This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (1998).






Sally Rothenberg, et al.,





Gregory Milne, M.D., et al.,



Behavioral Health Services, Inc.,



BCBSM, Inc.,

d/b/a Blue Cross and Blue Shield of Minnesota,



Filed December 5, 2000


Holtan, Judge*


Hennepin County District Court

File No. 97-7636



Jeffrey R. Anderson, Frances E. Baillon, Reinhardt and Anderson, E-1000 First National Bank Building, 332 Minnesota Street, St. Paul, MN  55101; and


R. Christopher Barden, R.C. Barden & Associates, 1093 East Duffer Lane, Suite 100, North Salt Lake, UT  84054 (for appellants)


John R. McBride, Lommen, Nelson, Cole & Stageberg, 1800 IDS Center, 80 South Eighth Street, Minneapolis, MN  55402 (for respondents Gregory Milne, M.D., et al.)


William H. Leary, Jean B. Hoppe, Geraghty, O’Loughlin & Kennedy, P.A., 1400 Ecolab University Center, 386 North Wabasha Street, St. Paul, MN  55102 (for respondent Behavioral Health Services, Inc.)


Eric J. Magnuson, Doreen A. Mohs, Rider, Bennett, Egan & Arundel, 333 South Seventh Street, Suite 2000, Minneapolis, MN  55402 (for respondent BCBSM)



            Considered and decided by Crippen, Presiding Judge, Stoneburner, Judge, and Holtan, Judge.

U N P U B L I S H E D   O P I N I O N


            This action arises out of a psychiatrist’s treatment of appellant Sally Rothenberg and their subsequent personal relationship.  Appellants Sally and Elliot Rothenberg challenge the dismissal of their vicarious liability, negligent supervision, and breach of warranty claims against the psychiatrist’s former employer, respondent Behavioral Health Services, Inc. (BHSI), under the two-year statute of limitations applicable to malpractice actions against physicians.  Appellants also argue that genuine issues of material fact exist on their claims for negligent retention, breach of contract, consumer fraud, and equitable estoppel claims and, therefore, the district court erred in granting summary judgment in favor of respondents on those claims.  We affirm.


            BHSI was incorporated in 1992 as a joint venture between respondent BCBSM, Inc., and HealthSpan, the parent company of Abbott Northwestern Hospital.  BCBSM initially owned 60% of BHSI’s stock and became the full owner in October 1994.  At all times relevant to this case, three BCBSM executives were members of BHSI’s board.

            BHSI employs therapists and psychologists to provide mental health counseling services to individuals.  BHSI does not employ psychiatrists, but rather, contracts with psychiatrists to provide medication management to its patients.  In 1993 and 1994, BHSI had contracts with eight to twelve psychiatrists, one of whom was respondent Gregory Milne, M.D.[1]

            Kathleen Garry, M.A., L.P., who was employed as a therapist by BHSI, treated Sally Rothenberg from December 1992 until April 1993.  Garry referred Sally Rothenberg to Milne for medication management.  Milne treated Sally Rothenberg at BHSI from January 1993 until March 14, 1994.

            While under contract with BHSI, Milne also maintained a private practice, respondent Twin City Psychiatric Associates, P.A. (TCPA).  On November 19, 1993, two TCPA employees, Patricia Hagge and Mary Hayes, observed Milne under the influence of drugs or alcohol and made a report to Physicians Servicing Physicians.  Dr. Glenn Lewis, a psychologist at Abbott Northwestern Hospital, contacted Tom Geskerman, BHSI’s chief operating officer, to notify him of this report.  Hayes and Hagge did not contact anyone at BCBSM regarding their observations of Milne in an impaired state.  Dr. Todd Miller, Abbott Northwestern’s vice president of medical affairs, organized an investigation into the complaint regarding Milne.  On November 20, 1993, Milne met with Lewis, Miller, and BHSI’s medical directors, Dr. Stephen Butzer and Dr. John Scanlan, at Abbott Northwestern Hospital.  Milne admitted that he had been self-prescribing antidepressants and Valium and provided a urine sample, which tested positive for benzodiazepines.

            Following the meeting, Milne entered Hazelden, a treatment center, for inpatient evaluation.  Hazelden diagnosed Milne as abusing benzodiazepines and antidepressants and recommended psychological and psychiatric treatment and random drug screening.  Hazelden’s discharge summary on Milne states that these recommendations were provided to Butzer.

            In December 1993, Milne signed a return-to-work agreement, outlining the conditions under which he could continue his contract with BHSI.  The conditions included Milne submitting to drug screening and allowing BHSI access to his medical and counseling records and communication with his treatment providers.  BHSI did not implement any of the terms of the return-to-work agreement.  In January 1994, BHSI terminated Milne’s contract, effective March 31, 1994.

            BHSI sent Milne’s patients a letter stating that Milne would be terminating his services with BHSI and that they could contact BHSI for a referral to another doctor within the clinic.  After being contacted by Milne’s attorney, BHSI sent a second letter to Milne’s patients providing them with the telephone number and address of Milne’s private practice, as well as BHSI’s telephone number and instructions to contact BHSI if they wanted to continue their care through BHSI.  The second letter also directed patients to contact their health plan’s customer service department if they had questions about coverage.

            In April 1994, BHSI and Milne entered into a referral agreement, under which Milne agreed to receive referrals from BHSI.  Milne testified that he would request a referral on a particular patient from BHSI and that BHSI would either grant or deny the referral.  Milne testified that he treated 50 to 100 former BHSI patients after his contract with BHSI was terminated.

            After Milne’s provider contract with BHSI was terminated, BHSI physicians approved prescription refills for Sally Rothenberg in April and May 1994.  Sally Rothenberg did not seek any further treatment or services from BHSI in 1994.

            In June 1994, Sally Rothenberg began receiving medication management from Milne at TCPA.  In July 1994, she began receiving psychotherapy from him at TCPA.  Because Sally Rothenberg was a state health plan subscriber, Milne had to make and receive a referral request from BHSI in order to receive payment under Sally Rothenberg’s insurance plan.  After Sally Rothenberg had already received treatment from him, Milne made a referral request, seeking retroactive authorization for payment.  On November 2, 1994, BHSI sent a letter to Sally Rothenberg informing her that it would authorize payment for three transitional visits to Milne for medication management.   Additional visits were paid for as a result of an administrative error.

            Sally Rothenberg continued formal treatment with Milne through March 15, 1995, at which time she began a personal and sexual relationship with him.  In August 1995, Sally Rothenberg returned to BHSI for treatment, at which time she was seen by Dr. Arlene Boutin.  Sally Rothenberg alleges no malpractice in connection with Boutin’s treatment.

            BCBSM is a nonprofit health service plan corporation that contracted with the State of Minnesota to provide a network of physicians and a payment method for health services received by state employees.  Elliot Rothenberg was a state employee.  Through his employment, the Rothenbergs subscribed to the State Health Plan, which was administered by BCBSM.  BHSI was an approved clinic in the State Health Plan network.


            1.         The Rothenbergs argue that the district court erred in dismissing their vicarious liability claims against BHSI under Minn. Stat. § 541.07(1) (1996).  A statute of limitations defense may be raised by a motion to dismiss or a motion for summary judgment.  Oreck v. Harvey Homes, Inc., 602 N.W.2d 424, 427-28 (Minn. App. 1999), review denied (Minn. Jan. 25, 2000).  If the court considers matters outside the pleadings on a motion to dismiss, the motion is treated as one for summary judgment.  Borom v. City of St. Paul, 289 Minn. 371, 374, 184 N.W.2d 595, 597 (1971).  On appeal from summary judgment, this court must review the record to determine whether any genuine issues of material fact exist and whether the district court erred in applying the law.  Offerdahl v. University of Minn. Hosps. & Clinics, 426 N.W.2d 425, 427 (Minn. 1988).  This court must view the evidence in the light most favorable to the nonmoving party.  Id.

            “The construction and applicability of statutes of limitation present questions of law subject to de novo review.”  Wallin v. Minnesota Dep’t of Corrections, 598 N.W.2d 393, 399 (Minn. App. 1999).  Generally, negligence actions are subject to a six-year statute of limitations under Minn. Stat. § 541.05 (1996).  Minn. Stat. § 541.07(1), however, imposes a two-year statute of limitations for

all actions against physicians, surgeons, dentists, other health care professionals as defined in section 145.61, and veterinarians as defined in chapter 156, hospitals, sanitariums, for malpractice, error, mistake or failure to cure, whether based on contract or tort.


Minn. Stat. § 145.61 (1996) provides:

            Subd. 2. Professional.  “Professional” means a person licensed or registered to practice a healing art under chapter 147 or 148, to practice dentistry under chapter 150A, to practice as a pharmacist under chapter 151, or to practice podiatry under chapter 153.


            Subd. 3. “Professional service” means service rendered by a professional of the type such professional is licensed to perform.


            Subd. 4. “Health care” means professional services rendered by a professional or an employee of a professional and services furnished by a hospital, sanitarium, nursing home or other institution for the hospitalization or care of human beings.


            The parties agree that Minn. Stat. § 541.07(1) applies to the Rothenbergs’ vicarious liability claims.  See Grondahl v. Bulluck, 318 N.W.2d 240, 244 (Minn. 1982) (Minn. Stat. § 541.07(1) applies to claims against clinic when clinic’s liability is predicated upon doctor’s malpractice).

            Ordinarily, a cause of action for medical malpractice accrues when the physician’s treatment for the particular condition ceases.  Ciardelli v. Rindal, 582 N.W.2d 910, 912 (Minn. 1998).  The last day on which Milne treated Sally Rothenberg during his employment with BHSI was February 21, 1994.  On March 14, 1994, Milne approved a prescription refill for Sally Rothenberg.  BHSI terminated its provider contract with Milne effective March 31, 1994.  Sally and Elliot Rothenberg, respectively, commenced their actions against BHSI on March 8, 1997, and June 6, 1997, more than two years after Milne’s contract with BHSI ended.

            Like this case, L.A.B. v. P.N., 533 N.W.2d 413 (Minn. App. 1995), involved a lawsuit brought by a former patient against a clinic that had employed a psychiatrist with whom she became romantically involved.  Although the issue in L.A.B. was whether appellant had been disabled by insanity for purposes of tolling the statute of limitations, this court stated in dicta that the district court properly dismissed all claims because any claim against the clinic based on conduct by the psychiatrist was required to be commenced no later than two years after the psychiatrist’s employment with the clinic ended.  Id. at 418.

            The L.A.B. court’s conclusion that a cause of action for vicarious liability accrues when employment terminates is consistent with the rule that a claim of vicarious liability against an employer must be based on the employee’s conduct that is work related and occurs within work-related limits of time and place.  See P.L. v. Aubert, 545 N.W.2d 666, 667 (Minn. 1996) (elements of vicarious liability).  It is also consistent with the purpose of statutes of limitation:

Statutes of limitation * * * are designed to “promote justice by preventing surprises through the revival of claims that have been allowed to slumber until evidence has been lost, memories have faded, and witnesses have disappeared.”  Clearly, the main consideration underlying these statutes is one of fairness toward the defendant.  “There comes a time when [a defendant] ought to be secure in his reasonable expectation that the slate has been wiped clean of ancient obligations * * *.”


Fabio v. Bellomo, 504 N.W.2d 758, 763 (Minn. 1993) (citations omitted).

            We agree with the district court’s conclusion that

from [BHSI’s] perspective, once the provider contract with [Milne] was terminated on March 31, 1994, they had no further control over his behavior, towards patients or otherwise.  To continue to hold [BHSI] vicariously liable for future negligence of [Milne], when both Sally Rothenberg and [Milne] were gone from the clinic is illogical. * * * [T]his approach could toll the statute of limitations for years depending upon how long the patient and the physician, both gone from a particular clinic, remained in a physician-patient relationship.


We hold that the district court properly dismissed the Rothenbergs’ vicarious liability claims against BHSI.

            2.         The Rothenbergs argue that the district court erred in applying Minn. Stat. § 541.07(1) to Sally Rothenberg’s negligent supervision claim against BHSI.  In Kaiser v. Memorial Blood Ctr., 486 N.W.2d 762, 765-66 (Minn. 1992), the supreme court held that because a blood bank is not one of the entities listed in Minn. Stat. § 541.07(1) or in Minn. Stat. § 145.61, Minn. Stat. § 541.07(1) only applies to certain claims against a blood bank based on conduct by a physician.  The court explained:

The term “professional service,” defined in Minn. Stat. § 145.61, subd. 3, included in the definition of “health care” in Minn. Stat. § 145.61, subd. 4, which together form the statutory source for determining what “other health care professionals” are covered by the two-year statute of limitations, refers to “service[s] rendered by a professional of the type such professional is licensed to perform.  There is thus a distinction between malpractice by professionals acting pursuant to their professional licensure from negligence based upon conduct for which a professional license is not required.


            The blood banks are not covered by the two-year statute merely because those in charge happen to be physicians, but only if those physicians are performing functions for which their professional licensure is required.  The administrative and policymaking functions of blood banks do not have to be performed by licensed physicians or nurses, however.


Kaiser, 486 N.W.2d at 767 (citation omitted).

            Because an outpatient mental health clinic is not listed in Minn. Stat. § 541.07(1) or Minn. Stat. § 145.61, the district court properly concluded that the Kaiser holding applies to this case.  See also Maloney v. Dakota County Receiving Ctr., Inc., 560 N.W.2d 402 (Minn. App. 1997) (holding that detoxification center fell within the definition of hospital for purposes of Minn. Stat. § 541.07(1) because the detoxification center was primarily an inpatient, comprehensive health care facility and because the law in other context recognizes placement in a detoxification center as hospitalization), review denied (Minn. May 20, 1997).

            The question remains whether Sally Rothenberg’s negligent supervision claim is an administrative claim.

[N]egligent supervision is the failure of the employer “to exercise ordinary care in supervising the employment relationship, so as to prevent the foreseeable misconduct of an employee from causing harm to other employees or third persons.”  Negligent supervision derives from the doctrine of respondeat superior so the claimant must prove that the employee’s actions occurred within the scope of employment in order to succeed on this claim.


M.L. v. Magnuson, 531 N.W.2d 849, 858 (Minn. App. 1995) (citations omitted), review denied (Minn. Jul. 20, 1995).  Liability based on respondeat superior for a physician’s malpractice is governed by Minn. Stat. § 541.07(1).  Kaiser, 486 N.W.2d at 767; see also M.L., 531 N.W.2d at 855 (stating that the statute of limitations for respondeat superior claims is ordinarily the same as that for the underlying cause of action).

            The conduct underlying Sally Rothenberg’s medical malpractice claim was the psychiatric treatment provided to her by Milne, conduct for which a professional, medical license is required.  Therefore, under Kaiser and M.L., the district court properly concluded that the negligent supervision claim was barred by Minn. Stat. § 541.07(1).[2]    

            The Rothenbergs also argue that the referral agreement entered into by BHSI and Milne after the termination of the provider contract supports the negligent supervision claim.  The Rothenbergs cite no authority to support this argument.  Moreover, under the referral agreement, by letter dated November 2, 1994, BHSI authorized Sally Rothenberg to see Milne for three visits for medication management through December 31, 1994.  Thus, the latest a cause of action could have accrued under the referral agreement, at least as to Sally Rothenberg, was December 31, 1994.

            3.         The Rothenbergs argue that the district court erred in applying Minn. Stat. § 541.07(1) to their breach of warranty claim against BHSI.  The Rothenbergs allege that BHSI held out Milne as a competent mental health care specialist, thereby warranting that Milne would exercise the standard of skill and learning ordinarily exercised by other licensed mental health care professionals in the community.  As BHSI argues, because the underlying basis for the breach of warranty claims is Milne’s negligence in providing psychiatric treatment to Sally Rothenberg, the district court properly concluded that Minn. Stat. § 541.07(1) barred the breach of warranty claim.  See Zagaros v. Erickson, 558 N.W.2d 516, 522 (Minn. App. 1997) (medical malpractice action based on breach of contract accrues upon breach and is governed by Minn. Stat. § 541.07(1)), review denied (Minn. Apr. 17, 1997).  Even if the November 2, 1994, letter can be construed as warranting Milne’s fitness, there is no evidence that BHSI made any representations as to Milne’s fitness after that time, so the Rothenbergs’ breach of warranty claims are untimely under Minn. Stat. § 541.07(1).

            Minn. Stat. § 541.07(1) also applies to Elliot Rothenberg’s breach of contract claim.  Elliot Rothenberg alleges that Milne breached a contract to provide competent psychiatric services to Sally Rothenberg, so the underlying basis for the breach of contract claim is Milne’s malpractice.[3]

            4.         BHSI asserts that even if the vicarious liability claims are not barred by the two-year statute of limitations, BHSI is entitled to summary judgment on the merits.  This court will affirm a grant of summary judgment if it can be sustained on any ground.  Winkler v. Magnuson, 539 N.W.2d 821, 828 (Minn. App. 1995).

To establish a prima facie case of medical malpractice, a plaintiff must introduce expert testimony demonstrating (1) the standard of care recognized by the medical community as applicable to the particular defendant, (2) that the defendant departed from that standard, and (3) that the defendant’s departure was a direct cause of the plaintiff’s injuries.


Fabio v. Bellomo, 504 N.W.2d 758, 762 (Minn. 1993).  To establish a direct cause, plaintiff must prove that it is more probable than not that defendant’s conduct caused plaintiff’s injury.  Leubner v. Sterner, 493 N.W.2d 119, 121 (Minn. 1992).  If plaintiff fails to present such evidence, defendant is entitled to summary judgment.  Id.  An expert affidavit must set forth

specific details concerning their experts’ expected testimony, including the applicable standard of care, the acts or omissions that plaintiffs allege violated the standard of care and an outline of the chain of causation that allegedly resulted in damage to them.


Sorenson v. St. Paul Ramsey Med. Ctr., 457 N.W.2d 188, 193 (Minn. 1990).

            The Rothenbergs submitted expert affidavits stating that Milne violated the standard of care by inappropriately prescribing and administering medication to Sally Rothenberg; failing to obtain informed consent before beginning treatment of Sally Rothenberg, specifically, by failing to discuss alternative behavioral treatments or risks and side effects of Milne’s treatment method; and failing to properly manage Sally Rothenberg’s depression and other problems.  The affidavits contain conclusory statements that all of Milne’s former employers were liable for his negligence.  The affidavits, however, contain no specific evidence showing that Milne committed malpractice while employed by BHSI.

            There is evidence that Milne had a substance-abuse problem and was in an impaired state at TCPA on November 19, 1993.  Evidence of impairment alone, however, is insufficient to support an inference that Milne provided inappropriate treatment to patients.  There is no evidence that Milne was ever impaired to a degree that he was unable to perform his job.  Nor is there evidence that while under contract with BHSI, Milne ever provided any inappropriate treatment to Sally Rothenberg or any other patient.  Such evidence is necessary to prove violation of the standard of care and causation.  See Hastings v. United Pac. Ins. Co., 396 N.W.2d 682, 684 (Minn. App. 1986) (affirming summary judgment in favor of dram shop when customer was intoxicated at time of accident but there was no evidence that intoxication caused the accident or that customer operated his vehicle in a negligent manner or failed to exercise due care to avoid collision).  Because the Rothenbergs presented insufficient evidence to establish that Milne committed medical malpractice while under contract with BHSI, BHSI is entitled to summary judgment on the Rothenbergs’ vicarious liability claims.  Lloyd v. In Home Health, Inc., 523 N.W.2d 2, 3 (Minn. App. 1994) (summary judgment on a claim is mandatory against a party who fails to establish an essential element of that claim).

            The Rothenbergs also argue that vicarious liability can be based on the referral agreement between BHSI and Milne.  We disagree.  Vicarious liability is imposed when an employment or agency relationship exists between the tortfeasor and a third party.  See Nadeau v. Melin, 260 Minn. 369, 376, 110 N.W.2d 29, 34 (1961) (explaining when vicarious liability will be imposed).  Both relationships involve an element of control over the tortfeasor by the third party.  See Dalager v. Montgomery Ward & Co., Inc., 350 N.W.2d 391, 394-95 (Minn. App. 1984) (defining agency relationship and independent contractor).  There is no evidence that under the referral agreement, BHSI had any control over Milne.

            BHSI is also entitled to summary judgment on the merits on the Rothenbergs’ breach of warranty claims.  The Rothenbergs argue that BHSI warranted that Milne would provide competent psychiatric services to patients.  Absent evidence that Milne provided inappropriate treatment to Sally Rothenberg or any patient while under contract with BHSI or that Sally Rothenberg relied on the referral agreement in deciding to continue treatment with Milne, the evidence is insufficient as a matter of law to prove that BHSI breached any such warranty.

            5.         BHSI also asserts that if Sally Rothenberg’s negligent supervision claim was not barred by the two-year statute of limitations, BHSI is entitled to summary judgment on the merits.  The commission of a tortious act by an employee is an element of a negligent supervision claim.  Bruchas v. Preventive Care, Inc., 553 N.W.2d 440, 443 (Minn. App. 1996).  Because the evidence was insufficient as a matter of law to prove that Milne committed medical malpractice while under contract with BHSI, BHSI is entitled to summary judgment on the merits on the negligent supervision claim.

            The commission of a tortious act by an employee is also an element of a negligent retention claim.  Id.  Therefore, the district court properly granted summary judgment in favor of BHSI on the negligent retention claim.

            6.         The Rothenbergs argue that the district court erred in granting summary judgment on Elliot Rothenberg’s breach of contract claim against BHSI.  To form a binding contract, there must be an offer, acceptance of the offer, and consideration.  Cederstrand v. Lutheran Bhd., 263 Minn. 520, 529-32, 117 N.W.2d 213, 219-21 (1962).  A quasi-contract may be implied under equitable principles:

            The essential elements of quasi contract are a benefit conferred upon the defendant by the plaintiff, appreciation by the defendant of such benefit, and acceptance and retention by the defendant of such benefit under such circumstances that it would be inequitable for him to retain it without paying the value thereof.


Acton Constr. Co. v. State, 383 N.W.2d 416, 417 (Minn. App. 1986), review denied (Minn. May 22, 1986).

            Elliot Rothenberg argues that a quasi-contract should be implied because he carried the medical insurance for the Rothenbergs through his employer and, therefore, insurance payments received by BHSI essentially came from Elliot Rothenberg.  Elliot Rothenberg also claims that he made the co-payments to BHSI.  The Rothenbergs cite no authority implying a contract under similar circumstances, and their argument does not persuade us that the district court erred in declining to do so in this case.

            7.         The Rothenbergs contend that the district court erred in granting summary judgment in favor of BCBSM on their consumer fraud claims.  Minn. Stat. § 325F.69, subd. 1 (1996),  provides:

The act, use, or employment by any person of any fraud, false pretense, false promise, misrepresentation, misleading statement or deceptive practice, with the intent that others rely thereon in connection with the sale of any merchandise, whether or not any person has in fact been misled, deceived, or damaged thereby, is enjoinable as provided herein.


Minn. Stat. § 325F.68, subd. 3, defines person as

any natural person or a legal representative, partnership, corporation (domestic and foreign), company, trust, business entity, or association, and any agent, employee, salesperson, partner, officer, director, member, stockholder, associate, trustee, or cestui que trust thereof.


The object of statutory interpretation is to determine and give effect to the legislature’s intent.  Minn. Stat. § 645.16 (1998).

            BCBSM is a nonprofit corporation incorporated under the Minnesota NonProfit Health Service Plan Corporations Act.  Minn. Stat. ch. 62C (1996).  BCBSM contracts for health services or payment for services for subscribers pursuant to a service plan in exchange for periodic prepayments by or on behalf of subscribers pursuant to Minn. Stat. § 62C.02, subd. 6.  Minn. Stat. § 62C.01, subd. 2, provides that the act’s purpose is

to promote a wider, more economical and timely availability of hospital, medical-surgical, dental, and other health services for the people of Minnesota, through nonprofit, prepaid health service plans, and thereby advance public health and the art and science of medical and health care within the state, while reasonably regulating the formation, continuation, operation, and termination of such service plans by establishment and enforcement of reasonable and practical standards of administration, investments, surplus and reserves.


As a nonprofit health services organization, BCBSM is regulated by the Minnesota Department of Commerce.  Minn. Stat. §§ 62C.02, subd. 2, 62C.23.

            There is no authority applying the consumer fraud act to a chapter 62C organization.  The supreme court has recognized BCBSM as a chapter 62C corporation and the only such nonprofit health service plan incorporated under chapter 62C.  State by Humphrey v. Phillip Morris, Inc., 551 N.W.2d 490, 492 (Minn. 1996).  Chapter 62C does not expressly make service plan corporations subject to the consumer fraud act.  In contrast, chapter 62D, which governs health maintenance organizations, expressly provides that health maintenance organizations are subject to the consumer fraud act.  Minn. Stat. § 62D.12, subd. 1.  Chapter 62C provides other consumer protections.  See Minn. Stat. §§ 62C.04, subd. 4 (organization of a service plan corporation and any amendments to its articles of incorporation are subject to the nonprofit corporations act and to the approval of the commissioner for protection of the public and subscribers), .19 (service plan corporations subject to the unfair claims practices act), .21 (if a service plan corporation violates chapter 62C or other applicable law, the commissioner may suspend or revoke its certificate of authority and impose a penalty).  Based on the absence of an express statutory provision making service plan corporations subject to the consumer fraud act and on the other consumer protection mechanisms expressly provided for in chapter 62C, we conclude that the legislature did not intend service plan corporations to be subject to the consumer fraud act.

            Even if the consumer fraud act applies to service plan corporations, BCBSM is entitled to summary judgment.  Injury is an element of a private cause of action under the consumer fraud act.  D.A.B. v. Brown, 570 N.W.2d 168, 172 (Minn. App. 1997).  Assuming that payment or the authorization thereof could be construed as a representation under the consumer fraud act, there is no evidence that BCBSM made any representations as to Milne’s fitness after December 31, 1994.  The record contains no specific evidence showing that Milne had committed any malpractice against Sally Rothenberg as of that date.  Therefore, the evidence as a matter of law is insufficient to prove injury.

            8.         The Rothenbergs argue that the district court erred in granting summary judgment in favor of BCBSM on Sally Rothenberg’s equitable estoppel claim.  Equitable estoppel

arises when one by his acts or representations, or by his silence when he ought to speak, intentionally or through culpable negligence, induces another to believe certain facts to exist, and such other rightfully acts on the belief so induced in such manner that if the former is permitted to deny the existence of such facts it will prejudice the latter.


Transamerica Ins. Group v. Paul, 267 N.W.2d 180, 183 (Minn. 1978).

            The Rothenbergs argue that BCBSM induced Sally Rothenberg to continue seeing Milne by paying for his treatment through 1994 and failing to alert her of his possible incompetence after becoming aware of his substance abuse problem.  The Rothenbergs cite no authority applying equitable estoppel in similar circumstances, and their argument does not persuade us that the district court erred in declining to do so in this case.



* Retired judge of the district court, serving as judge of the Minnesota Court of Appeals by appointment pursuant to Minn. Const. art. VI, § 10.

[1] Although BHSI asserts that Milne was an independent contractor, for purposes of this opinion, we assume that Milne was BHSI’s employee.

[2] Citing M.L., 531 N.W.2d at 856 n.3, the Rothenbergs argue that a negligent supervision claim can be based on an employer’s direct liability, not respondeat superior.  The argument misconstrues the cited footnote.  One of the cases cited in the footnote explains that claims for negligent hiring and retention are based on direct liability but claims for negligent supervision are based on respondeat superior.  Yunker v. Honeywell, Inc., 496 N.W.2d 419, 422 (Minn. App. 1993), review denied (Minn. Apr. 20, 1993).  The other case cited in the footnote refers only to negligent hiring.  Ponticas v. K.M.S. Invs., 331 N.W.2d 907, 911 n.5 (Minn. 1983).

[3] The district court did not address the applicability of Minn. Stat. § 541.07(1) to the breach of contract claim but rather granted summary judgment on the merits in favor of BHSI.