Grp. Health Coop. v. Coon

• Decision Date: 13 August 2018
• Docket Number: No. 76365-2-I,76365-2-I
• Citation: 423 P.3d 906
• Court: Washington Court of Appeals
• Parties: GROUP HEALTH COOPERATIVE, a Washington nonprofit corporation, Respondent, v. Nathaniel COON and Lori Coon, husband and wife, Appellants.

423 P.3d 906

GROUP HEALTH COOPERATIVE, a Washington nonprofit corporation, Respondent,

v.Nathaniel COON and Lori Coon, husband and wife, Appellants.

No. 76365-2-I

Court of Appeals of Washington, Division 1.

FILED: August 13, 2018

Eugene Melvin Moen, Chemnick Moen Greenstreet, 115 Ne 100th St., Suite 220, Seattle, WA, 98125, for Appellant.

Michael H. Church, Attorney at Law, 720 W Boone Ave. Ste 200, Spokane, WA, 99201-2560, Hailey Louise Landrus, Stamper Rubens, P.S., 720 W Boone Ave Ste 200, Spokane, WA, 99201-2560, for Respondent.

PUBLISHED OPINION

Leach, J.

¶ 1 Group Health Cooperative seeks reimbursement for health care benefits it provided to Nathaniel (Joel) and Lori Coon. The trial court determined on summary judgment that Group Health had an enforceable right to reimbursement from settlement funds obtained by the Coons. The Coons appeal from that decision. Because disputed factual issues prevent the resolution of Group Health's claims on summary judgment, we reverse and remand for further proceedings.

FACTS

¶ 2 The parties do not dispute many underlying facts. Nathaniel Coon had knee surgery at the Everett Clinic (Clinic) in March 2012. After the surgery, he developed an aggressive infection in his leg that ultimately resulted in an above-the-knee amputation. The Coons' insurer, Group Health, paid approximately $372,000 in medical expenses for his treatment. In December 2013, an attorney for the Coons wrote to Group Health, advising that he was representing the Coons in connection with a medical malpractice claim against the Everett Clinic for injuries he sustained from complications during the knee surgery procedure. He stated that the Clinic was disputing both negligence and causation. He requested that Group Health provide a breakdown of its "subrogation lien" for benefits it had paid relating to this claim. Group Health wrote back, including an itemized list of providers and expenses that had been covered. Group Health asked to be kept informed of settlement negotiations and to be contacted before final settlement "to confirm Group Health's subrogation amount."

¶ 3 The Clinic was unable to determine the cause of the infection, and the Coons likewise, despite considerable effort, could not identify a theory of negligence and causation that would support a malpractice lawsuit against the Clinic. The Clinic voluntarily paid the Coons over $300,000 to help with medical expenses, wage loss, travel and accommodation expenses (the amputation occurred out of state), and other expenses. The Clinic also asked the Coons to participate in mediation to resolve any claim by the Coons for additional compensation.

¶ 4 A declaration from attorney Todd Gardner, submitted to the trial court by the Coons, suggests a possible motivation for the mediation request:

It appears that there were factors that motivated The Everett Clinic to enter into pre-litigation negotiations in this case that were not centered on traditional assessments of liability and damages. It appears from the correspondence I have reviewed, that The Everett Clinic targeted this case as the type of case they would try to resolve before litigation was filed under a new program designed to reduce litigation filings and provide some level of compensation to patients who have suffered grievous injuries on their watch. This provided an opening for plaintiffs to mediate the claim with The Everett Clinic without the need for filing litigation.

¶ 5 Before the mediation, both the Coons' lawyer and the Clinic's lawyer sent letters to the mediator. Each provided background on Coon's injury and discussed that party's view of the case. The letter from Coons' counsel explained that no lawsuit had been filed: "this is an attempt at a pre-litigation resolution of the claim." The Clinic had "initiated the resolution effort":

The Everett Clinic and its insurer initiated the resolution effort before I became involved. They have been very cooperative in helping Mr. and Mrs. Coon financially to deal with the consequences of his injury, including making monthly payments to help Mr. Coon hire people to assist in running his lawn care and landscaping business. The Coons very much appreciate that help.

Counsel went on to explain that he had not established a theory of liability:

We have consulted with several liability experts, including an orthopedic surgeon, an orthopedic infectious disease expert, a hospital-infection expert, and an expert in operating room construction and ventilation systems. ... I also had an extensive telephone conference with Dr. Robert Trousdale, the orthopedic surgeon most closely involved with Joel's care at the Mayo Clinic [where the amputation occurred]. At this point, we have several hypothetical theories about how the fungal infection

was acquired by Joel. However, without extensive discovery we are not able to pin-point a specific explanation of how this happened. Basically, at this point we have a res ipsa loquitur case.

¶ 6 According to the letter, Dr. Trousdale had suggested a possible liability theory, that fungal spores were tracked into the operating room "by a provider, possibly on the sole of a shoe." Dr. Trousdale "said that this kind of fungal infection

would not ordinarily occur if appropriate sterile techniques and procedures were followed and the positive pressure ventilation system was designed and operating properly."

¶ 7 The letter described how Coon's amputation had impacted him and his family. The injury interfered with Coon's ability to operate his business and engage in the outdoor activities he had previously enjoyed. His claimed damages included $2 million in future care costs and $7 million in future economic loss. The letter made this statement about noneconomic damages: "Joel and Lori would present very well to a jury, and I have no doubt that any award for the non-economic impact of this injury would be for many millions of dollars."

¶ 8 The letter from the Clinic's counsel explained that the fungal infection

acquired by Coon was "extremely rare, aggressive, and resistant to most known and FDA-approved antifungal agents." After an "extensive review," the Clinic was still "unable to find a definite source or cause" of Coon's infection. As part of its review, the Clinic had consulted with experts who determined that the doctors who performed Coon's surgery met or exceeded the standard of care. The Clinic had determined it was "unlikely" that the infection was caused by conditions in the operating room.

¶ 9 In view of the fact that neither the Clinic nor the Coons could determine what caused the infection, the Clinic's lawyer suggested that the Coons would face difficulty proving liability:

The parties have agreed to mediation in the hope of reaching a final settlement without the need for litigation. TEC [the Everett Clinic], however, is concerned that the Coons' expectations for settlement may not prove to be realistic. TEC believes that the Coons may not fully appreciate the difficulty they face in trying to prove, to a reasonable degree of medical probability, how the infection occurred, its source or cause, or what, if any, specific precautions that allegedly should have been taken but were not taken would have prevented the infection from occurring. The damages the Coons are seeking should be significantly discounted to account for the difficulties of proof of liability and causation that they face.

....

Given the difficulty in identifying, more probably than not, the source of the SP [Scedisporium prolificans] spores, it is also difficult to establish more probably than not that any additional precautions could have been taken (that should have been taken) that would have prevented Mr. Coon's SP infection. The simple fact remains that this exceedingly rare SP infection is so highly resistant to most, if not all, readily available anti-fungal agents that it is unlikely that any customarily-employed infection control procedure would have killed the SP and prevented the infection.

¶ 10 Counsel described the Coons' estimated damages as "over-inflated." The Clinic was "not prepared to acquiesce" in those estimates.

¶ 11 The mediation resulted in a settlement: the Clinic agreed to pay the Coons $2 million in exchange for their agreement to fully release the Clinic from any claims. According to the parties' appellate briefing, $2 million was less than the Clinic's insurance policy limits.

¶ 12 Group Health's insurance contract provided it with "Subrogation and Reimbursement Rights" if the Coons received funds from another source:

If GHO [Group Health Options, Inc.] provides benefits under this Agreement for the treatment of the injury or illness, GHO will be subrogated to any rights that the Member may have to recover compensation or damages related to the injury or illness and the Member shall reimburse GHO for all benefits provided, from any amounts the Member received or is entitled to receive from any source on account of such injury or illness, whether by suit, settlement, or otherwise. This section VII.B more fully describes GHO's subrogation and reimbursement rights.

¶ 13 A later paragraph in the same section contained the fuller description of these rights, and it made Group Health's right of subrogation conditional upon the injury being "caused by a third party":

If the Injured Person's injuries were caused by a third party giving rise to a claim of legal liability against the third party and/or payment by the third party to the Injured Person and/or a settlement between the third party and the Injured Person, GHO shall have the right to recover GHO's Medical Expenses from any source available to the Injured Person as a result of the events causing the injury, including but not limited to funds available through applicable third party liability coverage and uninsured/underinsured motorist coverage. This right is commonly referred to as "subrogation." GHO shall be subrogated to and may enforce all rights of the Injured Person to the

...