Daily Blast December 15, 2014

The California Supreme Court just issued an opinion in Rashidi v. Moser (Dec. 15, 2014, S214430) __ Cal.4th___, analyzing “whether a jury’s award of noneconomic damages, reduced by the court to $250,000 under MICRA, may be further diminished by setting off the amount of a pretrial settlement attributable to noneconomic losses, even when the defendant who went to trial failed to establish the comparative fault of the settling defendant.” (Slip opn., pp. 1-2.) The Court of Appeal held that such a further reduction was required by the MICRA cap. (Id. at p. 2.) The Supreme Court reversed holding that “[it] would be anomalous to allow a defendant to obtain a setoff against damages for which he is solely liable. . . . The limitation on noneconomic damages restrains settlements indirectly, by providing a firm ceiling on potential liability as a basis for negotiation. Only noneconomic damages awarded in court are actually capped.” (Ibid.)

Plaintiff Rashidi went to the emergency room with a severe nosebleed and returned the next month with the same symptom. Defendant Dr. Moser performed surgery, which left Rashidi permanently blind in one eye. Rashidi sued Dr. Moser and Cedars-Sinai for medical malpractice and medical battery. He also sued Biosphere Medical for products liability. (Slip opn., p. 2.) Rashidi subsequently settled with Biosphere Medical for $2 million and with Cedars-Sinai for $350,000. The case went to trial against Dr. Moser. Dr. Moser presented no evidence of Cedars-Sinai’s fault, and the court ruled that the evidence was insufficient to support instructions on Biosphere Medical’s degree of fault. The jury found that Dr. Moser’s negligence caused Rashidi’s injury. The jury awarded $125,000 for future medical care, $331,250 for past noneconomic damages, and $993,750 for future noneconomic damages. The trial court reduced the noneconomic damages to $250,000, pursuant to the MICRA cap. (Id. at p. 3.) Dr. Moser sought offsets against the judgment for the pretrial settlements with Cedars-Sinai and Biosphere Medical. The trial court rejected this claim, finding no basis for allocating settlement sums between economic and noneconomic losses and because the jury made no finding as to the settling defendants’ proportionate fault. Dr. Moser appealed. Rashidi cross-appealed, challenging MICRA’s constitutionality. (Ibid.)

The Court of Appeal held that offsets were required. (Slip opn., p. 3.) The court concluded that MICRA, as the more specific statute, must be read as an exception to Civil Code section 1431.2’s more general limitation on liability for noneconomic damages according to proportionate fault. The court thus modified the judgment to reflect a deduction for the part of the Cedars-Sinai settlement attributable to noneconomic losses, resulting in a total award to Rashidi of $16,655. (Id. at p. 7.) The Supreme Court granted review to determine the propriety of the setoff against noneconomic damages. (Ibid.)

Rashidi argued that the plain terms of section 3333.2 distinguish between “losses” and “damages.” He contended he was entitled to recover his “noneconomic losses” without limitation by way of settlement under section 3333.2, subdivision (a), while his recovery of “damages for noneconomic losses” at trial was limited to $250,000 under section 3333.2, subdivision (b). The Supreme Court agreed. (Slip opn., pp. 7-8.) The legislative history of section 3333.2 did not indicate an intent to include settlement recoveries in the cap on noneconomic damages. (Id. at p. 9.) The Supreme Court reasoned that “[allowing] the proportionate liability rule of section 1431.2 to operate in conjunction with the cap on damages imposed by section 3333.2 enhances settlement prospects. . . . Nonsettling defendants must weigh not only their exposure to liability for noneconomic damages within the limits imposed by section 3333.2, but also the prospect of having to prove the comparative fault of settling defendants in order to obtain a reduction under section 1431.2. ” (Id. at pp. 10-11.) The Supreme Court thus concluded that “the cap imposed by section 3333.2, subdivision (b) applies only to judgments awarding noneconomic damages.” (Id. at p. 11.) According to the court, “the cap performed its role in the settlement arena by providing Cedars-Sinai with a limit on its exposure to liability. 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.” (Ibid.) Thus, the Supreme Court reversed the Court of Appeal’s judgment insofar as it reduced the award of noneconomic damages below $250,000. The Supreme Court affirmed the judgment in all other respects. (Id. at p. 12.)