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Damages Cannot Be Setoff by Settlements of Codefendants Without Fault


A man presented at a hospital emergency room with a severe nosebleed where he was treated and discharged. He returned the next month with the same symptom. A doctor examined him and recommended surgery. In an operation performed the same day, the doctor ran a catheter through an artery in the man’s leg up into his nose. Tiny particles were injected through the catheter to irreversibly block certain blood vessels. When the man awoke after surgery, he was permanently blind in one eye.

 

The man sued the doctor and the hospital for medical malpractice and medical battery. He sued the manufacturer of the tiny particles for product liability, failure to warn, negligence per se, breach of express and implied warranty, and misrepresentation. The man settled with the manufacturer for $2 million and with the hospital for $350,000.

 

The case went to trial against the doctor alone. The doctor presented no evidence of the hospital's fault, and the court ruled that the evidence was insufficient to support instructions on the manufacturer's degree of fault. The jury found that the doctor's negligence caused the man's injury. It awarded $125,000 for future medical care, $331,250 for past noneconomic damages, and $993,750 for future noneconomic damages. In professional negligence actions against health care providers, recovery of noneconomic damages is capped at $250,000 by Cal. Civ. Code § 3333.2, enacted as part of the Medical Injury Compensation Reform Act of 1975 (MICRA). The Los Angeles County Superior Court reduced the noneconomic damages to $250,000, conforming to the MICRA cap.

 

The doctor sought offsets against the judgment for the pretrial settlements with the hospital and the manufacturer. The trial court rejected this claim, finding no basis for allocating the settlement sums between economic and noneconomic losses, and noting that the jury made no finding as to the settling defendants' proportionate fault.

 

The doctor appealed, contending he was entitled to offsets against both the economic and noneconomic damage awards. He did not dispute the ruling that he had made an insufficient showing of comparative fault on the part of the hospital or the manufacturer. The Second District of the California Court of Appeal, Division 4, held that the jury's award of noneconomic damages, reduced by the trial court to $250,000 under MICRA, must be further diminished by setting off the amount of the pretrial settlement attributable to noneconomic losses. The appellate court concluded that $172,400 of the manufacturer’s settlement was for economic losses, completely offsetting the jury's $125,000 economic damages award. The court of appeals further modified the judgment to reflect a deduction of $233,345 for the part of the hospital’s settlement attributable to noneconomic losses, resulting in a total noneconomic damages award to the man of $16,655.

 

The Supreme Court of California reversed the appellate court insofar as it reduced the award of noneconomic damages below $250,000. The court held that the appellate court erred in allowing the doctor a setoff against damages for which he alone was responsible, and MICRA only caps noneconomic damages awarded in court.

 

The appellate court erred in allowing the doctor a setoff against damages for which he alone was responsible. The MICRA cap applied only to judgments awarding noneconomic damages. Had the doctor established any degree of fault on the hospital’s part at trial, he would have been entitled to a proportionate reduction in the capped award of noneconomic damages. However, the doctor failed to establish the comparative fault of the manufacturer or hospital. Therefore, he was not entitled to a setoff against damages paid by the manufacturer or hospital.

 

MICRA only caps noneconomic damages awarded in court. The noneconomic damages identified in MICRA are limited to amounts awarded by a court. Settlement recoveries are not included in the cap on noneconomic damages.

 

The Supreme Court of California reversed the appellate court insofar as it reduced the award of noneconomic damages below $250,000.

 

See: Rashidi v. Moser, 2014 WL 7014000 (Cal., December 15, 2014) (not designated for publication).

 

 

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