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October 2011

PacifiCare of California, et al v. Bright Medical Associates, Inc. - Health Care Service Plan And Health Care Provider Are Jointly Liable For Delaying Medical Treatment

Health Care Service Plan Not Precluded From Liability Under Health and Safety Code Section 1371.24

(September 2, 2011) ____Cal.App.4th____; 11 C.D.O.S. 11498

This appeal arises out of an underlying case filed by the family of decedent Elsie Martin ("Elsie").  In August 2003, Elsie was diagnosed with a large brain aneurysm.  Because of the size of the aneurysm, her primary care physician, belonging to Bright Medical Associates, Inc. ("Bright"), was incapable of treating it and referred Elsie to an out-of-network neurosurgeon.  Elsie consulted with the neurosurgeon in September 2003.  However, Bright did not approve the neurosurgeon's recommended treatment until mid-December 2003, after first undergoing an angiogram (a procedure deemed unnecessary by the neurosurgeon).  The neurosurgeon scheduled the treatment for early February 2004.  Elsie's aneurysm burst in January 2004 and she passed away.

Bright, a health care provider, was under contract with PacificCare of California dba Secure Horizons and PacifiCare Health Systems, LLC (collectively, "PacifiCare") to provide medical services to PacifiCare's subscribers.  Bright made decisions relating to Elsie's medical care and provided the medical treatment, but PacifiCare held final authority to determine whether a Bright physician should provide a particular treatment.
In April 2005, the family of Elsie (collectively, the "Martins") filed suit against PacificCare for bad faith alleging that delays in the treatment of Elsie for her aneurysm ultimately led to her premature death.  Although Elsie's immediate medical care was provided by a physician from Bright, her family only filed suit against PacifiCare.  In the Martins' second amended complaint against PacifiCare, they alleged that PacifiCare, as Elsie's health insurer, owed Elsie a nondelegable duty to ensure timely necessary medical care and that PacifiCare was directly liable for implementing an unreasonable health care plan with faulty oversight functions.  PacifiCare filed a cross-complaint against Bright for indemnity.

During jury selection, Bright settled with the Martins for $300,000, conditioned on the trial court granting Bright's good faith settlement motion and dismissing PacifiCare's cross-complaint against Bright. The trial court granted Bright's motion and dismissed the cross-complaint.  Trial proceeded on the Martins' claims against PacifiCare.  PacifiCare filed a nonsuit motion which was granted.  The trial court found that the Health and Safety Code section 1371.24 ("Section 1371") and supporting case law bars holding a health care service plan vicariously liable for its health care provider's acts or omissions. 

PacifiCare appealed the trial court's order granting Bright's good faith settlement motion and dismissing PacifiCare's cross-complaint.  The appellate court affirmed the order.

PacifiCare argued that the trial court lacked authority to make a good faith settlement determination because PacifiCare and Bright did not share joint liability for the Martins' damages.  PacifiCare's challenges were based on a narrow interpretation of the term "joint tortfeasors" in the Code of Civil Procedure §877.6(a)(1), which provides:  "any party to an action in which it is alleged that two or more parties are joint tortfeasors? shall be entitled to a hearing on the issue of the good faith of a settlement entered into by the plaintiff or other claimant and one or more alleged tortfeasors? ." 

The court held that Bright was a joint tortfeasor based on case law broadly construing the term "joint tortfeasor," including "all tortfeasors joined in a single action whose acts or omissions concurred to produce the sum total of the injuries to the plaintiff."   (Topa Ins. Co. v. Fireman's Fund Ins. Companies (1995) 39 Cal.App.4th 1331, 1341; Gackstetter v. Frawley (2006) 135 Cal.App.4th 1257, 1272.)  Additionally, to qualify as a joint tortfeasor, a "party need not be found liable in tort" and an alleged tortfeasor is entitled to seek a good faith settlement order.  (Hartford Accident & Indemnity Co. v. Superior Court (1995) 37 Cal.App.4th 1174, 1179.)

Further, the court held the complaint alleged Bright and PacifiCare acted as joint tortfeasors and were both directly liable for delays in Elsie's health care.  Specifically, the Martins alleged that PacifiCare breached its duty of good faith and fair dealing owed to Elsie by unreasonably implementing a defective review process, unreasonably designing and implementing a health care plan, and failing to implement an adequate oversight mechanism.  Therefore, PacifiCare and Bright are treated as joint tortfeasors under Section 1371 and the trial court did not lack authority to determine whether the Martins and Bright settled in good faith. 

PacifiCare also asserted that the trial court abused its discretion in granting the good faith settlement by failing to consider Bright's indemnity liability to PacifiCare for over $1 million in attorney fees.  PacifiCare argued it was entitled to attorney fees under Code of Civil Procedure section 1021.6.  However, the court held that section 1021.6 only applies when the party seeking the fees bears no fault, which is not the case here.  Also, the court held that Section 1371 clearly prevents PacifiCare from recovering attorney fees it incurs in defending any vicarious liability claims.  Because PacifiCare had no viable theory for its attorney fees claim, it failed to show that the trial court abused its discretion in determining a good faith settlement. 

The order granting Bright's good faith settlement motion and dismissing PacifiCare's cross-complaint was affirmed.  Bright's cross-appeal from the order denying its summary judgment motion was dismissed.

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This opinion is not final. It may be withdrawn from publication, modified on rehearing, or review may be granted by the California Supreme Court. These events would render the opinion unavailable for use as legal authority.

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