Castillo v. Montelepre, Inc.

UNITED STATES COURT OF APPEALS
For the Fifth Circuit
No. 92-3601
JOSE L. CASTILLO AND,
MARIA L. CASTILLO,
Plaintiffs-Appellees,
VERSUS
MONTELEPRE, INC., a/k/a
Montelepre Memorial Hospital,
LUIS R. OMS, M.D., ET AL.,
Defendants,
LOUISIANA PATIENTS'
COMPENSATION FUND,
Defendant-Appellant.
Appeal from the United States District Court
for the Eastern District of Louisiana
(August 23, 1993)
Before KING, HIGGINBOTHAM and DeMOSS, Circuit Judges.
DeMOSS, Circuit Judge:
In this case we review, principally, the district court's
application of Louisiana's Medical Malpractice Act, La. Rev. Stat.
Ann. § 40:1299.41 - 1299.47 (West 1992) (the "Act" or "statute").
I. The Medical Malpractice Act
Louisiana has established a statutory scheme for the
prosecution of medical malpractice claims against qualified health
care providers. Health care providers who choose to comply with
certain of the statute's provisions become qualified under the
statute and subject to its procedures and protection. See Id §
40:1299.42 (A).
The protection afforded qualified providers is a limitation on
liability exposure to no more than $100,000, plus interest, on
malpractice claims. Id. § 40:1299.42 (B)(2). Any amount owing from
a judgement or settlement in excess of the total liability of all
qualified providers on a malpractice claim is to be paid from the
Patient's Compensation Fund (the "Fund"). Id. § 40:1299.42
(B)(3)(a).
The statute also provides for limitation on the Fund's
exposure. The total amount recoverable from the Fund is limited to
$500,000, plus interest and cost, exclusive of damages for future
medical care and related benefits. Id. § 40:1299.42 (B)(1).
In the event a qualified provider settles for its $100,000
policy limits, its liability becomes "admitted and established" for
the purposes of any subsequent action by the malpractice victim
against the Fund for additional compensation. Id. § 40:1299.44
(C)(5). As a consequence, the statute precludes the Fund from
contesting the settling provider's liability in any such action.
Id.; Koslowski v. Sanchez, 576 So. 2d 470, 471 (La. 1991). The
2
only issue the Fund is allowed to litigate under the statute is the
quantum of the victim's damages.1 Koslowski, 576 So. 2d at 471.
In light of the forgoing, we review the facts material to our
decision today.
II. Facts
Mrs. Castillo and her husband sued three Louisiana health care
providers for malpractice because of injuries she suffered while
receiving treatment for a liver condition. Two of the providers,
Dr. Oms and Montelepre Memorial Hospital, are qualified under the
Medical Malpractice Act. The other provider, Dr. Gordillo, is not.
The Castillos subsequently entered into settlements with all
three providers. In their settlement with Montelepre, Montelepre
agreed to pay its $100,000 statutory limits, and the Castillos
reserved their right to seek excess compensation from the Fund.
Pursuant to the statute, the Castillos requested the district court
to approve their settlement with Montelepre.
Before the court could give its approval, the Fund intervened.
It sought to challenge the settlement and prevent Montelepre from
paying its statutory limits, which would preclude the Fund from
raising the issue of Montelepre's liability in the Castillo's
forthcoming suit for additional compensation. The court denied the
Fund's challenge, concluding that the Fund had no right to
challenge a settlement between a qualified provider and a
malpractice victim. Having denied the Fund's challenge, the court
approved the Castillos/Montelepre settlement.
1
But See § 40:1299.44 (D)(2)(b)(x) & (xi).
3
From this point forward, the Fund repeatedly and
unsuccessfully implored the district court to allow it to litigate
Montelpre's liability at the upcoming trial of the Castillos'
damages. Anticipating the Fund's trial strategy, the Castillos
filed a motion in limine seeking to exclude any evidence pertaining
to Montelpre's liability. The Fund opposed the motion, contending
that it had the right to prove the proportionate fault of the three
providers and reduce the Castillos' damages by whatever measure the
jury portioned out to Dr. Gordillo. The district court rejected
the Fund's contention and granted the Castillos' motion.
On the eve of trial, the Castillos filed a motion for summary
judgment. Both parties stipulated to facts material to the only
issue to be tried before the jury, the amount of the Castillos'
damages.2 Based on these stipulations, the court entered judgment
awarding the Castillos, inter alia, $500,000 in general damages,
plus interest, subject to a $200,000 credit in favor of the Fund
because of Dr. Oms and Montelepre's settlements, and $280,000 in
past medical expenses.
Shortly thereafter, the Fund filed its notice of appeal. That
same day, the court signed an order, over the Castillos' objection,
exempting the Fund from posting a supersedeas bond during the
pendency of its appeal. The Castillos subsequently filed a cross
appeal challenging the court's stay of execution.
2
As we read the these stipulations, the Fund admitted that
the Castillos' general damages were "at least the total sum of
$500,000." It also admitted that the expenses incurred by the
Castillos for past medical expenses were $280,000.
4
Against this factual backdrop, we address the issues raised by
the parties in this case.
III. Discussion
A. The Settlement Challenge
In its second point of error, the Fund argues that the
district court erred by not allowing it to challenge the settlement
between Montelepre and the Castillos and thereby force the
litigation of Montelepre's liability. At the heart of the matter,
the Fund contends, is its right to challenge a settlement between
a malpractice victim and a qualified provider in every instance
where the provider's insurer pays its $100,000 policy limits. It
tries to support this argument on two grounds: the language of
section 40:1299.44 (C)(3) and the duty imposed on the provider's
insurer under section 40:1299.44 (C)(7).
The relevant portion of section 40:1299.44 (C)(3) reads as
follows:
The board and the insurer of the health care provider ...
may agree to a settlement with the claimant from the
patient's compensation fund, or the board and the insurer
of the health care provider ... may file written
objections to the payment of the amount demanded.
Paragraph (C)(3) must be read in the complete context of
section 40:1299.44 (C). This section provides the procedure when
a qualified provider's insurer has agreed to settle its insured's
liability and the victim demands from the Fund, for a complete and
final release, amounts in excess of the settlement. Id. §
40:1299.44 (C). Assuming the settlement was for the provider's
$100,000 policy limits, the liability of the insured has already
5
become "admitted and established." Id. § 40:1299.44 (C)(5). The
only remaining issue, therefore, is whether the Fund will agree to
pay the excess amount the claimant is demanding for his damages.
The Fund has two choices: either agree to the amount demanded
or litigate the sole issue of the claimant's damages. Id. §
40:1299.44 (C)(3) & (5). If it chooses not to pay the demanded
amount, then subparagraph (C)(3) allows the Fund to file written
objections "to the amount demanded" and thereby force the
litigation of the claimant's damages. Stuka v. Fleming, 561 So. 2d
1371, 1373 (La. 1990). In the latter instance, the only issue to
be litigated is the quantum of the claimant's damages. Id. at 1374.
Importantly, this inquiry has nothing to do with liability; that
issue was conclusively resolved between the provider's insurer and
the claimant when the insurer agreed to settle for its $100,000
policy limits. Id. The written objections, therefore, provide the
vehicle through which the Fund puts into issue, between itself and
the claimant, only the amount of the claimant's damages and not the
provider's liability.
We therefore hold that the district court was correct in
ruling that nothing in the language of section 1299.44 (C)(3)
allowed the Fund to challenge the settlement between Montelepre and
the Castillos.
The Fund next asserts that allowing it to challenge the
underlying settlement between a health care provider and a
malpractice victim affords it the opportunity to determine whether
the health care provider's insurer discharged its duty of good
6
faith and reasonable care in evaluating and settling the victim's
claim. See Id. § 40:1299.44 (C)(7). It asserts that this
opportunity is particularly acute in this case because Montelepre's
insurer paid the $100,000 under a mistaken belief that it was
settling two $50,000 claims rather than one $100,000.3
The relevant part of paragraph (C)(7) reads as follows:
For the benefit of both the insured and the [Fund], the
insurer of the health care provider shall exercise good
faith and reasonable care both in evaluating the
plaintiff's claim and in considering and acting upon
settlement thereof. . . .
3
The Fund's position early in the life of this litigation
was that it was unfair for the Fund to be denied the opportunity
to contest liability simply because Montelepre's "insurer chose
to not defend the claim and run up litigation expenses in light
of the maximum exposure of $100,000." This representation was
consistent with its claim that "the malpractice alleged arises
from a single patient, being treated for a single condition."
Indeed, the Fund managed to convince the district court that the
case involved only one instance of malpractice and that the
statute limited the Castillos' claim to only one $500,000 pot
rather than the two the Castillos were seeking.
Thereafter, the Fund represented to the court that because
Montelepre's insurer believed "that it was exposed to an amount
well in excess of $100,000," it "rash[ly] ... jumped at the
opportunity to wash its hands of the case and simply tendered
$100,000 without any thought that such an act would lock the Fund
into liability." This representation was in furtherance of the
position it presses before the court today, namely, that
Montelepre's "insurer considered itself to be settling two
separate claims, each of which for $50,000."
In response to this latest version of the facts, the
district court stated, "The settlement of this claim, however,
was consummated after the court's order of approval which
specifically stated that Montelepre's maximum exposure was
$100,000, and that the settlement for this amount locked the Fund
into liability for the excess. Thus, this Court is unclear how
the settlement could have been based on any misapprehension on
the part of Montelepre or its insurer."
Based on a thorough review of the record, we find the Fund's
"mistaken belief" claim to be disingenuous.
7
Rather than supporting Fund's argument, we believe the
imposition of this duty weighs against it. Why would the
legislature have imposed upon the insurer, for the benefit of the
Fund, a duty of good faith and reasonable care in its decision to
settle a claim if the Fund has the greater right to challenge any
settlement that would lock it into liability? In other words, with
what benefit does this duty provide the Fund that it would not
necessarily enjoy by having the right to challenge any settlement
that would lock it into liability? To read into the statute the
Fund's right to challenge any such settlement would be to render
the duty imposed under paragraph (C)(7) of no practical
significance.4
Consequently we hold that nothing in section 40:1299.44 (C) or
any other part of the statute allows the Fund to challenge a
proposed settlement between a malpractice victim and a health care
provider, and the district court correctly denied the Fund's
attempt to do so. The Fund's second point of error is overruled.
B. The Apportionment Issue5
The district court granted the Castillo's motion in limine
precluding the Fund from offering any evidence concerning the
4
We also agree with the district court's response to this
argument that even though the Fund is the beneficiary of an
insurer's duty of good faith and reasonable care, this does not
mean that the Fund has the right to litigate the discharge of
such duty in an action between a provider and a victim.
5
After taking its appeal, the Fund filed a motion requesting
that we certify a question to the Louisiana Supreme Court on this
issue. We hereby deny the Fund's motion for certification in
light of conclusions reached in this opinion.
8
liability or proportionate fault of Montelepre, Dr. Oms and Dr.
Gordillo at the trial of the Castillos' damages. The court
decided, based on Stuka v. Fleming, 561 So. 2d 1371 (La. 1990) and
Muphrey v. Gessner, 581 So. 2d 357 (La. App., 4th Cir., 1991),
cert. denied, 587 So. 2d 694 (La. 1991), that once the Fund's
liability was established by Montelepre's payment of $100,000, the
Fund did not have the right to litigate the liability of any
purported tortfeasor; the only triable issue was the quantum of the
Castillos' damages.
In its first point of error, the Fund contends this was error.
While admitting that the "issue of Montelepre Hospital's liability
is established by the settlement with Montelepre," the Fund
nevertheless contends that it has the right to prove the
proportionate fault of Dr. Gordillo, a non-qualified health care
provider, and to reduce its maximum statutory exposure in
proportion to the percentage of fault attributed to Dr. Gordillo.
In essence, the Fund contends that Montelpre's payment of $100,000
establishes only Montelepre's liability and not that of Dr.
Gordillo.
In support of this contention, the Fund argues that Stuka and
Muphrey are materially distinguishable from the case at bar.
Accordingly, we review the relevant portions of these decisions.
In Stuka, the court was faced with facts materially similar to
ours. A malpractice plaintiff sued four qualified health care
providers, their insurer, and the Fund. Before the case could be
brought to trial, the insurer paid $100,000 to settle the claim
9
against one of the providers and his employer. The plaintiff
agreed to release the insurer and the two defendants while
reserving its right to recover excess compensation from the Fund.
The plaintiff also agreed to dismiss with prejudice its claim
against the remaining two providers. The district court
subsequently entered a judgment approving the settlement.
Thereafter, the Fund filed an answer asserting its right to
litigate the issue of liability based on its contention that the
$100,000 payment did not constitute an admission of liability for
all four defendants. The plaintiff moved to strike the Fund's
opposition to the court's considering the settlement as an
admission of liability.
The district court rendered a judgement in favor of the
plaintiff, ruling that the settlement constituted an admission of
liability as between the plaintiff and the Fund. The court of
appeal reversed, concluding that because the insurer had not paid
$100,000 on behalf of each of the four providers, the issue of
liability could be litigated by the Fund.
In reversing the court of appeal's decision, the supreme court
framed the issue and its holding as follows:
The issue in this case is whether ... (the Fund) ... may
contest its liability to a medical malpractice victim who
has compromised his claim against one health care
provider for $100,000, while voluntarily dismissing
others, and is seeking recovery against the Fund of
damages in excess of the settlement amount. We conclude
that payment of $100,000 to a medical malpractice victim
by one qualified health care provider (or the provider's
insurer) triggers the admission of the liability
provision of [section 40:1299.44 C(5)], and the only
10
contested issue remaining thereafter between the victim
and the Fund is the amount of the victim's damages in
excess of the amount already paid.
Stuka, 561 So. 2d at 1371.
In reaching this conclusion, the court reasoned as follows:
The statute does not make any express provisions for a
case in which multiple health care providers have been
joined as defendants and only one pays $100,000 in
settlement. We interpret the overall statute as
dispensing with the litigation of liability between the
victim and the Fund after one health care provider has
paid $100,000 in settlement.
A suit under the Medical Malpractice Act is against the
health care provider only and not against the Fund. The
health care provider is the only party defendant
contemplated by the Act. (citation omitted) Indeed, the
statute does not require joining the Fund as a defendant,
but only requires serving the administrator of the Fund
with the petition for approval of the settlement when a
health care provider has agreed to settle its liability
to the malpractice victim.
The status of the Fund, after a settlement between the
malpractice victim and a health care provider for
$100,000, is more in the nature of a statutory intervenor
than a party defendant. . . .
The Medical Malpractice Act therefore contemplates that
the issue of liability is generally to be determined
between the malpractice victim and the health care
provider, either by settlement or by trial, and that the
Fund is primarily concerned with the issue of the amount
of damages. Payment by one health care provider of the
maximum amount of his liability statutorily establishes
that the plaintiff is a victim of that health care
provider's malpractice. Once payment by one health care
provider has triggered the statutory admission of
liability, the Fund cannot contest that admission. The
only issue between the victim and the Fund thereafter is
the amount of damages sustained by the victim as a result
of the admitted malpractice.
We recognize that this literal interpretation of the
statute affords less rights to the Fund when claims
against multiple health care providers are settled than
when such claims are tried. In the case of a trial the
Fund has the opportunity for reduced exposure when more
than one health care provider is determined to be liable.
11
But in the case of a settlement with one [qualified]
health care provider for $100,000 the Fund does not have
this opportunity in the subsequent litigation with the
victim. However, the Legislature chose in cases of
settlement simply to declare the admission of liability
by the $100,000 payment of one health care provider and
did not provide for the Fund's affirmative right to
litigate liability on the part of any other named or
unnamed health care providers.
We accordingly conclude that, because of the payment of
$100,000 by Dr. Jones' insurer in this case, the only
issue to be litigated between plaintiffs and the Fund is
the quantum of damages.
Stuka, 561 So. 2d at 1373-74 (emphasis added).
In Muphrey v. Gessner, 581 So. 2d 357 (La. App. 4th Cir.
1991), a malpractice plaintiff sued two qualified providers, their
insurer, and two other qualified providers. Before the case was
brought to trial, one of the providers paid its statutory limits of
$100,000 in exchange for a release from the plaintiff. The court
approved the settlement. The plaintiff also dismissed without
prejudice the remaining defendants and sought recovery from the
Fund for excess damages.
The Fund filed a third party action against two of the
dismissed providers, seeking contribution and a credit against the
plaintiff's recovery. The Fund argued that it was entitled to a
credit to the full extent of the statutory limits of liability of
the two providers, due to their alleged negligence.
Thereafter, the plaintiff sought and received a summary
judgement concluding that the $100,000 payment by the one provider
constituted a statutory admission of liability, thereby making the
only issue between the Fund and the plaintiff one of damages. The
12
trial court also severed the plaintiff's claim for damages from the
Fund's contribution and credit action.
Subsequently, the plaintiff and Fund settled the damage claim,
leaving the Fund's action against the other providers as the sole
surviving claim from the original action. Thereafter, one of the
providers moved for summary judgement, asserting that the Fund had
no right to seek contribution. The trial court granted the motion
and dismissed the Fund's action against the provider. The Fund
appealed.
The Fund asserted its right to contribution on two grounds:
(1) as an obligor which has paid a debt owed by the provider, the
Fund is subrogated to the rights of the plaintiff against the
provider under La. Civil Code art. 1829; and (2) public policy
mandates that the Fund have the right to recover $100,000 from both
of the allegedly negligent providers in order to protect the fiscal
integrity of the Fund. The fourth circuit disagreed.
The court concluded that the Louisiana Supreme Court's
decision in Stuka was dispositive. Muphrey, 581 So. 2d at 360. It
paraphrased the holding in Stuka for the proposition that the Fund
cannot litigate the issue of liability in order to receive
contribution from other health care providers. In reviewing the
basis for this holding, the court stated that after a qualified
health care provider settles with the malpractice victim for its
statutory limits, "the status of the Fund is more in the nature of
a statutory intervenor than a party defendant." Id. (citation
omitted) So at that point, the only issue between the Fund and the
13
victim is the quantum of the victim's damages. Id. The court went
on to quote key portions of the Stuka opinion, including the
following: "However, the Legislature chose in cases of settlement
simply to declare the admission of liability by the $100,000
payment of one health care provider and did not provide for the
Fund's affirmative right to litigate liability on the part of any
other named or unnamed health care providers." Id. (emphasis in
original)
The Fund argued that Stuka was distinguishable because in the
case before the fourth circuit there was no longer any litigation
between the Fund and the victim; the victim had received $200,000
in settlement with the Fund. The court found the distinction to be
immaterial in light of the Stuka court's declaration that "the
statute does `not provide for the Fund's affirmative right to
litigate liability on the part of any named or unnamed health care
providers.'" Id. Even though the victim is no longer involved in
the suit, the liability of the provider to the victim would still
have to be litigated, the court reasoned. Therefore, it concluded
that the Fund was precluded from litigating the issue of the
liability of a non-contributing health care provider once there has
been a settlement for $100,000. Id.
The court proceeded to reject the Fund's subrogation argument,
concluding that the Fund is not a co-obligor with liable health
care providers. Id. It noted that case law interpreting the
Medical Malpractice Act has found that "the position of the [Fund]
is sui generis; it is a creature of statute and has only those
14
rights expressly given to it be the legislature." Id. Accordingly,
the court noted that the Louisiana Supreme Court had already
declared that the Fund is not a negligent party and does not have
the status of an Article 2315 defendant. See Williams v. Kushner,
449 So. 2d 455, 458 (La. 1989). Furthermore, the court recalled
how it had earlier decided that the Fund did not have the right
enjoyed by party defendants to urge the defense of prescription.
See Kelty v. Brumfield, 534 So. 2d 1331, 1334 (La. App. 4th Cir.
1988). In articulating the rational for its decision, the court
again reiterated that the legislature has reserved to the Fund only
the right to contest the amount of a victim's damages and nothing
more.
Finally the court addressed the Fund's policy argument. The
court concluded that the fiscal integrity of the Fund is adequately
protected by the statute which created it, without having to grant
the Fund a right to contribution not contemplated by that statute.
Muphrey, 581 So. 2d at 361.
Applying Stuka and Muphrey to the case at bar, we are left
with the following conclusions. Once Montelepre settled with the
Castillos for $100,000, its liability to the Castillos became
statutorily established such that the Fund was precluded from
contesting Montelpre's liability. More importantly, Montelepre's
payment of its statutory limits also precluded the Fund from
litigating the liability of Dr. Gordillo. Consequently, the Fund
lacks the authority to apportion fault amongst the defendants and
reduce its liability to the Castillos by Dr. Gordillo's share. The
15
only issue the Fund is permitted to litigate in the Castillos'
action for damages is the amount of damages the Castillos have
suffered.
The Fund argues that Stuka and Muphrey are distinguishable
because here, the Fund would be held liable for the acts a of non-
qualified provider. The Fund points out that a non-qualified
provider is not protected by the Act, and concomitantly, that the
Fund is not responsible for his conduct. From this the Fund
reasons that it must necessarily have the right to determine a non-
qualified provider's percentage of fault and reduce its exposure by
that amount. This right, the Fund argues, enables it to protect
its fiscal integrity.
We agree that Stuka and Muphrey are distinguishable from the
case at bar. However, a careful analysis of these cases reveals
the distinction to be immaterial. The courts in Stuka and Muphrey
arrived at their holdings by analyzing the statute to determine the
rights of the Fund as a creature of the legislature. In both
cases, the courts determined that the status of the Fund was such
that it lacked the statutory authority to litigate liability
issues. The analytical approach taken by the courts in these cases
properly focused on the status of the Fund. In point of fact, it
is the status of the Fund that was determinative in both cases.
Taking this same analytical approach, we also consider the
status of the Fund to be determinative. The status of the Fund as
a defined creature of the legislature is such that it lacks the
authority under the statute to apportion fault amongst providers
16
and reduce its liability by the non-qualified provider's share. We
find nothing in the statute or interpretive case law to indicate
that the status of a provider as unqualified under the statute
should affect this conclusion. More specifically, the fact that
one provider is not qualified does not expand the Fund's authority
beyond that which is expressly stated in or honestly implied from
the language of the statute. Consequently, we consider that fact
to be immaterial.
Examining the Fund's argument from this perspective reveals it
to be basically the same public policy argument it pressed in
Muphrey: allowing the Fund to litigate the fault of a provider and
thereby reduce the Fund's exposure protects the fiscal integrity of
the Fund. And although the statute and case law make clear that a
provider must be qualified under the Act to be subject to its
protection, we are unwilling to read into the statute the Fund's
affirmative right to litigate liability issues once a qualified
provider pays its statutory limits. Thus, the Fund's first point
of error is overruled.6
6
The Fund raises several additional arguments that we find
to be insupportable. One such argument relies upon articles 1803
and 1804 of the Louisiana Civil Code which address the rights and
benefits afforded remaining solidary obligors when a co-obligor
is released from liability to an obligee. However, the status of
the Fund is such that it is not a co-obligor with liable health
care providers. Muphrey, 581 So. 2d at 360.
Another argument asserts that the Louisiana legislature has
"confirmed" that the Fund is only responsible for the damages
caused by a qualified health care provider by adding items (x)
and (xi) to section 40:1299.44 (D)(2)(b). Item (x) provides the
Fund with the right to defend itself from malpractice claims for
which a non-qualified provider may be partially liable. Item
(xi) allows the Fund to obtain indemnity and reimbursement of all
amounts for which the non-qualified provider may be liable.
17
C. Interest on the Credit
As indicated above, the district court awarded the Castillos
legal interest on their entire $500,000 general damage award even
though it credited the Fund $200,000 because of Dr. Oms and
Montelepre's settlements. In its third point of error, the Fund
challenges the court's interest award by arguing that the court
improperly held the Fund liable for interest on the $200,000
credit. Its first argument in support of this position relies on
the terms of the statute.
Section 40:1299.42 (B)(1) indicates that the total amount a
malpractice victim can recover from the Fund, exclusive of future
medical care and related benefits, "shall not exceed Five Hundred
Thousand Dollars plus interests and cost." (emphasis added).
Section 40:1299.42 (D)(5) provides for the Fund to receive a credit
We note that the Fund became statutorily liable for the
Castillos' excess damages on March 27, 1991, the day the district
court approved the Castillo/Montelepre settlement. The effective
date of the amendment at issue is September 6, 1991.
Furthermore, we do not consider this amendment to constitute
a confirmation of any rights the Fund possessed at the time it
became liable. Rather, we view the inclusion of these provisions
to create in the Fund rights that are substantive in nature and
effect and additional to those rights that were expressly and
impliedly contained in the statute at the time of the Fund's
liability.
Finally, the Fund asserts that the right of apportionment
only comprehends apportioning damages and not liability. Thus,
the Fund argues that if allowed to apportion damages, it would
not be litigating liability issues. This argument is completely
fatuous. Dr. Gordillo's portion of damages would necessarily be
proportionate to his share of fault. La. Civ. Code. art. 1804.
And determining his proportionate share of fault would
necessarily require determination of both Dr. Oms and
Montelepre's fault. See Muphrey, 581 So. 2d at 361. Thus, not
only would liability issues be litigated, Montelepre's liability
would have to be litigated. And the latter proposition is
precisely what the statute forbids.
18
"in the amount of malpractice liability insurance in force as
provided for in La. R.S. 40:1299.42(B)(2)" once a victim settles
with a provider and continues its action against the Fund.
(footnote omitted). Section 40:1299.42 (B)(2) indicates that a
qualified provider "is not liable for an amount in excess of One
Hundred Thousand Dollars plus interest thereon accruing after April
1, 1991, for all malpractice claims ..." (emphasis added).
Whether the Fund may properly be held liable for interest
accruing on the entire $500,000 depends upon the interpretation
applied to subsections (D)(5) and (B)(2). There are at least two
possible interpretations of these subsections. Under the first,
(D)(5)'s reference to "the amount of malpractice liability
insurance in force as provided for in [(B)(2)]" could be read to
mean that the Fund receives a credit in an amount equal to only the
$100,000 liability insurance limits which providers are required to
maintain under the act. Under this interpretation, the Fund would
not receive credit for any interest on the $100,000 as provided in
subsection (B)(2). Thus, the Fund would be liable for interest on
the total $500,000 award.
A second interpretation could read (D)(5)'s reference to
(B)(2) to mean that the Fund should receive a credit in an amount
equal to not only the $100,000 insurance limits, but also the
"interest thereon accruing after April 1, 1991." However, applying
this interpretation to the facts here would not change the result
reached by the first interpretation. Dr. Oms and Montelepre
settled with the Castillos on March 27, 1991, five days before the
19
April 1st date upon which interest would have begun to accrue.
Thus, there was no interest in existence for which the Fund could
have received a credit.
Because we find under either interpretation of the statute
that the district court's award of interest on the entire $500,000
was not error, we will not decide which interpretation more
accurately reflects the will of the Louisiana legislature.
In its second argument challenging the interest award, the
Fund relies on the releases executed by Dr. Oms and Montelepre in
their settlements with the Castillos. The Fund asserts that by
releasing Dr. Oms and Montelepre from any claim to legal interest
arising from their malpractice action, the Castillos necessarily
released the Fund from liability for legal interest under the
statute. The Fund offers no authority for its position.
The fundamental defect in the Fund's argument is that it
overlooks the fact that the Castillos' had two independent claims
for interest on two different sums. The Castillos' civil action
against Dr. Oms and Montelepre gave rise to a claim for legal
interest on any amount of damages they might recover in judgment
against the providers. La. Rev. Stat. § 4203 (West 1993); La. Code
Civ. Proc. art. 1921. The Castillos' action against the Fund gave
rise to a right under the statute to receive legal interest against
the Fund on any damage award up to the $500,000 cap. La. Rev. Stat.
§ 40:1299.47 (M). Thus, when the Castillos' compromised their
action against Oms and Montelepre, they compromised their right to
receive legal interest arising from only that action. Their action
20
against the Fund and concomitant right to legal interest under the
statute was unaffected by the settlements.
The Fund's third point of error is overruled.7
D. Medical Expenses
In its final point of error, the Fund contends that the court
erroneously awarded the Castillos $280,000 in medical expenses on
top of their $500,000 general damage award. The Fund maintains
that the $500,000 general damage award is inclusive of any award
for past medical expenses.
This argument is contrary to the plain language of the
statute. Section 40:1299.42 (B)(1) clearly states that the
$500,000 general damage award is "exclusive of future medical care
and related benefits as provided in R.S. 40:1299.43." Section
40:1299.43 (B)(1) states that "`Future medical care and related
benefits' ... means all reasonable medical, surgical,
hospitalization, physical rehabilitation, and custodial services
and includes drugs, prosthetic devices, and other similar materials
reasonably necessary in the provision of such services, after the
date of the injury." (emphasis added). Thus, the district court
correctly awarded the $280,000 in past medical expenses as an
amount additional to it general damage award. Maxwell v. Soileau,
7
As an alternative position, the Fund asserts that it is
only liable for interest accruing on the $500,000 from "the date
of judicial demand" up to the date the Castillos settled with Dr.
Oms and Montelepre. The plain language of the statute forecloses
this argument. Section 40:1299.47 M clearly states that interest
shall accrue on "a judgment." At the time of the Castillos
settlement with Dr. Oms and Montelepre, there was no judgment.
Consequently, the district court properly determined the time of
accrual.
21
561 So. 2d 1378, 1390 (La. App. 2d Cir. 1990) ("Additionally, it is
well-established that the term `future medical care and related
benefits' includes not only those expenses incurred after the date
of trial but also those medical expenses incurred after the date of
injury but before the date of trial. [numerous citations omitted]
Therefore, under appropriate circumstances the court may award
$500,000 plus all medical expenses incurred from the date of
malpractice without exceeding the limit of recovery set forth in
La. R.S. 40:1299.42.")
The Fund's fourth and final point of error is overruled.8
E. The Bond
The district court found that under F.R.C.P. 62(f) the Fund
was entitled to a stay of judgment without having to post a bond.
The court concluded that the Louisiana legislature intended the
Fund to be exempt from having to post a bond pursuant to the terms
of La. Rev. Stat. § 13:4581. It also reasoned that the provisions
under the Medical Malpractice Act by which judgments are paid
provide sufficient security to protect the Castillos' right to
recover on their judgment. On their cross-appeal, the Castillos
assert that the district court erred by allowing the Fund to stay
execution without posting a bond.
F.R.C.P. 62(f) provides:
8
We note that the Fund also challenges the court's general
and medical expense damages awards as lacking any evidentiary
support. These arguments, however, are foreclosed by admissions
contained in the Fund's response to the Castillos' motion for
summary judgment.
22
In any state in which a judgment is a lien upon the
property of the judgment debtor and in which the judgment
debtor is entitled to a stay of execution, a judgment
debtor is entitled, in the district court held therein,
to a stay as would be available to the judgment debtor
had the action been maintained in the courts of the
state.
F.R.C.P. 62(f). The obvious purpose behind this rule is to allow
appealing judgment debtors to receive in the federal forum what
they would otherwise receive in their state forum. This purpose,
however, is qualified by the requirement that the state forum treat
judgments as a lien, or encumbrance, on the property of judgment
debtors. The purpose behind this requirement is also plain:
judgment creditors must be afforded security while judgment debtors
appeal.
There is no question that the Fund is entitled to stay
judgment without a bond under Louisiana law by virtue of the very
recent amendment to section 13:4581. The amended section provides:
§ 4581. Public boards and commissions not required to
furnish bond
State, parish and municipal boards or commissions
exercising public power and functions, sheriffs,
sheriffs' departments, and law enforcement districts, and
the Patients Compensation Fund, or any officer or
employee thereof, shall not be required to furnish any
appeal bond, or any other bond whatsoever in any judicial
proceedings instituted by or brought against them, that
arise from activities within the scope and course of
their duties and employment.
The amended version was signed by the governor on June 10, 1993 and
became effective August 15, 1993. Thus, applying the amended
23
provision retroactively, we find the Fund to be entitled to a stay
without bond under Louisiana law.9
We believe that the Fund was entitled to a stay of execution
without having to post a bond in federal forum as well. In this
diversity action, great deference must be given to the manifest
desire of the Louisiana legislature to allow the Fund to appeal
without bond. We note that on May 24, 1993, the Louisiana Supreme
Court declared that the Fund was not exempt from posting a bond
under the then unamended section 4581. Rodriguez v. Louisiana
Medical Mutual Insurance Co., 618 So. 2d 390, 394 (La. 1993).
However, on June 10, 1993, the Governor approved the amended
version of section 4581 that effectively overruled this decision by
specifically exempting the Fund from having to "furnish any appeal
bond, or any other bond whatsoever in any judicial proceedings."
Although we are convinced that the judgment against the Fund
is not a lien on the monies contained in the Patient's Compensation
Fund, we believe that the Medical Malpractice Act provides
sufficient security to judgment creditors so as to satisfy the
purpose behind the Rule 62(f) judgment as a lien requirement.10 The
9
We find that section 13:4581's exemption of the Fund from
having to post a supersedeas bond is procedural in nature and
effect and therefore should be applied retroactively to this
litigation. Op. La. Att'y Gen. 93-486 (1993); Cf Southern
Construction Co. v. Housing Authority of the City of Opelousas,
189 So. 2d 454, 458 (La. App. 3rd Cir. 1966) (holding that the
provision of section 13:4581 relating to the furnishing of an
appeal bond is purely procedural and therefore will be applied
retroactively).
10
In Louisiana, the filing of a judgment with the recorder
of mortgages creates a "judicial mortgage." La. Civ. Code art.
3300. A judicial mortgage is established by law to secure a
24
Act provides for the satisfaction of judgments out of the Patient's
Compensation Fund on a semi-annual basis. La. Rev. Stat. 40:1299.42
(B)(3)(a). In the event that the fund would be depleted by the
satisfaction in full of all such judgments, then the amount paid to
each judgment creditor is to be prorated. Id. § 40:1299.44
(A)(7)(c). Any amounts left unpaid are to be paid in the following
semi-annual periods. Id. § 40:1299.44 (A)(7)(d) & (e). Thus
judgment creditors are able to recover on their judgments.
The Castillos' point of error on cross appeal is overruled.
IV. Conclusion
The district court's judgment is AFFIRMED in all respects.
judgment. Id. art. 3284. A judicial mortgage secures a judgment
for the payment of money. Id. art. 3299. Once filed, the
judicial mortgage "burdens" all property of the judgment debtor
that is susceptible of mortgage by paragraphs (1) through (4) of
Louisiana Civil Code Article 3286. Id. art. 3302. The property
interests referenced in those paragraphs deal strictly with
immovable or real property type interests. See Id. art. 3286.
Thus, movable or personal property interests, including monies,
are not subject to a judicial mortgage. See Id.; Succession of
Macheca, 147 La. 164 84 So. 574 (1929). Consequently, the monies
contained in the Patient's Compensation Fund are not subject to a
judicial mortgage.
c:br:opin:92-3601:cf 25