$1.5 Million Fee Exposure Was Nonexistent Such That Indemnity Rights Issue Did Not Impact Good Faith Settlement Analysis.
In PacificCare of California v. Bright Medical Associates, Inc., Case No. G041507 (4th Dist., Div. 3 Sept. 2, 2011) (certified for publication), Acting Presiding Justice Aronson affirmed a good faith settlement determination after deciding on behalf of a 3-0 panel that there were no attorney’s fees indemnity considerations in light of the fact there was no fee exposure under a special fee-shifting provision or the “tort of another” doctrine.
Plaintiffs sued PacificCare when their mother died while seeing out-of-network treatment for a cerebral aneurysm. PacificCare cross-complained against cross-defendant Bright Medical, the healthcare provider who contracted with PacificCare to deliver medical services to PacifiCare subscribers. Bright settled with plaintiffs for $300,000 subject to a good faith determination, which was granted along with a dismissal of the cross-complaint. PacifiCare challenged the good faith settlement determination as erroneous because Bright had indemnity liability to PacifiCare for $1.5 million in attorney’s fees incurred by PacifiCare in opposing plaintiffs’ claims, meaning the $300,000 settlement was disproportionately low.
The good faith settlement determination was affirmed.
The reason was the Court of Appeal’s determination that PacifiCare had no viable attorney’s fees claim against Bright. Although indemnity exposure to a nonsettling defendant is certainly a factor to be gauged in the good faith determination calculus, PacifiCare could not recover fees under Health and Safety Code section 1371.25 given that the statutory provision’s first sentence prevented plaintiffs from holding PacifiCare vicariously liable for Bright’s conduct or for recovering the attorney’s fees PacificCare incurred in its defense of plaintiffs’ claims. Also, even if PacifiCare did share joint liability for mother’s health care (which it did not), the fees claims under the “tort of another” doctrine failed because the doctrine only applies when the party seeking fees bears no fault, which could not occur under PacifiCare’s joint liability theory.
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