Coastal Surgical Institute v. Blevins

(Insurance Code Section 11583 Tolling Applicable Statute of Limitations Applies to Medical Malpractice Actions)

In Coastal Surgical Institute v. Blevins, 232 Cal.App.4th 1321 (January 12, 2015), the California Second District Court of Appeal affirmed a judgment in favor of Charles Blevins (“Blevins”) in the amount of $543,034 (reduced by trial court to $285,114). Coastal Surgical argued that the judgment in favor of Blevins ought to be reversed based on the statute of limitations applicable to medical malpractice actions. The parties’ dispute arose out of an underlying surgery performed by a doctor on Blevins on September 1, 2010. As a result of the surgery, Blevins’ knee became infected. The infection was caused by bacteria. The bacteria was subsequently found on a sponge manufactured by Ruhoff Corporation (“Ruhoff”) that had been used to clean surgical equipment prior to Blevins’ surgery. The bacteria that infected Blevins’ knee had apparently survived the sterilization process performed by Coastal Surgical Institute’s (“Coastal”) employees.

On October 12, 2010, Coastal paid Blevins $4,118.23 for medical expenses he had incurred in treating the knee infection. However, Coastal failed to advise Blevins of the applicable statute of limitations when it paid for his medical expenses. Coastal admits that at the time of the subject payment, Blevins was not represented by counsel and Coastal did not provide him with written notice of the applicable statute of limitations for a medical malpractice action.

On January 24, 2012, more than 15 months after Blevins’ receipt of Coastal’s payment, Blevins filed a complaint for medical malpractice. The second amended complaint filed by Blevins added Ruhof as a defendant. Thereafter, Ruhof settled with Blevins for $100,000.

The trial court, relying on Insurance Code section 11583, ruled that the 1-year limitations period for Code of Civil Procedure section 340.5 was tolled by Coastal’s payment of Blevin’s medical expenses. Subsequently, Blevins’ case was tried resulting in a verdict of $543,034 in damages.

Insurance Code section 11583 provides in relevant part as follows:

"No advance payment or partial payment of damages made by any person, or made by his insurer . . . , as an accommodation to an injured person . . shall be construed as an admission of liability by the person claimed against, or of that person's or the insurer's recognition of such liability . . . . Any person, including any insurer, who makes such an advance or partial payment, shall at the time of beginning payment, notify the recipient thereof in writing of the statute of limitations applicable to the cause of action which such recipient may bring against such person as a result of such injury . . . Failure to provide such written notice shall operate to toll any such applicable statute of limitations or time limitations from the time of such advance or partial payment until such written notice is actually given. That notification shall not be required if the recipient is represented by an attorney."

In affirming the trial court’s decision that 11583 applied to medical malpractice actions and tolled the applicable statute of limitations for such actions based on Coastal’s failure to advise Blevins of such statute of limitations, the Court of Appeal ruled as follows in connection with section 11583:

Section 11583 "is primarily designed to encourage early payment of damages without fear of admitting liability. The legislative purpose of the written notice requirement is to prevent an injury victim from being lulled into a false sense of complacency about the need to sue because an advance or partial payment by the defendant or his insurer shows their apparent cooperativeness. [Citation.]" (Doe v. Doe 1 (2012) 208 Cal.App.4th 1185, 1191.)

In arguing that section 11583 did not apply to medical malpractice actions, Coastal referred to a California Code of Civil Procedure sections 340.5 and 364. Both of these sections are part of the Medical Injury Compensation Reform Act (MICRA) enacted in 1975. Section 340.5 provides that the time for commencement of a medical malpractice action “shall be three years after the date of injury or one year after the plaintiff discovers, or through the use of reasonable diligence should have discovered the injury whichever occurs first. In no event shall the time for commencement of legal action exceed three years unless tolled for any of the following reasons: (1) upon proof of fraud, (2) intentional concealment, or (3) the presence of a foreign body, which has no therapeutic or diagnostic purpose or effect, in the person of the injured person.” Section 364 provides that a medical malpractice action may not be commenced “unless the defendant has been given 90 days prior notice of intention to commence the action.” “If the notice is served within 90 days of the expiration of the applicable statute of limitations, the time for commencement of the action shall be extended 90 days from the service of the notice.”

In rejecting Coastal’s arguments, the Court of Appeal noted that the tolling provisions of Insurance Code section 11583 can extend the one year period of section 340.5 up to a maximum of 3 years from the date of the injury. Here, because Blevins filed his complaint after the one year statutory date expired, but well within the statute’s 3 year maximum, he was entitled to proceed with his lawsuit against Coastal.