claims against the agents by operation of law. Creech v. Addington, 281 S.W.3d at 376-383.

The decisions in Creech v. Addington and Huber v. Marlow reflect a fourth limitation on a plaintiff’s ability to assert a vicarious liability claim. This limitation arises when the plaintiff attempts to assert a vicarious liability claim against the principal after its right to assert a claim against the agent has become procedurally barred. It reflects one of the traditional policy reasons for refusing to permit a plaintiff to pursue a vicarious liability claim against a principal — plaintiffs should not be permitted to engage in an “encircling movement” against the principal when they cannot pursue a “frontal attack” on the agent. Graham v. Miller, 182 Tenn. at 441-42, 187 S.W.2d at 625-26; Raines v. Mercer, 165 Tenn. at 420, 55 S.W.2d at 264; see also Johnson v. LeBonheur Children’s Med. Ctr., 74 S.W.3d at 345-46; Huber v. Marlow, 2008 WL 2199827, at *5 (ruling that the plaintiff could not make “an ‘end run’ around the statute of repose” by amending their complaint to raise a vicarious liability claim).

In both Creech v. Addington and Huber v. Marlow, the plaintiffs initially sued the principals but did not assert vicarious liability claims against them. While the plaintiffs’ claims against the principal were pending, they lost their opportunity to mount a “frontal attack” on the agent or agents. In Huber v. Marlow, the statute of repose governing the claims against the agent ran. In Creech v. Addington, the doctrine of res judicata prevented the plaintiffs from resurrecting their previously dismissed claims against the agents. Thus, the plaintiffs’ belated efforts to amend their complaints against the principals to add a vicarious liability claim were found to be nothing more than the sort of “encircling movement” prohibited by Graham v. Miller and Raines v. Mercer.

The decisions in both Creech v. Addington and Huber v. Marlow were heavily influenced by the fact that the plaintiffs did not assert a vicarious liability claim against the principal when they first filed suit, even though they could have. In Huber v. Marlow, the court emphasized that the plaintiffs’ attempt to amend their complaint to assert a vicarious liability claim against the principal was untimely because it came after the statute of repose governing claims against the agent had run. Huber v. Marlow, 2008 WL 2199827, at *1-5. Similarly, in Creech v. Adding-ton, we noted that instead of filing their vicarious liability claim against the principal when they filed their original complaint, the plaintiffs delayed asserting their vicarious liability claim against the principal until after the doctrine of res judicata barred their claims against the agents. Creech v. Addington, 281 S.W.3d at 371-72 & nn. 10-11, 376-83.

Thus, the procedural limitation on the plaintiffs ability to pursue a vicarious liability claim against a principal recognized in Creech v. Addington and Huber v. Marlow is triggered only when a plaintiff belatedly attempts to amend its complaint to add a new vicarious liability claim against a principal after its claims against the agent have become barred by operation of law. The limitation does not apply in circumstances where the plaintiff has initially filed a vicarious liability claim against the principal, and the plaintiffs claims against the principal’s agents are later extinguished by operation of law.

Extending the procedural limitation recognized in Creech v. Addington and Huber v. Marlow to plaintiffs who have included a vicarious liability claim in their original complaint would be contrary to the traditional principle that plaintiffs may elect to sue the principal, the agent, or both. In circumstances where the plaintiff has properly asserted a vicarious liability claim against the principal, the extinguishment of the plaintiffs claims against the agent, by voluntary dismissal or otherwise, “merely produce[s] the same effect as if the [agent] had never been sued.... ” Rankhorn v. Sealtest Foods, 63 Tenn.App. at 721, 479 S.W.2d at 652.

F.

We now apply these principles to the two bases of the Court of Appeals’ decision to affirm Methodist Hospital’s summary judgment. The court first reasoned that the Abshures’ second voluntary dismissal of their claims against Dr. Ogle was “the substantive equivalent of a covenant not to sue” and, therefore, that the Abshures should be barred from suing the hospital under the “third instance” of non-liability identified in Johnson v. LeBonheur Children’s Medical Center. Abshure v. Upshaw, 2009 WL 690804, at *9. We cannot concur with this conclusion. The limitation on a principal’s liability that arises “when the injured party extinguishes the agent’s liability by conferring an affirmative, substantive right upon the agent that precludes assessment of liability against the agent” applies to settlements between the plaintiffs and agents. This record does not reflect that the Abshures reached a settlement with Dr. Ogle when they voluntarily dismissed their claims against him. To the contrary, it appears that the Abshures gratuitously dismissed these claims.

The Court of Appeals also held that the Abshures should not be permitted to pursue vicarious liability claims against Methodist Hospital because their right of action against Dr. Ogle had been extinguished by operation of law. The court noted that both Tenn. R. Civ. P. 41.01(2) and the statute of repose in TenmCode Ann. § 29-26-116(a)(3) (2000) barred the Abshures from pursuing any claims against Dr. Ogle. While we agree that the Abshures’ claims against Dr. Ogle have been extinguished by operation of law, we do not agree that their vicarious liability claims against Methodist Hospital should also be extinguished. The Abshures filed a proper vicarious liability claim against Methodist Hospital before their claims against Dr. Ogle were extinguished by operation of law. Accordingly, the subsequent procedural bar of their claims against Dr. Ogle does not prevent the Abshures from pursuing their timely filed vicarious liability claim against the hospital.

V.

The judgment of the Court of Appeals affirming the summary judgment dismissing the Abshures’ vicarious liability claims against Methodist Hospital is reversed, and the case is remanded to the trial court for further proceedings consistent with this opinion. The costs of this appeal are taxed to the Methodist Healthcare Memphis Hospital for which execution, if necessary, may issue.

      . The facts set forth in this opinion are drawn from the current record on appeal. Because the parties have yet to have a full hearing with regard to many of these facts, our inclusion of any particular fact in this opinion should not be construed to be a conclusive finding of fact that prevents the parties from presenting additional evidence regarding the fact or to prevent the trial court from making different findings of fact based on the evidence actually presented by the parties.

      . The parties have not included copies of the general sessions filings in this record, and their representations regarding the timing of these filings are not consistent. None of these discrepancies, however, is material to the disposition of this case.

      . While the trial court’s July 8, 2005 order did not specify whether the dismissal of the Ab-shures’ claims against Drs. Upshaw and Ogle was with or without prejudice, the claim is no longer viable. It is undisputed that the Abshures' second voluntary non-suit was taken outside of the protective scope of the saving statute. Tenn.Code Ann. § 28-l-105(a) (2000). Accordingly, any attempt to refile the claim against Drs. Upshaw and Ogle in the future is subject to dismissal pursuant to the statute of repose. See Tenn.Code Ann. § 29-26-116(a)(3).

      . Methodist Hospital also asserted that Dr. Ogle was not its agent and that the doctrine of apparent agency was not applicable. The trial court never addressed these arguments, and the parties have not raised them on this appeal.

      . The actual and apparent agency relationships between hospitals and emergency room physicians have received considerable attention from Tennessee's appellate courts. See, e.g., Boren ex rel. Boren v. Weeks, 251 S.W.3d 426, 432-37 (Tenn.2008); White v. Methodist Hosp. South, 844 S.W.2d 642, 646-48 (Tenn.Ct.App.1992). The facts alleged in the Ab-shures’ complaint lay a foundation for a claim based on the apparent agency relationship between the hospital and Dr. Ogle. See Boren ex rel. Boren v. Weeks, 251 S.W.3d at 436.

      . See, e.g., Cox v. M.A. Primary and Urgent Care Clinic, 313 S.W.3d 240, 251 (Tenn.2010); V.L. Nicholson Co. v. Transcon Inv. & Fin. Ltd., 595 S.W.2d 474, 483 (Tenn.1980); see also Ohio Life Ins. & Trust Co. v. Merchs. Trust Co., 30 Tenn. (11 Hum.) 1, 30 (1850); Nunnelly v. Goodwin, 39 S.W. 855, 859 (Tenn.Ch.App.1896).

      . See, e.g., Yamane v. Pohlson, 111 Hawai’i 74, 137 P.3d 980, 990 (2006); Wiedenfeld v. Chicago & Nw. Transp. Co., 252 N.W.2d 691, 695 (Iowa 1977); Kocsis v. Harrison, 249 Neb. 274, 543 N.W.2d 164, 169 (1996); Erdmann v. Thomas, 446 N.W.2d 245, 249 (N.D.1989); Wiebe v. Seely, 215 Or. 331, 335 P.2d 379, 390 (1959); Lane v. Home Ins. Co., 190 S.C. 84, 2 S.E.2d 30, 32 (1939).

      . Warren A. Seavey, Law of Agency § 95(A), at 169 (1964).

      . See, e.g., Miller v. Staples, 3 Colo.App. 93, 32 P. 81, 81 (1893); Cascarella v. Nat’l Grocer Co., 151 Mich. 15, 114 N.W. 857, 858 (1908); Nat’l Union Fire Ins. Co. of Pittsburgh, PA v. Wuerth, 2009 OH 3601, ¶¶ 21-22, 122 Ohio St.3d 594, 913 N.E.2d 939, 944; Parlin & Orendorff Co. v. Miller, 25 Tex.Civ.App. 190, 60 S.W. 881, 882 (1901); see also Frank B. Cross & Roger LeRoy Miller, The Legal Environment of Business: Text and Cases — Ethical, Regulatory, Global, and E-Commerce Issues 497 (2008).

      . See, e.g., McGee v. Wilson Cnty., 574 S.W.2d 744, 746 (Tenn.Ct.App.1978); Rankhorn v. Sealtest Foods, 63 Tenn.App. 714, 722, 479 S.W.2d 649, 652 (1971); Williams v. Pritchard, 43 Tenn.App. 140, 145-46, 306 S.W.2d 46, 49 (Tenn.Ct.App.1957); see also Campbell v. Corr. Corp. of Am., No. M1999-01082-COA-R3-CV, 2001 WL 921888, at *4 (Tenn.Ct.App. Aug. 7, 2001) (No Tenn. R.App. P. 11 application filed).

      . In recent years, the near universality of this rule has broken down with the effect of releases or covenants not to sue on actions against principals having become a matter of considerable debate, disagreement, and variance in the state courts. See generally J.D. Lee & Barry Lindahl, 1 Modern Tort Law: Liability and Litigation § 7:17 (2d ed.2010). Arguably much of this tumult is attributable to language in the Uniform Contribution Among Tortfeasors Act, see Convit v. Wilson, 980 A.2d at 1116 & n. 32. Even though Tennessee has adopted critical provisions of the uniform act, this Court has rejected the argument that these provisions are applicable to the extinguishment of suits against principals where the plaintiff settles with an agent. See Craven v. Lawson, 534 S.W.2d at 656-57.

      . The Kentucky Court of Appeals has discussed the application of this rule in the context of a vicarious liability claim against a hospital. The court noted:
      The [plaintiffs] had but one cause of action which the law gave to compensate them for their daughter’s injuries. This cause of action for the allegedly tortious conduct of [the anesthesiologists] was as-sertable against the hospital only because [the anesthesiologists] were allegedly acting in their function as employees or ostensible agents of the hospital at the time they committed the negligent act causing [the plaintiffs’ daughter’s] injury. When [the anesthesiologists] entered into the structured settlement agreement with the [the plaintiffs], they repaired the wrong that they had done and therefore were fully acquitted from further liability. This acquittance inured to the benefit of the hospital, for the discharge of the primary tortfeasor ([the anesthesiologists]) must be held to discharge the secondary tortfeasor (the hospital) also from further responsibility, as the hospital’s liability for the tortious act was vicarious in nature and derived solely from its legal relation to the wrongdoer, [the anesthesiologists].

        Copeland v. Humana of Ky., Inc., 769 S.W.2d 67, 70 (Ky.Ct.App.1989). Similarly, the Iowa Supreme Court concluded that by settling with the agent, the plaintiff "satisfied the percentage of fault attributable to [agent] and, vicariously, attributable to the [the principal]. That is, the settlement wiped out any fault derived from the [agent’s] conduct....” Biddle v. Sartori Mem’l Hosp., 518 N.W.2d 795, 799 (Iowa 1994).

      . The Restatement does not extend this rule to circumstances covered by Tenn. R. Civ. P. 41.01(2).

      . The common-law "marital unity” rule provided that "all rights of action for antenuptial wrongs of the husband to the wife are extinguished by their marriage” because a husband and wife were "declar[ed] ... to be one person.” Raines v. Mercer, 165 Tenn. at 419, 55 S.W.2d at 264. This bar on such inter-spousal tort litigation was eliminated in Davis v. Davis, 657 S.W.2d 753, 759 (Tenn.1983).

      . Accordingly, one commentator noted that the lesson of Huber v. Marlow is that "lawsuits brought ... under the doctrine of re-spondeat superior must be filed within the statute of repose applicable to the tortious employee.” Natasha W. Campbell, When an Employer’s Only Liability Is Based on Action of a "Nonparty Employee", the Employer Cannot Be Held Vicariously Liable After the Statute of Repose Has Run Against That "Nonparty Employee", 10 Transactions: Tenn. J. Bus. L. 119, 120 (2008).

      . Johnson v. LeBonheur Children's Med. Ctr., 74 S.W.3d at 345.

      . Johnson v. LeBonheur Children’s Med. Ctr., 74 S.W.3d at 345.