Calif. Supreme Court rules on medical malpractice awards

With the defeat of California's Proposition 46 this past November, dentists and other healthcare practitioners breathed a sigh of relief, as the ballot measure that would have quadrupled the cap on noneconomic damages for medical and dental malpractice to $1.1 million was soundly defeated by voters.

On Monday, however, California practitioners heard some difficult news, as the California Supreme Court delivered what may turn out to be the first crack in the state's malpractice award cap.

Under the Medical Injury Compensation Reform Act (MICRA) of 1975, dentists and other healthcare providers are protected from extreme liability exposure. Noneconomic damages are limited to $250,000 in medical and dental malpractice cases.

"Before MICRA was enacted, dentists and other practitioners were seeing annual increases of up to 400%," Daniel G. Davidson, DMD, past CDA president told DrBicuspid.com this fall. "MICRA stabilized premiums by enacting a $250,000 cap on noneconomic damages."

In what is widely seen as the first challenge to MICRA, the California Supreme Court unanimously ruled on Monday that a jury's previous award of $1.3 million in noneconomic damages in a medical malpractice action from 2013 cannot "be further pared" to reflect the amount of a pretrial settlement with other defendants attributable to noneconomic losses.

In the case of Rashidi v. Moser in Superior Court of Los Angeles, patient Hamid Rashidi was awarded $1.3 million in noneconomic damages by a jury in a lawsuit against Franklin Moser, MD, who performed surgery at Cedars-Sinai Medical Center in Los Angeles. The medical center and the manufacturer of the particles used to block blood vessels, Biosphere Medical, also were included in the initial lawsuit. According to multiple media reports, these particles, used to stop Rashidi's nose bleeds, resulted in his loss of sight in one eye. The case was overseen by Justice Richard Fruin Jr.

Rashidi settled with Biosphere for $2 million and with Cedars-Sinai for $350,000, according to reports. The court then cut Rashidi's noneconomic damages award of $1.3 million down to $250,000, as called for under MICRA. An appeals court ruling further cut the award to $16,655.

In the initial ruling, Fruin noted that, under Civil Code §1431.2, each healthcare provider would ordinarily pay its share of the noneconomic damages, but that Dr. Moser was liable for the entire $250,000 award because he filed to establish fault on the part of the other defendants.

The California Supreme Court backed Fruin's ruling.

Supreme Court Justice Carol Corrigan wrote for the court that the justices "conclude that the cap imposed by section 3333.2, subdivision (b) applies only to judgments awarding noneconomic damages."

The "cap performed its role in the settlement arena by providing Cedars-Sinai with a limit on its exposure to liability," Corrigan continued. "Had Moser established any degree of fault on his codefendants' part at trial, he would have been entitled to a proportionate reduction in the capped award of noneconomic damages. The Court of Appeal erred, however, in allowing Moser a setoff against damages for which he alone was responsible."

In legal terms, a setoff is a claim by a defendant in a lawsuit that the plaintiff owes the defendant money that should be subtracted from the amount of damages claimed by plaintiff.

As the Hastings Law Journal put it in its case background, if a plaintiff is awarded noneconomic damages against a healthcare provider defendant, does Civil Code section 3333.2 entitle that defendant to a setoff based on the amount of a pretrial settlement entered into by another healthcare provider that is attributable to noneconomic losses, or does the statutory rule that liability for noneconomic damages is several only (not joint and several) bar such a setoff?

Corrigan wrote that "[n]either the parties nor amici curiae direct us to anything in the legislative history of section 3333.2 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."

This ruling paves the way for the court to rule on another trial, Hughes v. Pham, which challenges MICRA's constitutionality, which will be heard by the California Supreme Court later in the court's calendar.

At press time, the California Dental Association and the California Medical Association had not responded to requests for comment.