Written by Daniel Royce, Esq.
Edited y Bill Pfund, Esq.
While much time, attention, and focus in public risk management is rightfully attuned to issues involving law enforcement and emergency personnel, equal attention need be paid to the opposite end of the spectrum, and the myriad issues involving incarcerated persons. A novel issue recently arose in a case involving a contract between the Culpeper County Sheriff (“Sheriff Jenkins”) and the Piedmont Regional Jail Authority (“PRJA”), and whether an inmate was an intended third-party beneficiary of said housing and medical care contract. The case of Hubbard v. Jenkins was recently heard in the Court of Appeals of Virginia and decided on February 7, 2023. 2023 Va. App. LEXIS 73 *; 76 Va. App. 533; 833 S.E.2d 1.
Facts and Background
In July 2016, Sheriff Jenkins and the PRJA entered a contract which provided for housing the inmates in Sheriff Jenkins’ custody at the Piedmont Regional Jail. Paragraph Four of the contract outlined financial responsibility for medical services rendered to Culpeper inmates. Specifically, the contract specified PRJA’s financial responsibility for routine medical treatment of the inmates and delineated categories of medical care that would require pre-approval by the Sheriff. Emergency medical treatment was addressed separately in Paragraph Two (b) and Paragraph Five stated that the Sheriff “will pay to PRJ[A]…[m]edical costs pursuant to paragraph 4 above,” which lists these costs as “exceptions” that require “prior approval from the Sheriff.”
Hubbard was an inmate at the Piedmont Regional Jail. In August 2018, he was assaulted by another inmate and sustained injuries. Hubbard filed a lawsuit in the Eastern District of Virginia against PRJA and settled before trial. The terms of that settlement included a provision that Hubbard “…be solely responsible for any federal, state, or other taxes or other legal obligations that may be owed as a result of any such payment made by [PRJA] pursuant to the terms of this Agreement.” Additionally, Hubbard released the PRJA from any contract or tort claims that may arise from the surrounding facts.
Hubbard subsequently brought an action for declaratory judgment seeking a declaration from the Culpeper Circuit Court that the Sheriff Jenkins, not PRJA, is responsible for medical expenses incurred to treat Hubbard’s injuries. The stated purpose of this action was a favorable declaration would allow Hubbard to avoid the Commonwealth’s lien for reimbursement of medical expenses and enable him to enjoy full benefit of the settlement with PRJA. The trial court sustained a demurrer to the declaratory judgment action and Hubbard appealed to the Court of Appeals.
On appeal, Hubbard argued he is an intended third-party beneficiary of the contract between the PRJA and Sheriff Jenkins because performance under the contract rendered a direct benefit to Hubbard. Hubbard relied heavily on Ogunde v. Prison Health Servs., Inc., 274 Va. 55 (2007). In Ogunde, Ogunde filed a medical malpractice action against the provider hired by the Virginia Department of Corrections to provide medical care to inmates. The Court ruled that Ogunde was a third-party beneficiary because the contract included a recital, “that its purpose is to ‘provide cost effective, quality inmate health care services for up to approximately 6000 inmates.’”
Here, the Court of Appeals disagreed with Hubbard’s reliance on Ogunde and found that Hubbard was not an intended beneficiary and thus had no standing to pursue this claim.
The Third-Party Beneficiary Doctrine
The doctrine allows a non-party to enforce an interest under a contract if the contract was clearly made for the benefit of that non-party, even if not named in the contract. See Code of Va. Ann. Sec. 55.1-119; Ogunde v. Prison Health Servs., Inc., 274 Va. 55, 63, 645 S.E.2d 520 (2007). Under certain circumstances, a party may sue to enforce terms of a contract even if he/she is not specifically named as a party to the contract. Levine v. Selective Ins. Co. of Am., 250 Va. 282, 285 (1995). The doctrine is subject to the limitation that the third party must show the contracting parties clearly and definitively intended that a contract confer benefit upon him/her. Copenhaver v. Rogers, 238 Va. 361, 367 (1989). A person benefitting incidentally from a contract has no grounds upon which to bring suit. “[A] third person cannot maintain an action upon a contract merely because he would receive a benefit from its performance. Envtl. Staffing Acquisition Corp. v. B&R Constr. Mgmt., Inc., 283 Va. 787, 795 (2012).
The Supreme Court of Virginia has drawn a specific distinction between being a person or entity that will merely benefit from performance of a contract versus when a contract is entered with the express purpose of conferring benefit upon a third party. Copenhaver at 368. In fact, the Court has decided several cases where there was obvious benefit to a third party but was not expressly created to confer a benefit upon a third party entitled to enforce the provisions of the contract.
Application of the Doctrine to Hubbard’s Claim
Unlike Ogunde, the contract at issue in Hubbard did not include a specific recital like the one included in Ogunde. The absence of such a purpose directed recital proved fatal to Hubbard’s claim. The Court reasoned that in the absence of such a provision, the Sheriff had no elevated duty other than his “constitutional and statutory duty to provide medical care” to pretrial detainees and incarcerated inmates in his custody. Patterson v. City of Danville, Va, 875 S.E.2d 65 (2022). When the state takes a person into confinement against his will, the Constitution imposes upon the state a corresponding duty to assume some responsibility for the safety and general well-being of the inmates. DeShaney v. Winnebago Cnty. Dep’t of Soc. Servs., 489 U.S. 189, 199-200 (1989).
Given the Sheriff’s pre-existing legal obligations under DeShaney and Va. Code. Sec. 53.1-126, the contract at issue here did not create any new duty to provide such care. The contract was not an “express” of the “intent to help” the inmates. The duty of care was pre-existing and the contract between Sheriff Jenkins and PRJA did not augment that duty or responsibility for the care that Hubbard was supposed to receive. Specifically, the contract did not suggest it was intended to confer a benefit on the inmates, rather it was merely to determine as between the Sheriff and PRJA how the care would be provided and who would pay for it.
Ultimately, the Court determined that even in the light most favorable to Hubbard, he failed to plead facts sufficient to show he was an intended third-party beneficiary, rather than an incidental beneficiary. Hubbard failed to establish clear and defined intent in the contract to confer benefits upon Culpeper inmates and show that one of the parties failed to uphold the contract. The Court stressed that this is a demanding test and therefore the Circuit Court properly sustained the demurrer.[i]
The experienced lawyers of KPM spend great time and effort to stay aware of pertinent cases in the realm of Public Risk Management, and we can be counted on to be experts in cases involving prisons, jails, and other such facilities and their interaction with incarcerated persons. You can trust KPM to be knowledgeable in public risk management, and continue to keep you updated on cases and authorities that will significantly impact our clients. Please don’t hesitate to reach out to us with questions, concerns, or for assistance.
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[i] It is important to note the dissenting opinion of Judge Chaney. The dissent was based upon ambiguity in the contract and the Court’s obligation to view all factual allegations in the light most favorable to Hubbard. Under this standard Judge Chaney believed that Hubbard was a clearly and definitely intended third-party beneficiary.