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Miguel Gonzalez, Jr., A Minor, By and v. United States of America

January 6, 2012


The opinion of the court was delivered by: Sheila K. Oberto United States Magistrate Judge



On November 2, 2011, Maria Gonzales ("Petitioner"), as the court-appointed guardian ad litem of the named minor, Plaintiff Miguel Gonzalez, Jr. ("Miguel"), filed a petition to approve the proposed settlement between Miguel and the United States of America ("United States"). On November 10, 2011, Defendant County of Kern, erroneously sued in the name of its agency, Kern Medical Center, filed a statement of non-opposition to the petition for approval of the proposed settlement between Miguel and the United States. (Doc. 66.)

On December 16, 2011, Plaintiffs filed an amended petition for compromise of the claim of minor Miguel Gonzalez, Jr. (Doc. 70.) The matter was heard on January 4, 2012. Thomas Donahue, Esq., appeared on behalf of Petitioner Maria Gonzalez, and Plaintiffs Maria Gonzalez, Miguel Gonzalez, Sr., and Miguel Gonzalez, Jr., also appeared. (See Local Rule 202(d).) Assistant United States Attorney Alyson Berg, appeared on behalf of the United States.

After reviewing the amended petition and reviewing the terms of the settlement with the parties at the January 4, 2012, hearing, the Court finds that the proposed settlement agreement is fair and reasonable. For the reasons that follow, the Court RECOMMENDS that the amended "Petition for Compromise of the Claim of Minor Miguel Gonzalez, Jr. Pursuant to Settlement with Defendant United States of America" ("amended petition") BE APPROVED and GRANTED.


This case was originally filed on February 8, 2008, in Kern County Superior Court by Plaintiffs Miguel Gonzalez, Jr., Maria Gonzalez, and Miguel Gonzalez, Sr. (collectively, "Plaintiffs") against Kern Medical Center, Clinica Sierra Vista, Luis Lopez, M.D., Deng Fong, M.D., and Gurvir Khurana, M.D. Petitioner was appointed guardian ad litem for Miguel. According to Petitioner, it was thereafter discovered that Defendant Clinica Sierra Vista and Defendant Luis Lopez, M.D., were deemed employees of the Public Health Services pursuant to the provisions of the Federally Supported Health Centers Assistance Act of 1992, 42 U.S.C. § 233, and therefore subject to the Federal Tort Claims Act ("FTCA"), codified at 28 U.S.C. §§ 2671-2680. (Doc. 70, 2:9-21.)

On March 18, 2009, Plaintiffs filed a complaint in this Court pursuant to the FTCAagainst the United States and simultaneously proceeded in state court against the remaining defendants. On September 17, 2009, Plaintiffs filed a First Amended Complaint naming the state-court defendants, Kern Medical Center and Gurvir Khurana, M.D.,*fn1 in this action and dismissed the state-court action in its entirety. (See Doc. 70, 2:19-21.)*fn2

Plaintiffs' claims arise from the events occurring on the date of Miguel's birth, August 1, 2007, at the Kern Medical Center. According to Plaintiffs, when Petitioner presented for the delivery of Miguel, the child was "in complete breech presentation and at a minus 3 station." (Doc. 70, 4:8- 9.) Dr. Luis Lopez, employed by the United States, improperly attempted to perform a vaginal breech delivery of the fetus. (Doc. 70, 4:10-11.) Plaintiffs assert that in doing so, Dr. Lopez violated the standard of care by recommending a vaginal delivery because only experienced physicians -- which Dr. Lopez was not -- should undertake such deliveries in situations of breech. (Doc. 70, 4:9-25.) As a result of Dr. Lopez' lack of sufficient experience, Plaintiffs contend that Miguel suffered traumatic delivery causing hypoxia, acidosis, and brain injury. (Doc. 70, 4:24-28.)


The amended petition has two essential parts. Petitioner, Miguel's guardian ad litem, requests that the settlement be approved and that, as part of the approval, the Court issue an order establishing a special needs trust for Miguel such that certain settlement proceeds may be paid into the trust. Thus, the two components of the petition are considered below.

A. The Settlement Between Minor Miguel Gonzalez, Jr. and the United States

As a derivative of Federal Rule of Civil Procedure 17(c), district courts have a special duty to safeguard the interests of litigants who are minors. Rule 17(c) provides, in pertinent part, that a district court "must appoint a guardian ad litem -- or issue another appropriate order -- to protect a minor or incompetent person who is unrepresented in an action." Fed. R. Civ. P. 17(c). In the context of proposed settlements in suits involving minor plaintiffs, the district court's special duty requires it to "'conduct its own inquiry to determine whether the settlement serves the best interests of the minor.'" Robidoux v. Rosengren, 638 F.3d 1177, 1181 (9th Cir. 2011) (quoting Dacanay v. Mendoza, 573 F.2d 1075, 1080 (9th Cir. 1978)).

In Robidoux, the United States Court of Appeals for the Ninth Circuit provided specific guidance "on how to conduct this independent inquiry." Robidoux, 638 F.3d at 1181. While the Ninth Circuit noted that district courts have typically applied state law and the local rules governing the award of attorney's fees to make the reasonableness and fairness determination, the court held that "this approach places an undue emphasis on the amount of attorney's fees provided for in a settlement, instead of focusing on the net recovery of the minor plaintiffs under the proposed agreement." Id. The Ninth Circuit held that, instead, district courts should "limit the scope of their review to the question whether the net amount distributed to each minor plaintiff in the settlement is fair and reasonable, in light of the facts of the case, the minor's specific claim, and recovery in similar cases." Id. at 1181-82. Further, the fairness of each minor plaintiff's net recovery should be evaluated "without regard to the proportion of the total settlement value designated for adult co-plaintiffs or plaintiffs' counsel -- whose interests the district court has no special duty to safeguard." Id. at 1182 (citing Dacanay, 573 F.2d at 1078).

Beyond the substantive requirements in considering the compromise of a minor's claim, the Eastern District of California has issued Local Rules ("L.R.") that govern the procedure for submitting requests for approval of a proposed settlement or compromise of a minor. In actions in which a minor is represented by an appointed representative where the United States courts have exclusive jurisdiction, "the motion for approval of a proposed settlement or compromise shall be filed and calendared pursuant to L.R. 230." L.R. 202(b)(2); see also L.R. 202(b)(1).

Local Rule 202(b)(2) further provides that an application for approval of a settlement of a minor shall disclose, among other things, the age and sex of the minor or incompetent, the nature of the causes of action to be settled or compromised, the facts and circumstances out of which the causes of action arose, including the time, place and persons involved, the manner in which the compromise amount or other consideration was determined, including such additional information as may be required to enable the Court to determine the fairness of the settlement or compromise, and, if a personal injury claim, the nature and extent of the injury with sufficient particularity to inform the Court whether the injury is temporary or permanent. If reports of physicians or other similar experts have been prepared, such reports shall be provided to the Court. The Court may also require the filing of experts' reports when none [has] previously been prepared or additional experts' reports if appropriate under the circumstances . .

The amended petition tracks the language of the California Judicial Council form MC-350, which contains the "Petition to Approve Compromise of Disputed Claim or Pending Action or Disposition of Proceeds of Judgment for Minor or Person with a Disability" that is applicable in state-court proceedings. The amended petition offers a comprehensive overview of the terms of the settlement and sets forth the information necessary to consider approval of the settlement pursuant to both the Federal Rules of Civil Procedure, the Eastern District of California's Local Rules, and the Ninth Circuit's instruction in Robidoux.

1. Terms of the Proposed Settlement and Miguel's Net Recovery

Defendant United States has offered consideration in the amount of $1,750,000.00 in exchange for a release of all Plaintiffs' claims. Under the terms of the settlement, $140,000.00 will be paid to Petitioner and her husband, Miguel Gonzalez, Sr. in consideration of their release of their claims for negligent infliction of emotional distress and their prospective claims for the wrongful death of their son.

The remainder of the settlement amount -- $1,610,000.00 -- will be paid in consideration of release of Miguel's claim against the United States. Miguel's medical expenses have been paid by Medi-Cal in the amount of $145,213.00. Pursuant to California Welfare & Institutions Code § 14124.72, Medi-Cal will accept $97,830.85 as full satisfaction of the lien. The difference between the $145,213.00 lien amount and the negotiated amount of $97,830.85 represents the reasonable share of attorney's fees and litigation costs that will be paid to counsel for Petitioner. Thus, of the $1,610,000.00 proposed settlement amount, $145,213.00 will be deducted as satisfaction of MediCal's lien for medical services provided (which includes attorney's fees and costs).

Additionally, $261,384.72 in attorney's fees will be paid out of the gross settlement amount to Plaintiffs' counsel. The amount to be paid in attorney's fees is less than 25% of the total settlement, and conforms with the requirements of 29 U.S.C. § 2678. Also deducted from the gross settlement amount will be $200,000.00 as payment for costs and cost reserves. The net amount of the settlement to Miguel, therefore, is $1,003,402.28 ($1,610,000.00 less the sum of $145,213.00, $261,384.72, and $200,000.00).

Miguel's net settlement amount will be used to purchase an annuity and the remainder of the cash funds will be paid into a special needs trust for the benefit of Miguel. Specifically, $500,000.00 of the net settlement will be used to purchase an annuity which provides for periodic payments in the amount of $1,912.00 per month for Miguel's lifetime, guaranteed for 30 years. These periodic payments will be deposited into a special needs trust for the benefit of Miguel. The first payment is currently set to be made on April 11, 2012, by Liberty Life Assurance Company of Boston, or its assignee. After Miguel's death, guaranteed payments will be made to his estate. The total amount of the guaranteed payments is $688,320.00. The total amount of the anticipated payments, if Miguel lives to the life expectancy as computed by the annuity company, will amount to $1,785,600.00. The remaining $503,402.28 of the net settlement ($1,003,402.28 less the sum of $500,000 for the purchase of the annuity) will be distributed to a special needs trust for the benefit of Miguel.

2. The Reasonableness and Fairness of the Settlement Amount

In Robidoux, the Ninth Circuit directed district courts considering the compromise of a minor's claim to examine the fairness and reasonableness of the net settlement amount in view of the facts of the case, the minor's specific claim, and the recovery in similar cases. Petitioner asserts that the settlement amount was reached through mediation. Petitioner's counsel has extensive experience mediating and handling cases of this nature, and a considerable amount of time and resources were devoted to fully developing the facts surrounding Miguel's claim against the United States. Plaintiffs consulted and retained nine experts, and over 700 pages of expert reports were generated. (Doc. 70, Declaration of Thomas Donahue, p. 16, ¶¶ 6-7.) Miguel was examined by multiple physicians, and his life care needs were assessed by Dr. Montes and Barbara Greenfield, R.N. (Doc. 70-2.) The parties completed the depositions of the named defendants who were involved in the labor, delivery, and resuscitation as well as numerous nurses who were involved in the events. In total, 18 witness and party depositions were completed. (Doc. 70, p. 17, ¶ 5.) Over 25 deposition subpoenas were served by the parties seeking medical and billing records. (Doc. 17, p. 17, ¶ 5.) The facts of the case were diligently developed and were known to the parties when the dispute was privately mediated and a settlement was reached between Plaintiffs and the United States.

In addition to consideration of the facts and expert reports obtained and developed, Petitioner's counsel considered the settlement amount to be reasonable and fair in view of the fact that it resolves the claim without any risk to Miguel and avoids the increased costs of paying experts to testify at trial. Petitioner asserts that the net recovery to Miguel is also reasonable and fair in light of the facts of the case, particularly because evidence was discovered that may have resulted in diminished liability at trial. (Doc. 70, 6:1-17.) Thus, despite Plaintiffs' assertion that Miguel's special damages exceed $10,000,000.00, Petitioner contends that the $1,003,402.28 net settlement of Miguel's claim is reasonable and fair.

The facts of the case were thoroughly investigated and developed over the course of approximately two years. Negotiation of the settlement was achieved through private mediation following completion of nearly all fact discovery, which was substantial, and after obtaining multiple expert opinions regarding causation and Miguel's damages. Upon reviewing the facts of the case and Miguel's claim against the United States, the Court finds ...

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