Massachusetts Law Review

Case & Statute Comments - Boundaries of the Charitable Cap, Massachusetts General Laws chapter 231, section 85K

Conners v. Northeast Hosp. Corp., 439 Mass. 469 (2003).

In Conners v. Northeast Hospital Corp.,1 the Supreme Judicial Court (“SJC”) addressed the elements necessary to establish when an entity is entitled to the protection afforded by General Laws chapter 231, section 85K, the charitable cap statute, which limits the liability in tort of charitable entities to $20,000.2 An entity claiming the charitable cap must establish (1) that it is a “charity” and (2) that the tort committed by the charity occurred “in the course of any activity carried on to accomplish directly the charitable purposes of such” entity.3 According to the SJC, this reading of the charitable cap statute accomplishes the legislature’s goal of “pursu[ing] ‘the legitimate objective of preserving charitable assets,’ while evincing an intent to ‘confine narrowly the doctrine of charitable immunity.’”4

In Conners, the SJC discussed at length the evolution of this statute and its primary intent to abolish the doctrine of charitable immunity while preserving a limitation of liability for “certain institutions, [who] by their nature and the quality and character of their charitable endeavor, should be treated differently, with regard to their legal liability, from those institutions of a different nature.”5 The SJC found that hospitals, among others, are the type of institutions that the legislature meant to protect by enacting the statute.6

A debate has arisen with respect to the breadth of the statutory cap mandated by section 85K. Trial attorneys claim that, by limiting the inquiry to a two rather than three-pronged analysis, Conners interferes with the legislature’s intention to abolish the doctrine of charitable immunity, significantly expanding an organization’s ability to take advantage of the statutory cap and significantly limiting a tort plaintiff’s recovery.7 The hospital industry, on the other hand, believes that the statute must be read as the Conners court mandates in order to preserve the legislature’s intent of protecting certain charitable institutions, namely nonprofit health care providers.8

I. The Charitable Cap Statute

In McDonald v. Massachusetts General Hospital,9 the SJC recognized the defense of charitable immunity.10 The court noted that defendant hospital was a public charitable institution, and that

[i]ts funds [we]re derived mainly from public and private charity; its affairs [we]re conducted for a great public purpose, that of administering to the comfort of the sick, without any expectation, on the part of those immediately interested in the corporation, of receiving any compensation which w[ould] enure to their own benefit, and without any right to receive such compensation.11

“The principle of immunity there stated was that a charitable corporation of that nature ‘has no funds which can be charged with any judgment which he [the plaintiff] might recover, except those which are held subject to the trust of maintaining the hospital.’”12

In 1969, however, the SJC noted that only three or four states still adhered to the doctrine.13 It said that it had declined to renounce the doctrine in previous cases, on the principle that renunciation should be done prospectively and legislatively.14 But, anticipating that there would not be any legislative action in the near future, the SJC said, “Accordingly, we take this occasion to give adequate warning that the next time we are squarely confronted by a legal question respecting the charitable immunity doctrine if it is our intention to abolish it.”15 The legislature enacted section 85K in 1971.16

II. Conners

The SJC found the following facts and circumstances underlying the appeal: Janet Conners slipped and fell on an accumulation of ice and snow located on a parking lot owned and maintained by defendant Northeast Hospital Corporation (Northeast).17 Conners was employed by a physician practice group housed in a medical building complex located on land owned by Northeast.18 Northeast did not own the complex itself, but leased the land upon which the complex was located to the building’s condominium association.19 The complex was leased below market value, and all physicians who practiced in the complex had privileges at the hospital.20 Pursuant to the terms of the lease, Northeast provided a parking lot to the complex for parking by employees and patients of the complex as well as employees, patients and visitors of the hospital.21 Northeast provided maintenance to all parking lots on its campus, including the parking lot adjacent to the complex.22 This maintenance included snow removal services.23 Northeast did not generate any revenue from its snow removal services.24

The jury found Northeast liable for negligence and awarded Conners $183,000.25 The trial judge allowed Northeast’s motion to amend the judgment pursuant to the statute to $20,000.26 No appeal was taken as to the finding of liability.27

Conners appealed, alleging that Northeast “failed to establish (1) that it was a ‘charity’; (2) that its snow removal activities were carried on ‘to accomplish directly’ its charitable purposes; and (3) that such activities were not ‘primarily commercial in character.’”28 The SJC conducted the following analysis and rejected Conners’ claims.29

III. Charitable Status

The SJC found that Northeast is a “charity” as contemplated by section 85K. Northeast’s articles of organization established its charitable character and purpose.30 Further, Northeast presented evidence of its history of providing care and treatment to the sick.31 The court reiterated the following test for determining whether an institution is entitled to charitable status:

An institution will be classed as charitable if the dominant purpose of its work is for the public good and the work done for its members is but the means adopted for this purpose. But if the dominant purpose of its work is to benefit its members or a limited class of persons it will not be so classed, even though the public will derive an incidental benefit from such work.32

In conducting this analysis, the SJC found the following characteristics were not dispositive of, and in some instances were not relevant to, the determination of Northeast’s charitable status: 1) the size of the institution; 2) the source of its revenue; 3) the absence of charitable gifts; 4) the lack of free care; and 5) the integration into a single corporate structure with some for profit entities.33 Rather, “[t]he critical inquiry is whether the purpose of the organization is to benefit a select few, rather than the wider community.”34

The SJC reduced Conners’ argument to its essence: “that this court should significantly revise the concept of ‘charity’ under § 85K, at least as it applies to hospitals.”35 The court acknowledged the concern raised by the changing atmosphere of health care provided by large nonprofit institutions which are largely funded by insurance, both government and private.36 The SJC presumed that the legislature is aware of the significant changes, but noted that it has taken “no action regarding the statutory limitation of liability of charitable hospitals in response to these developments.”37 The SJC determined that the question whether large, nonprofit health organizations that are substantially funded by insurance should still benefit from the charitable cap is an issue best left to the legislature.38

IV. The Limitation on Liability

The charitable cap will apply where “the tort was committed in the course of any activity carried on to accomplish directly the charitable purposes of such corporation, trust or association.”39 Conners alleged that Northeast’s snow removal activities, upon which the finding of negligence was based, related to a commercial lease and therefore were not carried out to accomplish directly the purpose of providing care to the sick.40 The SJC rejected this position for two reasons: first, it concluded that snow removal provided convenient physical access for those seeking treatment both at the complex and at the hospital; and second, it found that the proximity of the complex to the hospital provided patients with both physicians and hospital services in the same location.41 Thus, the court determined that the trial judge appropriately applied the statutory cap to limit Northeast’s liability.42

Conners argued that, even if Northeast is a charity that maintained the parking lot to advance its charitable purposes, the cap still should not apply, because the snow removal activities were “primarily commercial” in nature.43 The trial judge held that the snow removal activities were not primarily commercial, because Northeast “did not derive any revenue from the snow removal operations, was not operating a ‘full-fledged’ snow removal business, and was not engaged in an activity that was ‘entirely disconnected’ from the charity’s purpose.”44

The SJC agreed with the trial judge’s determination, but for different reasons. The court found that the “primarily commercial” clause in the statute was not, as Conners argued and the trial judge appeared to accept, a separate analysis.45 The SJC said that the “primarily commercial” sentence is intended to assist the fact-finder in determining whether or not the activity “accomplish[ed] directly” the charitable purpose.46 In other words, the court found: “If the revenue-generating activity is indeed ‘primarily commercial,’ it cannot ‘accomplish directly’ the charitable work of the organization. Conversely, a revenue-generating activity may, and in many circumstances does, ‘accomplish directly’ the organization’s purpose.”47 In essence, the court concluded that the “primarily commercial” inquiry is unnecessary where, as here, the fact-finder has determined that 1) the hospital is a charitable entity, and 2) the services at issue, regardless of their arguable commercial nature, accomplish the hospital’s charitable purpose.48

V. Subsequent Case Law

Since Conners was issued on May 29, 2003, several lower courts have used the court’s reasoning when making the determination of whether or not the charitable cap will apply to a particular entity.

In Goldberg v. Northeastern University,49 the Massachusetts Appeals Court, in dicta, discussed the application of the cap to Northeastern University’s Lane Health Center.50 Relying on evidence proffered by Northeastern through its charter that stated its charitable purposes and the description of the services provided by its health care facility, the Appeals Court held that if liability had attached to Northeastern for the negligent setup and operation of the facility, the statutory cap would also apply, limiting recovery to $20,000.51 Citing Conners, the Appeals Court stated:

Northeastern’s entitlement to the protection of the statutory cap extends to the activities of the Lane Health Center because those activities were conducted in pursuit of Northeastern’s charitable purpose. A corporate activity is sufficiently connected to the corporation’s charitable purposes unless the reasons for conducting that activity are “primarily commercial,” meaning that the activity is “entirely disconnected” from the charitable purposes of the corporation. That is not the case here.52

In In re Boston Regional Medical Center,53 Judge Wolf, in the U.S. District Court for the District of Massachusetts, relied on Conners’ holding that “the inquiry into whether an activity is primarily commercial in nature cannot be separated from the inquiry into whether that activity accomplishes directly the goals of the charity.”54 Judge Wolf found that Atlantic Adventist Healthcare Corporation (AAHC), “a Massachusetts corporation organized to coordinate activities among charitable institutions affiliated with the [Adventist] Church,” was entitled to the statutory cap.55 AAHC was alleged to have aided and abetted the debtor’s trustees’ breach of fiduciary duty.56 Judge Wolf held that “if the activities of AAHC that form the basis of the Committee’s Complaint directly accomplish the Church’s goal of providing the optimum level of health and medical care to the general public, AAHC is entitled to the liability cap of § 85K.”57 He found that, based on the evidence presented, AAHC was so entitled.58 Judge Wolf recognized the ongoing debate regarding the policy implications of the cap, but determined that those issues were best left to the legislature.59

In Witlow v. Harvard Pilgrim Health Care, Inc.,60 Judge Garsh, sitting in the superior court, limited the application of the statutory cap by ruling that, despite their quasi-tort nature, claims brought for employment discrimination pursuant to Massachusetts General Laws chapter 151B are not entitled to the cap.61 In so ruling, Judge Garsh recognized that the cap would, at its outer boundary, apply only to those situations in which there otherwise would have been an affirmative defense of charitable immunity.62 In the context of chapter 151B, as amended in 1969, charitable corporations are, with limited exceptions, included within the definition of “employer” and therefore are subject to liability under 151B.63 Judge Garsh drew this analysis to its logical conclusion and found that where the legislature expressly provided that certain charities could be liable for employment discrimination, those charities would not be entitled to either the charitable immunity defense or the statutory cap.64 As did the SJC in Conners and Judge Wolf in Boston Regional Medical Center, she suggested that the legislature is the most appropriate forum to address the policy implications of the statute’s mandates.65

Finally, in Martin v. Kelley,66 Judge Agostini in the superior court analyzed the activities of the Roman Catholic bishop of Worcester in the alleged negligent hiring and supervision of a priest who allegedly sexually abused a minor parishioner, in relation to both the charitable immunity doctrine (for activities alleged to have occurred prior to 1971) and the statutory charitable cap (for all activities occurring thereafter).67 Judge Agostini held that “[i]t is well established that charitable immunity and the charitable limitation of damages apply to cases involving negligent hiring and retention.”68 In applying the Conners analysis, he made the following determination:

“Directly charitable activities,” as applied in case law and [General Laws chapter] 231, § 85K, “are meant to be contrasted with those activities whose thrust is commercial, rather than with all the other forms of activities that may in some sense be only indirectly charitable.” Thus, in an analysis of whether the doctrine of ultra vires applies because the tort was not committed in the course of directly accomplishing a charitable purpose, a court only focuses its attention on the commercial nature of the activity. [Plaintiff] has not claimed that any of the Diocese’s alleged ultra vires acts were commercial in nature.69

Judge Agostini determined that the ultra vires exception to the statutory cap only applies in cases where the tort was committed during the course of primarily commercial activities.70 Finding that the plaintiff failed to allege any commercial characteristics associated with the hiring and retention of the allegedly abusive priest, he held that the diocese was entitled both to the charitable immunity and the statutory cap.71

The SJC has limited the application of the charitable cap in certain circumstances. Recently, in Ayash v. Dana-Farber Cancer Institute,72 it addressed the issue of whether the statutory cap should apply to liability under chapter 151B.73 The SJC upheld the jury’s determination that the employer was liable under chapter 151B for unlawful retaliatory conduct in response to the plaintiff’s complaint of gender discrimination with the Massachusetts Commission Against Discrimination.74 The SJC held that “[t]he charitable cap does not apply to most statutory violations, unless there is a ‘tort’ within the meaning of the statute.”75 This conclusion was based upon reasoning found in other decisions where a charitable entity asserted the application of the charitable cap in the context of other statutory provisions.76 The Ayash court pointed out that the charitable cap is likewise inapplicable in the context of Massachusetts’ consumer protection statute77 and wiretapping statute,78 and it was held inapplicable to chapter 151B by the U.S. Court of Appeals for the First Circuit in McMillan v. Massachusetts Society for the Prevention of Cruelty to Animals.79 The court ultimately held, “The plain language of the statute, however, could not be clearer. Section 85K applies only in limited circumstances where damages flow from a tort ‘committed in the course of any activity carried on to accomplish directly [a defendant’s] charitable purposes.’”80

VI. Conclusion: The Slippery Slope

As illustrated by the cases applying Conners’ rationale, the statutory charitable cap, although inapplicable outside of the “tort” context, is available in many circumstances. In fact, at least two decisions, In re Boston Regional Medical Center and Martin, applied the cap when the conduct complained of was particularly egregious.81 The fears of trial attorneys that tort plaintiffs are losing their ability to prosecute claims, despite the legislature’s intent to preserve that ability when it enacted section 85K, are well-founded.

It appears to be the universal view of the courts that have entertained this policy debate over the last year and a half that this issue is more appropriately placed before the legislature. In a concurring opinion in Conners, Justice Ireland expressed the need for legislative action:

I agree that our result in this case is mandated by G.L. c. 231, § 85K, but as I have written before, I am concerned when statutes are used to shield responsible parties from liability. I disagree, however, with the court’s contention that § 85K fairly “balances” the interests of the charitable organization against those of the injured citizen. . . . The statute is not only monetarily outdated, but also fails to recognize the evolving roles of traditionally charitable institutions. I call on the Legislature to address this problem.82

Conners, which irrefutably expands the availability of the statutory charitable cap to a point that concerns several practitioners and courts, is being consistently applied throughout the Massachusetts judicial system. Parties interested in curtailing an organization’s ability to limit its liability under the statute should look to the legislature for guidance. Likewise, as the tone appears to be an acknowledgment by the courts that the statute may not accomplish the legislature’s original goal of abolishing the charitable immunity, those who seek to preserve the reach of the cap should make themselves heard on Beacon Hill.

Katy E. Koski

1. 439 Mass. 469 (2003).[back]

2. Mass. Gen. Laws ch. 231, § 85K (2005). The statute provides:

It shall not constitute a defense to any cause of action based on tort brought against a corporation, trustees of a trust, or members of an association that said corporation, trust, or association is or at the time the cause of action arose was a charity; provided, that if the tort was committed in the course of any activity carried on to accomplish directly the charitable purposes of such corporation, trust or association, liability in any such cause of action shall not exceed the sum of twenty thousand dollars exclusive of interest and costs. Notwithstanding any other provision of this section, the liability of charitable corporations, the trustees of charitable trusts, and the members of charitable associations, shall not be subject to the limitations set forth in this section if the tort was committed in the course of activities primarily commercial in character even though carried on to obtain revenue to be used for charitable purposes.

Id.[back]

3. Id.[back]

4. Conners, 439 Mass. at 473 (citations omitted).[back]

5. Id.[back]

6. Id.[back]

7. See Brief of Amicus Curiae The Massachusetts Academy of Trial Attorneys at 43-48, Conners v. Northeast Hosp. Corp., 439 Mass. 469 (2003) (No. SJC-08802).[back]

8. See Brief of Amicus Curiae Massachusetts Hospital Association, Inc. at 7-9, Conners (No. SJC-08802).[back]

9. 120 Mass. 432 (1876).[back]

10. Id. at 434-35.[back]

11. Id. at 435.[back]

12. Roosen v. Peter Bent Brigham Hosp., 235 Mass. 66, 68 (1920) (alteration in original) (quoting McDonald, 120 Mass. at 436).[back]

13. Colby v. Carney Hosp., 356 Mass. 527, 528 (1969). [back]

14. Id.[back]

15. Id.[back]

16. 1971 Mass. Acts ch. 785, § 1. As the SJC noted in Conners, “[h]ospitals were among the charitable institutions specifically targeted [by the legislature] to be ‘treated differently.’” Conners, 439 Mass. at 473.[back]

17. Conners, 439 Mass. at 470.[back]

18. Id. at 471.[back]

19. Id.[back]

20. Id.[back]

21. Id.[back]

22. Conners, 439 Mass. at 471.[back]

23. Id.[back]

24. Id. Indeed, the annual cost of its snow removal activities was approximately $90,000. Id. [back]

25. Id. at 470.[back]

26. Id.[back]

27. Conners, 439 Mass. at 472.[back]

28. Id. at 472-73.[back]

29. Id. at 472-80.[back]

30. Conners conceded that the entity’s articles of organization were “prima facie evidence” of its charitable character and purpose. Id. at 474.[back]

31. Id. at 475-76.[back]

32. Conners, 439 Mass. at 474 (quoting Western Mass. Lifecare Corp. v. Bd. of Assessors, 434 Mass 96, 102-03 (2001)).[back]

33. Id. at 475-76.[back]

34. Id. at 475.[back]

35. Id. at 476.[back]

36. Id. at 477. See Brief of Amicus Curiae The Massachusetts Academy of Trial Attorneys at 42, Conners (No. SJC-08802), criticizing the trial judge’s determination of charitable status on the basis that it rests solely on “corporate formalities,” and ignores Northeast’s “predominant purpose” of providing health care services only to that limited class of individuals who can afford to pay for such services. Id.[back]

37. Conners, 439 Mass. at 476-77.[back]

38. Id. at 477.[back]

39. § 85K.[back]

40. Conners, 439 Mass. at 477.[back]

41. Id. at 477-78.[back]

42. Id. at 478-80.[back]

43. Id. at 478.[back]

44. Id.[back]

45. Conners, 439 Mass. at 478.[back]

46. Id. at 479.[back]

47. Id. at 479-80.[back]

48. In its Amicus Brief, the Massachusetts Academy of Trial Attorneys claimed that the SJC eviscerated the protections intended by the legislature when it abolished charitable immunity and that, by eliminating the third prong of the analysis, the court created even more hardship for tort plaintiffs seeking to recover for their injuries. See Brief of Amicus Curiae the Massachusetts Academy of Trial Attorneys at 45-49, Conners (No. SJC-08802).[back]

49. 60 Mass. App. Ct. 707 (2004).[back]

50. Id. at 711-13.[back]

51. Id. at 712.[back]

52. Id. at 712-13 (citations omitted).[back]

53. 328 F. Supp. 2d 130 (D. Mass. 2004) (Wolf, J.).[back]

54. Id. at 154.[back]

55. Id. at 135, 154.[back]

56. Id. at 153.[back]

57. Id. at 154.[back]

58. 328 F. Supp. 2d at 154.[back]

59. Id. at 155.[back]

60. No. MICV 2002-2735, 2004 WL 113464, at *1 (Mass. Super. Ct. Jan. 23, 2004) (Garsh, J.).[back]

61. Id. at *1.[back]

62. Id. at *3.[back]

63. Mass. Gen. Laws ch. 151B, § 1(5)(2005).[back]

64. Witlow, 2004 WL 113464, at *3.[back]

65. Id.[back]

66. No. 02684, 2004 WL 1895116, at *1 (Mass. Super. Ct. Aug. 12, 2004) (Agostini, J.).[back]

67. Id.[back]

68. Id. at *4.[back]

69. Id. (internal citations omitted).[back]

70. Id.[back]

71. No. 02684, 2004 WL 1895116, at *4.[back]

72. 443 Mass. 367 (2005).[back]

73. Id. at 389-92.[back]

74. Id. at 389.[back]

75. Id. at 391.[back]

76. Id. at 391-92.[back]

77. Ayash, 443 Mass. 367 at 390 (citing Linkage Corp. v. Trustees of Boston Univ., 425 Mass. 1, 27-28, cert. denied, 522 U.S. 1015 (1997)); Mass. Gen. Laws ch. 93A, §§ 2, 9 (2005).[back]

78. Ayash, 443 Mass. at 390 (citing Birbiglia v. Saint Vincent Hosp., Inc., 427 Mass. 80, 88 (1998)); Mass. Gen. Laws ch. 272, § 99Q (2005)).[back]

79. 140 F.3d 288, 307 (1st Cir. 1998), cert. denied, 525 U.S. 1104 (1999); see Ayash, 443 Mass. at 390.[back]

80. Ayash, 443 Mass. at 391 (alteration in original).[back]

81. See Boston Reg’l Med. Ctr., 328 F. Supp. 2d at 153-55; Martin, 2004 WL 1895116, at *4.[back]

82. 439 Mass. at 481 (Ireland, J., concurring) (citations omitted).[back]

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