Bad faith claimed against risk retention group during med-mal settlement. $35M.

Facts and Background

• Facts and Background:

  Claimant Snover, at age 26  suffered a cardio-respiratory arrest following delivery of her baby by defendant Aruna Gupta, M.D. on Dec 10, 2018. Plaintiff filed a medical-malpractice case against Dr. Gupta, the hospital and the anesthesiologist in Nov 2019. In early 2021, defendant anesthesiologist settled with plaintiff for $1 million. Hospital later settled for $2.5 million, leaving Dr. Gupta as the only remaining defendant. In June 2021, plaintiff filed a $1 million CCP Sec 998 offer to Dr. Gupta, based on an Interrogatory response that indicated a policy with CARE RRG as a $1 million policy. In fact, it was a "burning limits" policy. CARE RRG is a risk retention group, not an insurance company and it issues policies with defense costs inside the limit, so-called burning limits policies.

  On June 30, 2021, Dr. Gupta filed an MSJ with a declaration from OB Steve Rad, M.D. Plaintiff filed an opposing OB declaration and on Aug 9, 2021, the Court in Riverside County denied the MSJ. In Nov 2021, plaintiff and Dr. Gupta attended a mediation where it was revealed that the policy was declining benefits based on costs of defense. With this information, plaintiff said she would accept an amount between $700,000 and $800,000.

  CARE RRG claims manager, David Prisco offered $100,000. Unknown to plaintiff at the time, Dr. Gupta had sent a letter to Mr. Prisco on Sept 10, 2021, following the MSJ denial, giving consent to settle for an amount within her declining balance limit. In Sept 2022, plaintiff made a new CCP Sec 998 offer to settle for the available balance of the policy, followed by a letter that offered to settle all claims, including the husband’s loss of consortium claim and any future wrongful death claim for the available balance of the policy and offered to keep the demand open to the end of December 2022 to allow for depositions of three liability experts – Dr. Rad and plaintiff’s two OB/MFM experts. This offer was made directly to CARE RRG through David Prisco, the claim manager, who did not respond to the offer beyond re-issuing a $100,000 offer and giving three days to respond.

  Between Jan 9 and Mar 13, 2023, 16 expert depositions were taken (8 plaintiff and 8 defense). On Mar 12, 2023, CARE’s coverage counsel offered “the balance of the policy” of $724,716.26, which was rejected.  The case went to trial in Dept 5, Riverside Superior Court. Trial started on Apr 10. On May 19, 2023, the jury returned a 12-0 verdict in favor of plaintiff for $17,458,474, which included $10 million in non-economic damages. The economic damages were based on medical care costs for the plaintiff who requires 24/7 care, and future loss of earnings.

  After several post-trial motions to apply the offsets from prior settlements and reduction of non-economic damages, on Nov 20, 2023, the court entered judgment against Dr. Gupta for $4,353,225 plus $1,061,660 in pre-judgment interest based on the CCP Sec 998 offer from June 2021. After the entry of judgment, CARE RRG notified Dr. Gupta that the entire balance of her insurance policy was spent through trial and she was now responsible for any further costs. Dr. Gupta then gave an assignment of her bad-faith rights against CARE RRG to plaintiff, and also filed her own first-party bad-faith claim for both contractual and special damages.

  Plaintiff Adria Snover has filed an appeal of the judgment entered by the trial court, claiming that it incorrectly applied the prior settlements offset, which would increase the judgment by another $2 million, plus additional pre-judgment interest. That appeal is currently pending.

• Plaintiff's Contentions:

  Claimant contentions: After the MSJ was denied and Dr. Gupta gave consent to settle, CARE RRG acted in bad faith by not settling the case in Nov 2021 for the available balance of the policy. By then, CARE also had the opinion of another expert OB/MFM, Dr. Larry Griffen, who had been used for consults in other cases and who gave the opinion that Dr. Gupta was negligent for not delivering Ms. Snover earlier based on her very high blood pressure and diagnosis of pre-eclampsia.

  CARE was also told by defense counsel that Dr. Rad would not make a good witness at trial and another expert, Dr. Gene Park, who was retained and listed on the designation of experts, was also not supportive of Dr. Gupta’s care.  Further, that the decision by Mr. Prisco, when the case did not settle on Mar 13, to instruct defense counsel to spend all of the remaining policy during trial, leaving nothing for Dr. Gupta or plaintiff after trial, was malice.

• Defendant's Contentions:

  CARE RRG relied on advice of counsel, Wood Smith, Henning & Berman, who they hired for defendant Dr. Gupta, and throughout the litigation, defense counsel told them that the case was defensible and only changed their opinion after expert depositions were taken, at which time the balance of the policy was offered to settle.

  CARE RRG claimed that the liability of Dr. Gupta was never reasonably clear and that therefore they were not acting in bad faith.