Under what circumstances will a non-settling medical malpractice defendant found liable at trial pay only a token amount to plaintiff as a result of other defendants’ pretrial settlement?

Posted in: Medical Damages, Trial Practice by Steven Vartabedian on

The case of Rashidi v. Moser (filed 9/23/13) 2013 DJDAR 12903 provides such circumstances. And the circumstances are not terribly unusual. What causes a virtual victory here for to a losing defendant is the confluence of the following statutes: California Civil Code section 3333.3 (MICRA), section 1431 (Prop 51), and Code of Civil Procedure section 877 (concerning good faith settlements).

Plaintiff Rashidi had gone to the emergency room of defendant Cedar-Sinai Hospital with a severely bleeding nose. Based on his ER examination, Defendant physician Franklin Moser proceeded to perform an embolization procedure that same day utilizing embosphere microspheres manufactured by defendant Biosphere Medical. The process was to inject these particles through a catheter to stop the bleeding. Immediately after the procedure, Rashidi lost sight in one eye. He sued the hospital and doctor for medical practice, and additionally alleged Biosphere was liable for product defect for failing to warn that there was a risk the manufactured particles would enter into the wrong part of the blood system and cause blindness.

Court approved good-faith settlements were reached as follows: with Cedar-Sinai for $350,000, and with Biosphere for $ 2 million. Moser was the sole defendant to go to and participate at trial. The jury found him liable, awarding $125,000 for economic damages (future medical), $331,250 for past non-economic damages, and $993,750 for future non-economic damages. The trial court reduced both categories of non-economic damages to a total amount of $250,000 under MICRA, leaving a total damage award of $375,000 against Moser. Moser argued he was entitled to a greater reduction under MICRA, Prop 51 and CCP section 877 in light of the amounts paid by the settling defendants. The trial court disagreed, denying the claimed offset because there was no basis to allocate the settlements between economic and non-economic damages and the jury was not required to attribute any portion of the fault to the settling defendants.

The Court of Appeal, Second Appellate District, Division Four, disagreed with the trial court and modified the judgment to defendant being liable for only $16,655 in total damages after appropriate offsets. It took some nifty arithmetic to get there, which I will briefly explain below. But first, I will summarize the applicable legal principals discussed by the appellate court. CCP section 877 explains that the settlements reduce the claims against other defendants in the amount paid. Under Prop 51 all of the settling and liable defendants are jointly liable for economic damages; but they are proportionately liable for noneconomic damages. As to the medical malpractice defendants, under MICRA, the aggregate total of noneconomic damages is capped at $250,000.

With that background, the case here was one where no allocations were made between the two types of damages in either of the settlements. In such a case, contrary to the trial court’s ruling, there is a method for calculating that allocation: determine the percentage of the trial award attributable to economic damages in relation to the entire award, and then take that percentage of each settlement to derive the dollar amount. (See Espinoza v, Machonga, (1992) 9 Cal.App.4th 268,288.) That percentage here worked out to 8.62% (125,000 divided by 1.45 million); thus the economic damage attribution in the Biosphere settlement was $172,400 (2 million times .0862). Based on this calculation alone, because the total jury award against Moser for economic damages was $125,000, a lesser number, the economic damage award against him was totally offset.

On the matter of noneconomic damage apportionment (taking into consideration MICRA limits applied by the trial court), 33.33% was that portion of the jury award against Moser (125,000 divided 375,000). The portion of the Cedar-Sinai attributable to economic damages was thus $116,655 (350,000 times .333). This left $233,345 as Cedar-Sinai’s share of noneconomic damages. Because both medical defendants can only be held responsible for $250,000 total, the resulting modified award of noneconomic damages against Moser was reduced to $16,655. Given his liability for economic damages has been fully offset, $16,655 was the modified damage award against him.

These tortuous calculations give a MICRA defendant, among several defendants, a real disincentive to settle before trial where there might be so little to lose at trial. Oh, but counsel may need to hire a mathematician.

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