Licudine v Cedars Sinai Medical Center – Case Study

CASE STUDY PREPARED FROM ORIGINAL PUBLISHED OPINION
ERNEST A. LONG
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Licudine v Cedars Sinai Medical Center 1/3/19
CCP section 998; Validity; “Reasonable prospect of acceptance”
In February 2012, Dionne Licudine (plaintiff) underwent gallbladder
removal surgery. The surgery was performed by Dr. Ankur Gupta under the
supervision of Dr. Brenden Carroll at defendant Cedars-Sinai Medical Center
(Cedars). The surgery was intended to be minimally invasive, but Dr. Gupta
nicked a vein inside the abdominal cavity and caused substantial internal
bleeding. This necessitated a more invasive surgery that left plaintiff with a
large scar, a month-long hospitalization and a chronic abdominal condition.
On January 15, 2013, plaintiff filed a medical malpractice lawsuit against
Cedars, Dr. Gupta, Dr. Carroll and the Regents of the University of California
(collectively, defendants). The complaint was three pages long. With respect to
liability, plaintiff alleged that the defendants’ provision of medical services was
“below the standard of care.” With respect to damages, plaintiff alleged only
that she (1) had suffered “personal injuries and related emotional distress,” (2)
had incurred “medical, nursing, health care, hospital and medical expenses,” (3)
had suffered a “loss of wages, profits, and earning capacity,” and (4) incurred
“other damages and injuries to be proven but which at this time are unknown.”
She prayed “for damages within the jurisdiction of the Court.”
It was not until May 23, 2013 that plaintiff served her complaint on Cedars.
Cedars filed its answer on June 6, 2013, along with a demand for written
discovery and for a statement of damages.
On June 11, 2013, plaintiff mailed Cedars an “Offer to Compromise”
pursuant to section 998. Specifically, she “offered to allow judgment to be taken
against Cedars and in favor of the plaintiff in the amount of $249,999.99, plus legal
costs.”
On June 27, 2013, Cedars sent plaintiff a written “Objection” to the 998 offer.
In its objection, Cedars noted that plaintiff made her 998 offer only five days after
Cedars had filed its answer. As Cedars explained, this was “too soon for it to
make any determination as to whether plaintiff’s 998 offer was reasonable”
because Cedars had “not had an opportunity to fully investigate this action.”
The offer expired on July 16, 2013. Cedars did not accept the offer prior to
its expiration.
The matter proceeded to trial. A jury found Cedars liable for malpractice
and awarded plaintiff $1,045,000 in damages. Both Cedars and plaintiff moved
for a new trial on damages, and the trial court granted both motions and set the
matter for a new damages trial. We affirmed the trial court’s orders. (Licudine I
(2016) 3 Cal.App.5th 881.)
A jury returned a total damages award of $7,619,457, comprised of
$5,344,557 in economic damages and $2,274,900 in noneconomic damages.
Pursuant to the statutory cap on noneconomic damages applicable in medical
malpractice cases (Civ. Code, § 3333.2), the trial court reduced the noneconomic
damages verdict to $250,000, yielding a total verdict of $5,594,557.
Plaintiff filed a memorandum of costs seeking, among other things,
$2,335,929.20 in prejudgment interest from the date of her 998 offer to the date of
judgment. Cedars filed a motion to strike plaintiff’s prejudgment interest
request, arguing that her 998 offer was “invalid” because it was “made so early in
the proceedings that Cedars did not have a fair opportunity to intelligently
evaluate it.” Following full briefing, the court held a hearing. Toward the end
of the hearing, plaintiff sought to supplement her briefing, but the trial court
denied her request. After further argument, the court struck plaintiff’s request for
prejudgment interest. In so ruling, the court found that plaintiff’s 998 offer had
been “premature” because Cedars had not “had an adequate opportunity to
evaluate the damages in this case at the time of the 998 offer.”
Plaintiff filed a timely appeal.
The Second District Court of Appeal began by noting that if a plaintiff
makes an offer to settle a lawsuit pursuant to section 998 that the defendant does
not accept, and if the plaintiff ultimately obtains a “more favorable judgment,”
she is entitled to have the defendant pay (1) the costs of her expert witnesses
incurred after the 998 offer was made (§ 998, subds. (b) & (d)), and (2)
prejudgment interest at the rate of 10 percent starting from the date of the 998
offer (Civ. Code, § 3291; Wilson v. Wal-Mart Stores, Inc. (1999) 72 Cal.App.4th 382,
392-393). However, a plaintiff is entitled to this additional recovery only if her
998 offer is “valid.” (Barella v. Exchange Bank (2000) 84 Cal.App.4th 793, 799; Chen
v. Interinsurance Exchange of the Automobile Club (2008) 164 Cal.App.4th 117, 121.)
Plaintiff argues that the trial court erred in ruling that her 998 offer was not valid.
Where, as here, the underlying facts are disputed, the appellate court will review
the trial court’s ruling solely for an abuse of discretion. (Timed Out LLC v. 13359
Corp. (2018) 21 Cal.App.5th 933, 942) As the appellant, plaintiff bears the burden
of proving that the trial court abused its discretion. (Najera v. Huerta (2011) 191
Cal.App.4th 872, 877.)
A 998 offer is valid only if it is made in “good faith.” (Elrod v. Oregon
Cummins Diesel, Inc. (1987) 195 Cal.App.3d 692, 698; Wear v. Calderon (1981) 121
Cal.App.3d 818, 821; Regency Outdoor Advertising, Inc. v. City of Los Angeles (2006)
39 Cal.4th 507, 531) A 998 offer is made in good faith only if the offer is
“‘realistically reasonable under the circumstances of the particular case’” (Elrod, at
p. 698,)— that is, if the offer “carries with it some reasonable prospect of
acceptance” (Regency, at p. 531).
Although section 998’s text does not itself condition validity upon an
offeror’s good faith, such a requirement is necessarily implied by the statute’s
purpose: Section 998 is meant “to encourage the settlement of lawsuits prior to
trial”, and it uses the proverbial “stick” to do so: “Accept this offer or you will
face additional financial consequences for rejecting it.” (Elrod, at p. 699) If a
section 998 offer has no “reasonable prospect of acceptance,” an offeree will reject
the offer no matter what and applying section 998’s punitive “stick” will do
nothing to encourage settlement. (Elrod, at p. 699.) Applying the “stick” in such
instances would instead encourage litigants to “game the system by making . . .
offers they can reasonably expect the offeree will refuse,” allowing them “to
benefit from a no-risk offer made for the sole purpose of later recovering large
expert witness fees” and, if they are plaintiffs, prejudgment interest. (Vick v.
DaCorsi (2003) 110 Cal.App.4th 206, 211; Jones v. Dumrichob (1998) 63 Cal.App.4th
1258, 1262-1263; Elrod, at p. 699.) The good faith requirement prevents this
perversion of section 998. (Menees v. Andrews (2004) 122 Cal.App.4th 1540, 1544;
Westamerica Bank v. MBG Industries, Inc. (2007) 158 Cal.App.4th 109, 129)
Whether a section 998 offer has a reasonable prospect of acceptance is a
function of two considerations, both to be evaluated in light of the circumstances
“at the time of the offer” and “not by virtue of hindsight.” (Burch v. Children’s
Hospital of Orange County Thrift Stores, Inc. (2003) 109 Cal.App.4th 537, 548;
Fortman v. Hemco (1989) 211 Cal.App.3d 241, 264; Elrod, at p. 699.) First, was the
998 offer within the “range of reasonably possible results” at trial, considering
all of the information the offeror knew or reasonably should have known?
(Elrod, at pp. 699-700.) Second, did the offeror know that the offeree had
sufficient information, based on what the offeree knew or reasonably should
have known, to assess whether the “offer was a reasonable one,” such that the
offeree had a “fair opportunity to intelligently evaluate the offer”? These two
considerations assess whether the offeror knew that the 998 offer was reasonable,
first, from the offeror’s perspective and, second, from the offeree’s perspective.
In light of this focus on the reasonableness of the offeror’s conduct in making the
998 offer (which makes sense because the issue is the validity of the offer in the
first place), whether the offeree acted reasonably in rejecting that offer is irrelevant.
(Arno v. Helient Corp. (2005) 130 Cal.App.4th 1019, 1027; People ex rel. Lockyer v.
Freemont General Corp., Inc. (2001) 89 Cal.App.4th 1260, 1270-1271.)
In assessing whether the 998 offeror knew that the offeree had sufficient
information to evaluate the offer (the second consideration), the offeree needs
information bearing on the issue of liability as well as on the amount of
damages because these are the issues upon which a verdict would rest and
because the 998 offer, if accepted, would be in lieu of that verdict. (Nelson v.
Anderson (1999) 72 Cal.App.4th 111, 135; Barba v. Perez (2008) 166 Cal.App.4th 444,
450-451; Aynes v. Winans (1948) 33 Cal.2d 206, 211) In assessing the information
available to the offeree, courts are to look to all of the relevant circumstances.
(Arno, at p. 1026.) The pertinent cases have nevertheless identified a number of
specific circumstances to be examined.
First, how far into the litigation was the 998 offer made? Although
section 998 fixes no “minimum period that must elapse following commencement
of suit for service of a valid 998 offer” (Barba, at p. 452), a litigant receiving a 998
offer at the time a lawsuit is filed or soon thereafter is, as a general matter, less
likely to have sufficient information upon which to evaluate that offer. (E.g.,
Najera, at p. 875; cf. Whatley-Miller v. Cooper (2013) 212 Cal.App.4th 1103, 1113)
Second, what information bearing on the reasonableness of the 998 offer
was available to the offeree prior to the offer’s expiration? Information may be
obtained (1) by virtue of prior litigation between the parties (Bender v. City of Los
Angeles (2013) 217 Cal.App.4th 968, 989; (2) through pre-litigation exchanges
between the parties (Barba, at pp. 450-451; Aguilar v. Gostischef (2013) 220
Cal.App.4th 475, 482; (3) through post-complaint discovery in the case
(Whatley-Miller, supra, 212 Cal.App.4th at p. 1113); or (4) by virtue of a pre-existing
relationship between the parties that yields a “free flow of information” (Barba, at
p. 451).
Third, did the party receiving the 998 offer alert the offeror that it lacked
sufficient information to evaluate the offer and, if so, how did the offeror
respond? An offeree may alert the offeror by (1) requesting discovery, either
formally or informally (Barba, at pp. 450-451); (2) asking for an extension of the
998 offer’s deadline (cf. Whatley-Miller, at p. 1107, 1114); or (3) otherwise
objecting to the offer (Najera, at p. 875). If, after hearing the offeree’s concerns,
the offeror’s response is less than forthcoming, “such obstinacy” is “potent
evidence that the offer was neither reasonable nor made in good faith.” (Barba, at
p. 451; Najera, at p. 878.)
Although the party making a 998 offer generally has the burden of showing
that her offer is valid (Timed Out, at p. 942; Barella, at p. 799), it is the 998 offeree
who bears the burden of showing that an otherwise valid 998 offer was not
made in good faith. (Elrod, at p. 700; Nelson v. Anderson (1999) 72 Cal.App.4th
111, 134)
Plaintiff’s 998 offer to settle for $249,999.99 was undoubtedly within the
“range of reasonably possible results” at trial. The jury’s $5,594,557 verdict
constitutes prima facie evidence of such (Elrod, at p. 700), and Cedars has offered
no evidence to the contrary.
Consequently, and as the trial court properly recognized, whether
plaintiff’s 998 offer in this case was made in good faith turns entirely on the
second consideration bearing on good faith— that is, on whether Cedars had
sufficient information to assess whether plaintiff’s $249,999.99 offer was a
reasonable one.
As to timing, plaintiff made her 998 offer just 19 days after serving Cedars
with her complaint and just five days after Cedars filed its answer.
As to the availability of information, Cedars had very little information
available to it on the issues of liability and the amount of damages prior to the
date plaintiff’s 998 offer expired. Plaintiff’s three-page complaint was “bare
bones,” as it listed no specifics as to the injuries she suffered or the amount of
damages she sought. Nor was this skeletal complaint fleshed out by the
pre-litigation notice required by section 364, which would have set forth the
“legal basis of her claim and the type of loss sustained, including the specific . . .
nature of injuries suffered” (§ 364, subds. (a) & (b)), because plaintiff never filed
such a notice. No depositions had been taken.
But Cedars was not entirely bereft of information. Plaintiff had sent
Cedars a letter the day before she made her 998 offer (1) stating that her doctors’
negligence was “self-evident” and that her “injuries are well documented and far
exceed the” $250,000 cap on noneconomic damages, and (2) attaching
photographs of plaintiff before and after the surgery. Plaintiff also provided
some written discovery to Cedars prior to her offer’s expiration— namely, (1) she
forwarded to Cedars her answers to the general interrogatories propounded by
Dr. Carroll, but submitted to the trial court only the cover sheet for those answers
and not the answers themselves, and (2) she responded to Cedars’s request for
documents on the day before her 998 offer expired. Those responses contained
no details on the issues of liability and the amount of damages except (1) to
indicate that plaintiff was not making a claim for “lost earnings” and that
plaintiff’s “earning capacity may be affected as she has had to delay starting law
school for at least two years,” (2) to tell Cedars to contact plaintiff’s insurance
carrier to obtain her medical bills, and (3) to tell Cedars to look at its own records.
And Cedars also had in its possession plaintiff’s 9,662-page medical chart, which
included (1) the operation report noting the nicked vein and internal bleeding,
and (2) the records indicating her extended stay and care at the hospital.
The trial court did not abuse its discretion in concluding that this
information, considered in its totality, did not provide Cedars with sufficient
information with which to evaluate the reasonableness of plaintiff’s section 998
offer. On the question of liability, this information did not indicate which doctor
(Dr. Gupta or Dr. Carroll) was responsible for any negligence or the extent to
which plaintiff’s injuries were related to or exacerbated by any pre-existing
medical conditions she might have. On the question of the amount of damages,
this information did not speak at all to plaintiff’s pain and suffering, to the
amount of her medical expenses (including any offset due to insurance), or to any
possible loss in her earning capacity. Indeed, plaintiff’s response to Cedars’s
request for documents indicated she was unsure whether she would suffer any
loss of earning capacity.
As to providing notice of the lack of sufficient information and any
response to that notice, Cedars alerted plaintiff to its concern that it was “too
soon for it to make any determination as to whether” her 998 offer was
reasonable, and plaintiff never responded.
Plaintiff responds that Cedars had sufficient information to evaluate her
section 998 offer.
As a threshold matter, she argues that any absence of information regarding
her economic damages is of no consequence because her 998 offer was an offer only
to settle the noneconomic damages portion of her case for $249,999.99, which is just
below the statutory cap for noneconomic damages in medical malpractice cases.
The Court will reject this argument because it contradicts the plain language of
the 998 offer itself, which offers to “allow judgment to be taken against Cedars . . .
in the amount of $249,999.99” without any hint that the offer would settle only
part of the case. Even accepting plaintiff’s invitation to retroactively rewrite her
998 offer, Cedars still lacked sufficient information to make an intelligent
determination as to a reasonable amount of noneconomic damages for the reasons
described above. What is more, plaintiff’s conduct in making an offer as to
noneconomic damages that, in her counsel’s own words, was “one penny below”
the statutory cap for such damages mere weeks after serving Cedars raises more
than a specter of gamesmanship, which, as noted above, is antithetical to the
legitimate operation of section 998.
Even if the Justices reject her retroactively narrowed reading of her 998
offer, plaintiff continues, Cedars still had enough information to evaluate a global
settlement offer because (1) Cedars had access to her 9,662-page medical chart, (2)
Cedars conducted a peer review of the operation that provided greater
information, (3) Cedars had the answers to Dr. Carroll’s form interrogatories, and
(4) any shortfall of information regarding damages could not in any event
invalidate her 998 offer because Cedars’s objection never used the word
“damages.”
However, none of these sources provided Cedars with sufficient
information to evaluate plaintiff’s offer.
Plaintiff’s medical chart, as noted above, supplied some information
regarding liability. But it left several issues unaddressed, including plaintiff’s
loss of earning capacity and her pain and suffering.
Plaintiff provided no evidence that Cedars ever conducted a peer review
regarding the operation. All she offers is her counsel’s assertion that “of course”
Cedars did.
The DCA cannot evaluate whether plaintiff’s answers to Dr. Carroll’s form
interrogatories provided Cedars with sufficient information because those
answers were never made part of the record in this case. Plaintiff asserts that she
tried to make them a part of the record and that the trial court was wrong to deny
her request to supplement her briefing with the interrogatory answers.
Plaintiff’s request to supplement was, in effect, a motion to amend her pleading;
as such, it was governed by section 473, subdivision (b). (Garcia v. Hejmadi (1997)
58 Cal.App.4th 674, 683-684; Puppo v. Larosa (1924) 194 Cal. 721, 724) The
discretionary relief portion of this statute applicable here only permits a trial
court to allow an amendment necessitated by an attorney’s mistake or
inadvertence if it is an error that “‘anyone could have made’”; put differently,
errors due to an attorney’s failure to “meet the professional standard of care, such
as failure . . . to properly advance an argument” provide no basis to amend.
(Zamora v. Clayborn Contracting Group, Inc. (2002) 28 Cal.4th 249, 258.) In this
case, plaintiff’s attorney told the trial court that he “didn’t see the actual discovery
responses forwarded to Cedars as necessary,” and this statement confirms that
the attorney’s decision to include the cover letter accompanying the responses but
to omit the responses themselves was strategic and tactical rather than a mistake
any layperson could have made.
Plaintiff’s criticism of Cedars’s objection lacks merit because the plain
language of that document registered a general objection to the timing of
plaintiff’s 998 offer that applied with equal force to the issues of liability and to
the amount of damages. Cedars’s purported failure to use the words
“liability” or “damages” did not somehow narrow the scope of its otherwise
inclusive objection.
Plaintiff next contends that Cedars effectively waived any right to object to
the lack of information because it never asked her to extend the deadline of her
section 998 offer. The Justices reject this contention. Although a request for a
continuance is one method by which a section 998 offeree may put the offeror on
notice that it lacks sufficient information to evaluate the offer, it is not the only
method of doing so; Cedars’s objection sufficed.
And plaintiff posits that the trial court impermissibly required her to prove
her good faith rather than requiring Cedars to prove its absence. As noted
above, the law squarely places the burden on Cedars. (E.g., Elrod, at p. 700.)
However, plaintiff’s position that the trial court shifted that burden is not
supported by the record. At no point did the trial court indicate that the burden
rested with plaintiff, and the questions the court posed to plaintiff during the
hearing sought plaintiff’s input on how to refute the points Cedars had already
made in support of its motion.
The order striking plaintiff’s request for prejudgment interest is affirmed.
Cedars is entitled to its costs on appeal.
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