Monday, March 30, 2009
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Court Throws Out Settlement as Not in Good Faith
By SHERRI M. OKAMOTO, Staff Writer
A six-figure medical negligence settlement reached during arms-length negotiations was insufficient to qualify as a good-faith offer between a Long Beach doctor, his employer and a three-year-old girl born with neurological damage, this district’s Court of Appeal has ruled.
In its Thursday decision, Div. Three issued a peremptory writ of mandate directing Los Angeles Superior Court Judge Judith A. Vander Lans to vacate her order approving a $200,000 settlement—representing two percent of the estimated damages and 10 percent of the doctor’s available insurance coverage—between Makya Connors, Dr. Tamerou Asrat and the Magella Medical Group.
Connors was born to Anthony and Tamara Hill at the Long Beach Memorial Medical Center in February 2006.
During her labor, Tamara Hill was classified as a high risk patient, and her attending obstetrical physician was Asrat.
Asrat checked on the progress of Hill’s labor at 4:45 the morning Connors was born and noted abnormal fetal heart tracings. He was able to monitor the heart monitor tracings from numerous places in the hospital, but did not return to Hill’s bed until 8:06 a.m., when he ordered an emergency Cesarean section.
Connors, by and through her guardians ad litem, filed suit against various alleged tortfeasors, including Asrat, Magella, the hospital, and the attending nurse’s employer, Fastaff Inc., for negligence and emotional distress
Based on her anticipated damages, Connors made a global settlement demand of $10 million. Two alleged tortfeasors then settled with for $250,000.
According to the hospital’s version of events, during discovery, Beverly Hills attorney Bruce G. Fagel, counsel for Asrat and his employer, indicated his clients’ willingness to explore a possibility of joining Fastaff and the hospital in contributing to the global settlement and subjecting a final allocation of their respective contributions to binding arbitration.
The hospital claimed that it then discussed a proposal with Asrat, Magella and Fastaff calling for Asrat and Magella to contribute $1.5 million, Fastaff to contribute $2 million, and the hospital to contribute $4 million.
Being informed that Asrat and Magella did not have settlement authority, the hospital made a settlement offer of $5.25 million and Falstaff made an offer of $2.5 million.
One day after the hospital and Falstaff made their offers, counsel for Asrat and Magella contacted the Hills and offered $200,000 as a separate settlement in exchange for a dismissal of his clients from the suit.
When Asrat and Magella moved for a good faith determination of their settlement, the hospital objected, contending that the settlement was disproportionate to Asrat’s liability.
Asrat and Magella argued that they believed they would be successful at trial because Asrat had no liability and introduced a declaration by another perinatologist— who had not yet been deposed—to that effect, as well as a declaration by their attorney attesting that he did not have settlement authority until two days after the hospital and Fastaff had entered their settlements.
After Vander Lans found that the settlement had been entered in good faith, the hospital sought writ relief.
Writing for the appellate court, Justice Richard D. Aldrich explained that good faith can only be found if there has been no collusion between the settling parties and the settlement is reasonably proportionate to the settling party’s share of comparative liability for a plaintiff’s injury.
As the good faith determination must be made based on the information available at the time of settlement, Aldrich noted that the declaration in support of Asrat’s denial of liability which came after the settlement was reached could not be considered for purposes of determining proportionate liability.
Even if it were, Aldrich reasoned, the $200,00 settlement was still “wholly disproportionate” in light of the evidence that Asrat was the sole physician responsible for Connors’ birth and did not return to check on her mother’s labor on his own initiative for over three hours, despite being aware of the abnormal fetal heart tracings.
“Even a slight probability of liability on Dr. Asrat’s part would warrant a contribution more significant than 2 percent,” Aldrich wrote.
Aldrich also suggested that the timing of Asrat and Magella’s settlement offer indicated that their reason for extending the offer was to cut off the hospital’s and Fastaff’s right to indemnity because their liability exposure for indemnity was greater than their exposure to Connors for negligence once her settlement demand was satisfied.
The justice concluded that the offer was a tactical decision designed to benefit Asrat and Magella at the expense of the interests of the hospital and Fastaff, which served neither the goal of encouraging settlement among all interested parties nor the goal of equitably allocating costs among multiple tortfeasors. The judge abused her discretion in finding it had been made in good faith, Aldrich said.
Presiding Justice Joan Dempsey Klein and Justice Patti S. Kitching joined Aldrich in his opinion.
Dennis J. Sinclitico of Sinclitico & Burns represented the hospital, while Curtis A. Cole and Joshua C. Traver of Cole Pedroza and Yuk K. Law and Gregory R. Bunch of Law & Brandmeyer represented Conners and her parents.
The case is Long Beach Memorial Medical Center v. Superior Court (Conners), 09 S.O.S. 1869.
Copyright 2009, Metropolitan News Company