California implemented substantive tort reform in the 1970s. The cap on non-economic damages (pain and suffering) has held firm at $250,000 since. And, compared to the rest of the country, professional liability premiums in California have remained “reasonable.”


Last year, enterprising lawyers spearheaded a referendum, Proposition 46, to overturn these caps. The Proposition was labeled Drug and Alcohol testing of Doctors. Medical Negligence Lawsuits.  The marketing pitch behind the proposition was clever – pilots and bus drivers are randomly tested for drugs and alcohol. Surely, this list should include physicians. (Buried in the Proposition was– “hey, by the way, let’s raise the cap on non-economic damages.”) The measure failed. For now, there is no state mandated random drug and alcohol testing for doctors. And, the cap on non-economic damages continues at $250k.


In the Godfather III, Michael Corleone shouts the classic line “Just when I thought I was out, they pull me back in.” Rashidi v. Moser [1] strikes the same chord. There, the court ruled that caps on pain and suffering apply only to the jury verdict. Any settlements made with defendants prior to jury trial cannot be used to offset the $250k cap.


The details.


Hamid Rashdi lost vision in one eye after a procedure by Dr. Moser to treat epistaxis. Dr. Moser was sued. So were Cedars Sinai Medical Center and Biosphere Medical, Inc. These two co-defendants settled before trial respectively for $350,000 and $2 million. Dr. Moser rolled the dice, went to trial, and lost. The jury awarded $125,000 for economic damages; $331,250 for past non-economic damages; and $973,750 for future non-economic damages. Applying the law capping non-economic damages, the trial court reduced the award for non-economic damages to $250,000.


Dr. Moser appealed the case, arguing that prior settlements should be used as a further offset to the $250,000 cap.  The Appeals Court agreed with his argument and reduced the non-economic damages to $16,655.


Rashdi appealed to the California Supreme Court. It concluded the cap only applied to trial judgments on non-economic damages; and the statute had nothing to say about pre-trial settlements. It continued, the statute was designed to prevent runaway, capricious jury awards. If parties wanted to negotiate before trial, the statute on caps on non-economic damages would not stand on the way. The only workaround is if the trial judgment included a formal apportionment of fault for those who settled.


Moser will be on the hook for $250k in non-economic damages.


What’s the implication? Aren’t we back to where we were before – the cap being $250k? Well, not really. The Supreme Court ruled that if there are multiple defendants, any settlements prior to trial would not count against the cap at trial. Do not be surprised if more defendants are named in lawsuits. The shotgun suit is back. It is true that if all defendants go to trial, the cap will likely hold firm at $250k in aggregate. But, the legal system should be encouraging reasonable settlements, not promoting expensive litigation a defendant’s best position.


One California law firm, Wood, Smith, Henning, and Berman, summarized the likely outcome.


This decision will likely impact future litigation, as it may encourage injured parties to name multiple defendants in actions for damages with the hope of settling with one or more of the defendants and thereby potentially circumventing the MICRA limitations. Plaintiff can still proceed to trial with the non-settling defendant and receive up to an additional $250,000 in non-economic damages. With there being no limitation on non-economic damages for settlements, we may see an overall increase in the number of lawsuits in general, as well as an increase in the degree of frivolity.


What to do? Well, one state – New Jersey – nipped the shotgun lawsuit problem in the bud. There, experts who submit an affidavit of merit against defendant(s) must be in the same specialty. If you sue two different specialties, you’ll need two different affidavits or merit by two different specialists to proceed.


The New Jersey Supreme Court held in Nicholas v. Mynster, 213 N.J. 463 (2013) that N.J.S.A. 2A:53A–41 required that “[w]hen a physician is a specialist and the basis of the malpractice action ‘involves’ the physician’s specialty, the challenging expert must practice in the same specialty.” The plaintiff in Nicholas was required to produce an affidavit of merit by a specialist in each of the two defendant doctors’ specialties despite the overlapping areas of their practice and their treatment of the same condition in the patient.


This paradigm was tested in a recent case where two spine surgeons were sued – one a neurosurgeon; the other an orthopaedic surgeon. [2] There, the plaintiff developed neck swelling and difficulty breathing after spine surgery. The complication was caused by a pharyngeal tear related to endotracheal tube placement.


The patient obtained a single affidavit of merit – from a neurosurgeon. The orthopaedic surgeon defendant argued the expert neurosurgeon was in a different specialty – even though both practiced spine surgery. The court agreed. The case was appealed. Same conclusion. The plaintiff needed to get a second expert, an orthopaedic surgeon, and file a second affidavit of merit.


While this might not be the best case to illustrate the need for two affidavits of merit when both surgeons practice the same functional specialty (spine surgery), the broader implication is clear. If the law incentivizes suing as many defendants as possible, that will be the outcome. If the law forces plaintiffs to focus their litigation energies on the proper parties, judicial economy will result.


[1] Hamid Rashidi v. Franklin Moser —P.3d—(2014) Westlaw citation: 2014 WL 701400 No. S214430 December 15, 2014

[2] Williams v. AtlantiCare Regional Medical Center, 2014 WL 4328205 (N.J.Super.A.D., September 3, 2014) (not designated for publication).