Wednesday, September 27, 2006

Simmons v. Ghaderi (Cal. Ct. App. - Sept. 27, 2006)

This is an interesting problem.

Plaintiff files a medical malpractice lawsuit, and the parties (and defendant's insurer) attend a mediation. The insurance policy, as required by law, allows the defendant doctor to veto any proposed settlement. So before the mediation, the insurer gets the doctor to consent in writing to a settlement up to and including $125,000.

Eventually, during the mediation, the insurer offers the plaintiff $125,000 in settlement, and plaintiff accepts. At which point the case gets interesting. As the mediator starts to write up the agreement, the insurer walks over to the doctor to tell her that the case has settled for $125,000. At which point the doctor says: "Good, because I'm revoking my consent."

So now what do you do? The doctor leaves the mediation at that point, and the insurer says: "Well, we don't have the doctor's consent. Plus, she won't sign any agreement. What can we do?" At which point the plaintiff moves to bind the defendant to the settlement, but the defendant says: "I didn't sign anything. Plus, you can't even prove that an offer was made -- or that my (advance) consent was given -- since everything associated with a mediation is confidential. Gotcha!"

You can see how such conduct, if permitted, would countenance widespread tactical abuse. Doctors, and/or their insurers, could use this strategy to find out the plaintiff's bottom line settlement demand without being bound to the defendant's formal offers. And mediation would be a lot less effective if the defendant could get out of its own accepted settlement offers even if the doctor agreed in advance to settle the case.

Ultimately, the trial court bifurcates the proceedings and finds that the settlement agreement was binding notwithstanding mediation confidentiality, and Justice Croskey affirms. But Justice Aldrich writes a pretty powerful dissent that disagrees, arguing that the majority has unjustly invented an exception to mediation confidentiality in order to affirm the judgment here against the sleazy Dr. Ghaderi. Both the majority as well as the dissent make good points in this regard. It's an interesting -- and tough -- issue.

Let me add one more thing. If I were the trial court, I would have seriously considered doing something a little different here. I would have bifurcated the proceedings as well, and tried the breach of contract (i.e., settlement agreement) dispute separate from the underlying medical malpractice action. But unlike the trial court, I might have ordered that the medical malpractice action be tried first. Which would have basically told the "Gotcha" Dr. Ghaderi: "Okay, that's what you want? Fine. So we'll try the medical malpractice action first. And if you get spanked badly -- i.e., over $125,000 -- in that one, I'm quite positive that the plaintiff will drop the breach of contract/settlement agreement cause of action. And I'll likely hold you estopped to argue it yourself, since you're claiming you're not bound. By contrast, if you win the malpractice action, you're still looking at possibly losing the $125,000 settlement. So, given the order of the bifurcation, do you still want to argue that you're not bound to the settlement?"

Maybe that's not right. But I'd have definitely been inclined to do it.

P.S. - Legalities, and doctrine, aside, I'm certainly never going to use Dr. Lida Ghaderi, who practices in Lawndale. I prefer my doctors be assuredly non-sleazy, TYVM.