Va.S.Ct. holds prisoner 3d pty bene of medical contract

The Supreme Court of Virginia held that a prisoner is a third party beneficiary of a contract between the Virginia Department of Corrections and the medical services contractor, and therefore the court reversed the dismissal of the prisoner’s contract claims against the medical services contractor. The court also held that the contractor was not entitled to sovereign immunity. Ogunde v. Prison Health Services, Inc., 645 S.E.2d 520 (Va. 2007).

Prison Health Services, Inc. (PHS) provides medical services to prisoners in certain Virginia prisons, pursuant to a contract with the Virginia Department of Corrections (VDOC).  Oludare Ogunde, an inmate, suffered from a skin condition that was aggravated by shaving.  He alleged that PHS and its employees denied him proper medical treatment and failed to issue him an exemption from VDOC’s inmate grooming policy which requires shaving unless shaving would aggravate a medical condition. 

 

The trial court dismissed the medical malpractice and gross negligence claims based on its determination that PHS and its employees were entitled to sovereign immunity.  PHS argued that it was not an independent contractor because VDOC had to pre-approve all personnel and had control over many aspects of the delivery of medical care, including specifying where inmates may be hospitalized, the methods of delivering off-site medical care, and the medications to be prescribed for certain illnesses.  The court found that the VDOC oversight related to security and not supervision of medical services, e.g., pre-approval of personnel was limited to a criminal records check.  The court found that the restrictions on medications concerned only HIV/AIDS and Hepatitis C, and did not even apply to the correctional facility where Ogunde resided.  The court concluded that although the contract sets forth staffing requirements, “PHS supervises and directs its employees, not VDOC.”  The court further observed that the contract to provide medical services was the result of a competitive bidding process.  The court held that PHS and its employees are independent contractors and therefore are not entitled to sovereign immunity.

 

Ogunde also alleged breach of contract, arguing that he is an intended third party beneficiary of the contract between PHS and VDOC.  The contract states that its purpose is to provide quality health care for inmates at specified correctional center facilities.  The court stated: “Ogunde is one of these inmates and PHS’s performance under the contract renders a direct benefit to Ogunde.  The contract thus ‘clearly and definitely’ indicates that PHS and VDOC intended to provide a benefit to, among others, Ogunde.”  (Citation omitted.) 

 

PHS contended that Ogunde was not an intended beneficiary but rather was an incidental beneficiary because he could leave the facility and the duties imposed on PHS would remain intact.  The court disagreed, stating “The status of an intended third party beneficiary does not depend upon permanent membership in the class of persons entitled to receive the benefit of the contract.”  The court held that the trial court erred in dismissing the breach of contract claim.