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Pacificare of California et al v. Bright Medical Associates

September 2, 2011

PACIFICARE OF CALIFORNIA ET AL., CROSS-COMPLAINANTS AND APPELLANTS,
v.
BRIGHT MEDICAL ASSOCIATES, INC., CROSS-DEFENDANT AND APPELLANT.



Appeal from an order of the Superior Court of Orange County, Kirk H. Nakamura, Judge. Affirmed. Cross-Appeal from an order of the Superior Court of Orange County, Kirk H. Nakamura, Judge. (Super. Ct. No. 05CC04980)

The opinion of the court was delivered by: Aronson, Acting P. J.

CERTIFIED FOR PUBLICATION

OPINION

Dismissed as moot.

Plaintiffs Jerry Jay Martin, Jerry Lloyd Martin, Tressa Brown, and Lisa Vindell (collectively the Martins) filed the underlying action against defendants and cross-complainants PacifiCare of California doing business as Secure Horizons and PacifiCare Health Systems, LLC (collectively PacifiCare). The Martins asserted claims for insurance bad faith based on delays their wife and mother, Elsie Martin (Elsie),*fn1 experienced while seeking out-of-network treatment for a cerebral aneurysm. The aneurysm ruptured and Elsie died before receiving the necessary care.

Elsie's primary care physician belonged to cross-defendant Bright Medical Associates, Inc. (Bright), the health care provider who contracted with PacifiCare to deliver medical services to PacifiCare subscribers. Although Bright made all the decisions that delayed Elsie's medical care, the Martins did not file a claim against Bright. Instead, PacifiCare joined Bright in this action by filing a cross-complaint seeking indemnity. During jury selection, Bright settled with the Martins for $300,000, conditioned on the trial court finding Bright and the Martins settled in good faith. PacifiCare appeals from the trial court order granting Bright's good faith settlement motion and dismissing PacifiCare's cross-complaint against Bright.

PacifiCare contends the trial court lacked authority to make a good faith settlement determination because PacifiCare and Bright did not share joint liability for the Martins' damages. According to PacifiCare, Bright bears all liability because the Martins based their claims on Bright's acts or omissions only and PacifiCare cannot be held vicariously liable for Bright's conduct as a matter of law. The Martins, however, alleged PacifiCare's conduct in designing and implementing its health care service plan contributed to the delays in Elsie's medical care. Because a good faith settlement may be sought in any action in which two or more parties are "alleged" to be "joint tortfeasors" (Code Civ. Proc. § 877.6(a)(1)), we conclude the trial court had authority to grant Bright's good faith settlement motion.

PacifiCare also contends the trial court abused its discretion in determining Bright and the Martins settled in good faith because the trial court failed to consider Bright's indemnity liability to PacifiCare for attorney fees. In PacifiCare's view, Bright's $300,000 settlement is grossly disproportionate to its liability for the nearly $1.5 million in attorney fees PacifiCare incurred in opposing the Martins' claims. As explained below, we conclude PacifiCare has no viable attorney fees claim against Bright and therefore cannot urge that claim as a basis for finding Bright settled in bad faith.

We affirm the trial court's order granting Bright's good faith settlement motion and dismissing PacifiCare's cross-complaint. Our decision on PacifiCare's appeal renders Bright's cross-appeal from the order denying its summary judgment motion moot. We therefore dismiss the cross-appeal.

I

FACTS AND PROCEDURAL HISTORY

A. PacifiCare and Bright

PacifiCare is a licensed health care service plan under California's Knox-Keene Health Care Service Plan Act of 1975 (Health & Saf. Code, § 1340 et seq.).*fn2 The Knox-Keene Act defines a "health care service plan" as "[a]ny person who undertakes to arrange for the provision of health care services to subscribers or enrollees, or to pay for or to reimburse any part of the cost for those services, in return for a prepaid or periodic charge paid by or on behalf of the subscribers or enrollees." (Health & Saf. Code, § 1345, subd. (f)(1).) PacifiCare is not licensed to practice medicine and it does not directly provide medical care to its subscribers. (Civ. Code, § 3428, subd. (c); Health & Saf. Code, § 1395, subd (b).) Instead, PacifiCare contracts with "providers"*fn3 to deliver medical care to subscribers who enroll in its plans.

Bright is a health care provider PacifiCare hired to provide health care to PacifiCare's subscribers. The contract between PacifiCare and Bright requires Bright to provide health care to each PacifiCare subscriber who selects a member of Bright's medical group as his or her primary care physician. The contract also requires Bright to perform utilization review on PacifiCare's behalf. Utilization review is the process physicians utilize to determine whether a particular service or treatment is medically necessary and therefore covered by the applicable health care service plan. Although PacifiCare delegated this function to Bright, it retained final authority to determine whether Bright's physicians should provide a particular service or treatment. All PacifiCare subscribers have the right to appeal any utilization review decision to PacifiCare and PacifiCare may reverse Bright's health care decisions.

B. Elsie's Health Care

Elsie enrolled in PacifiCare's Secure Horizons plan and selected a Bright physician for her primary care. In August 2003, Bright diagnosed Elsie with a large cerebral aneurysm. Due to the aneurysm's size, Bright lacked the expertise to treat it within its medical provider network and therefore referred Elsie for out-of-network treatment at the University of Southern California Medical Center (USC).

Although Elsie consulted with a neurosurgeon at USC in September 2003, Bright did not approve the neurosurgeon's recommended treatment until mid-December 2003, despite multiple requests. Bright approved the procedure only after requiring Elsie to undergo what the USC neurosurgeon characterized as an unnecessary angiogram. After receiving the approval, USC scheduled the treatment for early February 2004. Tragically, Elsie's aneurysm burst in January 2004 and she died after the doctors removed her from life support.

At no time did Elsie or anyone acting on her behalf contact PacifiCare to discuss Elsie's medical care or challenge Bright's utilization review decisions.

D. The Trial Court Proceedings

The Martins filed the underlying lawsuit in April 2005. They did not name Bright or any of its physicians as defendants. Instead, the Martins named PacifiCare as the only defendant and alleged two causes of action based on insurance bad faith: a wrongful death cause of action on behalf of Elsie's husband and adult children, and a ...


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