Caps, Settlements, and Chutzpah under California’s Medical Malpractice Law

Rashidi v. Moser, — P.3d — (Cal. 2014)

This important decision of the California Supreme Court dealt with a very serious incident of medical malpractice.

A patient underwent surgery to stop severe nosebleed. His doctor ran a catheter through an artery in his leg up into his nose. Tiny particles were injected through the catheter to irreversibly block certain blood vessels. The particles, however, traveled to places other than the intended sites. As a result, when the patient awoke after the surgery he was permanently blind in one eye. He sued the doctor and the hospital for medical malpractice and the particles’ manufacturer for products liability.

Subsequently, the patient settled with the particles’ manufacturer for $2,000,000 and with the hospital for another $350,000. The case went to trial against the doctor alone. The jury found that the doctor was negligent and that his malpractice was responsible for the patient’s incapacitation. Based on that finding, it awarded the patient $125,000 for future medical care, $331,250 for past noneconomic damages, and $993,750 for future noneconomic damages. The trial court reduced the noneconomic damages to $250,000, pursuant to the cap set by the Medical Injury Compensation Reform Act of 1975 (MICRA, Civil Code § 3333.2: “In no action [for injury against a health care provider based on professional negligence], shall the amount of damages for noneconomic losses exceed two hundred fifty thousand dollars ($250,000).”).

The defendant doctor did not benefit from the cap alone. He also took full advantage of California’s Civil Code § 877 that allows a nonsettling tortfeasor to set off the amount of a jointly liable tortfeasor’s settlement against damages awarded at trial. This offset was only available with respect to the patient’s economic damages, for which tortfeasors are liable jointly and severally. Under California’s Civil Code § 1431.2, tortfeasors assume strictly several liability for noneconomic damages and pay in proportion to their share of fault. Because the patient’s settlements with the hospital and the manufacturer did not differentiate between economic and noneconomic damages, the doctor obtained a post-verdict allocation pursuant to the rule devised in Espinoza v. Machonga, 11 Cal.Rptr.2d 498 (Cal.App. 1992). Under that rule, the percentage of the jury’s award attributable to economic damages is calculated and applied to the settlement, yielding the amount that the nonsettling tortfeasor is entitled to offset. The patient’s award attributable to economic damages was 8.62% ($125,000 in economic damages divided by the total award of $1,450,000). Applying that percentage to the $2,000,000 settlement with the manufacturer yielded $172,400 in economic damages, which allowed the doctor to offset the jury’s $125,000 economic-damages award.

For the settlement between the patient and the hospital, the requisite calculation was different. Because the hospital (unlike the manufacturer) was entitled to cap the patient’s noneconomic damages at $250,000 pursuant to MICRA, the jury’s award of noneconomic damages was reduced to $250,000 and then juxtaposed against the economic award of $125,000. This juxtaposition yielded a different percentage: $125,000/$375,000=33.33%. Applying that percentage to the $350,000 settlement between the patient and the hospital yielded another $116,655 in economic damages—an allocation that the doctor no longer needed because the patient’s economic settlement with the manufacturer – $172,400 – already compensated him for his entire economic loss of $125,000.

After eradicating the patient’s economic award, the doctor also tried to offset his noneconomic liability – $1,325,000, capped at $250,000 pursuant to MICRA – by the patient’s settlement recoveries for noneconomic damages ($233,345 from the hospital and $1,827,600 from the manufacturer). The doctor argued that he is entitled to this setoff as well.


Happily, the California Supreme Court rejected this audacious argument.

The Court properly distinguished between apportionment and setoff. Apportionment of noneconomic damages under Civil Code § 1431.2, it explained, “is a form of equitable indemnity in which a defendant may reduce his or her damages by establishing others are also at fault for the plaintiff’s injuries.” The doctor failed to establish the hospital’s and the manufacturer’s faults, and for that reason he was not entitled to apportion his liability for the patient’s noneconomic damages. Hence, the doctor should be obligated to pay the patient the capped compensation in the amount of the $250,000 unless he can establish that MICRA caps settlement recoveries as well.

The Court then went on to explain that MICRA’s cap provision only applies to judgments awarding noneconomic damages and does not extend to settlement recoveries. In the Court’s words,

“Neither the parties nor amici curiae direct us to anything in the legislative history [of MICRA] that indicates an intent to include settlement recoveries in the cap on noneconomic damages. To the contrary, we have noted that the Legislature had jury awards in mind when it enacted the cap, and that only a collateral impact on settlements was contemplated. In Fein v. Permanente Medical Group, 695 P.2d 665 (Cal. 1985), where the constitutionality of the cap was upheld, this court observed that one problem identified in the legislative hearings was the unpredictable size of large noneconomic damage awards, resulting from the inherent difficulties in valuing such damages and the great disparity in the price tag which different juries placed on such losses. The Legislature could reasonably have determined that an across-the-board limit would provide a more stable base on which to calculate insurance rates.

Furthermore, as one amicus suggests, the Legislature may have felt that the fixed $250,000 limit would promote settlements by eliminating ‘the unknown possibility of phenomenal awards for pain and suffering that can make litigation worth the gamble.’ Thus, the Legislature was primarily concerned with capricious jury awards when it established the MICRA cap. However, excluding settlement dollars from the cap does not leave settlements unaffected. The prospect of a fixed award of noneconomic damages not only increases plaintiffs’ motive to settle, as noted in Fein, but also restrains the size of settlements. Settlement negotiations are based on liability estimates that are necessarily affected by the cap. By placing an upper limit on the recovery of noneconomic damages at trial, the Legislature indirectly but effectively influenced the parties’ settlement calculations.”

The Court also observed in this connection that “If nonsettling defendants were assured of an offset against noneconomic damages regardless of their degree of fault, an agreement with one defendant would diminish the incentive for others to settle. Conversely, if all defendants are responsible for their proportionate share of noneconomic damages, settlements are encouraged. Nonsettling defendants must weigh not only their exposure to liability for noneconomic damages within the limits imposed by section 3333.2, but also the prospect of having to prove the comparative fault of settling defendants in order to obtain a reduction under section 1431.2.”

Res Ipsa in Colorado

Chapman v. Harner, — P.3d — (Colo. 2014)

The res ipsa loquitur rule plays an important role in our torts system and in medical malpractice litigation in particular. In Chapman v. Harner, a patient’s wife argued via expert testimony that her husband’s aortic arch was punctured during the procedure, that such a puncture would not ordinarily occur absent negligence, and that it was more likely than not that the injury was caused by the surgeon or a member of his team. Had the res ipsa rule not been available, this and many other potentially meritorious suits would be dismissed summarily without a trial. In most jurisdictions across the United States, the res ipsa rule allows the plaintiff to defeat the defendant’s motion for summary judgment and move her case to trial.

In Colorado, this rule did even more: it shifted to the defendant the burden of proving by a preponderance of the evidence that he was not negligent. Weiss v. Axler, 328 P.2d 88, 96–97 (Colo. 1958).

About a month ago, the Colorado Supreme Court has changed this formulation. It decided to align the res ipsa rule with Colorado Rule of Evidence 301, pronouncing that, from now on, the rule will only shift to the defendant the burden of production, not the persuasion burden. Chapman v. Harner, — P.3d —- (Colo. 2014). This decision keeps the res ipsa rule in a format still friendlier to plaintiffs than in other jurisdictions, where the rule merely allows the plaintiff to pass the judge and move the case to the jury without formally requiring the defendant to adduce evidence. See, e.g., States v. Lourdes Hospital, 792 N.E.2d 151 (N.Y. 2003), and Sides v. St. Anthony’s Med. Ctr., 258 S.W.3d 811 (Mo. 2008).

Teamwork as Malpractice:
Washington Supreme Court fixes the Appeal Court’s Error

Grove v. Peacehealth St. Joseph Hosp., — P.3d — (Wash. 2014)

In this important case, the Washington Supreme Court decided an appeal against the dismissal of an aggrieved patient’s suit by a court below, Grove v. Peace Health St. Joseph Hospital, — P.3d — (Wash.App.Div. 1 2013). I criticized that dismissal (in a JNOV decision) in the October issue of this Journal. See here.

To recall: A team of doctors employed by the same hospital failed to properly monitor a patient after his heart surgery in order to rule out a well-known neurological complication. The patient subsequently developed an irreversible neurological disorder, and a suit ensued. The patient’s expert identified the team’s omission as malpractice. However, he was unable to attribute the omission to any specific member of the doctors’ team. Under the common law doctrine of vicarious liability, because the omission could be attributed to the team as a whole, the patient could still win his suit against the hospital. This doctrine holds that a hospital employing a team of doctors assumes vicarious liability for the team’s malpractice even when there is no way to single out the defaulting team member.

Washington’s appellate court, however, decided that this doctrine was inapplicable because medical malpractice is a statutory, rather than common law, tort under Washington law. Washington’s statute defines medical malpractice as a physician’s failure “to exercise that degree of care, skill, and learning expected of a reasonably prudent health care provider at that time in the profession or class to which he or she belongs, in the state of Washington, acting in the same or similar circumstances.” The appellate court held that this provision requires an aggrieved patient to produce expert testimony that identifies an individual physician’s malpractice as a cause of her injury. In the case at bar, the court ruled, the patient “did not present evidence that but for any one of those particular individuals’ failure to adhere to the standard of care, he would not have been injured.”

The Washington Supreme Court reversed this ruling. It decided – rightly, in my opinion, that “the Court of Appeals view that [the statute] ‘does not contemplate liability for groups of providers’ appears to be overly restrictive. The statutory definition of ‘health care provider’ is nonexclusive, extending to an entity employing one or more individual health care providers.” Based on this interpretation, it vacated the JNOV decision and reinstated the jury verdict in favor of the patient.

This is a very good decision, in my opinion.

Furthermore, I believe that under Washington law, a patient injured by his doctors’ teamwork will do well to explore two alternative ways of suing the hospital:

A. Corporate negligence. The hospital might be directly liable for failing to establish a protocol with an appropriate checklist for doctors’ post-surgical monitoring of patients.

B. Spoliation. The hospital might be accountable for missing and non-compiled records documenting the work done by each individual member of the doctors’ team. Absence of the required records is a reason for shifting the burden of proof to the hospital. The hospital would then have to prove that none of its doctors acted negligently toward the patient.