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Sanderford v. Malley

United States District Court, D. Kansas

March 16, 2015

KIMBERLY DEE SANDERFORD, Plaintiff,
v.
STEPHEN MALLEY, M.D., Defendant.

REPORT AND RECOMMENDATION

K. GARY SEBELIUS, Magistrate Judge.

This matter comes before the court upon Plaintiff Kimberly Dee Sanderford's Motion for Approval of Settlement (ECF No. 30), which the district judge has referred to the undersigned for a Report and Recommendation. The motion seeks approval of the parties' private settlement agreement and approval of attorney fees. Both Ms. Sanderford and Defendant Stephen Malley, M.D. have submitted in camera the settlement agreement as well as supplemental briefs regarding approval of attorney fees. On March 13, 2015, the court held a hearing on the motion. Ms. Sanderford appeared personally with her counsel, Thomas E. Hankins. Dr. Malley appeared through counsel, Diane L. Waters. Based on the motion, the materials submitted in camera, and the evidence presented during the hearing, the magistrate judge respectfully recommends the district judge deny the motion as to Ms. Sanderford's request that the court approve the settlement agreement and grant the motion as to the request that the court approve the parties' respective attorney fees.

I. The Settlement Agreement

Ms. Sanderford seeks court approval of her settlement agreement with Dr. Malley. Ordinarily, a federal court need not approve a settlement reached by opposing parties.[1] In the supplemental briefs submitted to the magistrate judge in camera, specify that the parties seek court approval pursuant to K.S.A. 40-3410. That statute requires court approval of medical malpractice settlements under certain circumstances:

When the insurer of a health care provider or inactive health care provider covered by the fund has agreed to settle its liability on a claim against its insured or when the self-insurer has agreed to settle liability on a claim and the claimant's demand is in an amount in excess of such settlement, or where a claim is against an inactive health care provider covered by the fund who does not have liability insurance in effect which is applicable to the claim, or where it would otherwise be in the best interest of the fund, the claimant and the board of governors may negotiate on an amount to be paid from the fund. The board of governors may employ independent counsel to represent the interest of the fund in any such negotiations. In the event the claimant and the board of governors agree upon an amount the following procedure shall be followed:... (c) At such hearing, the court shall approve the proposed settlement if the court finds it to be valid, just and equitable.

In Whittington v. Newman Regional Health Center, District Judge Daniel D. Crabtree found that the statute does not require court approval of settlements that do not impose liability on the Kansas Heath Care Stabilization Fund (the Fund), which provides excess medical malpractice coverage.[2] The parties in Whittington argued the first sentence of K.S.A. 40-3410 extends the statute to any medical malpractice settlement involving a health care provider covered by the Fund. Judge Crabtree rejected this interpretation: "The provision they cite provides that the Court must approve a medical malpractice settlement when, among other circumstances, the insurer of a health care provider... covered by the fund has agreed to settle its liability on a claim against its insured... and the claimant's demand is in an amount in excess of such settlement.'"[3] Judge Crabtree found that under the statute, the requirement for court approval arises when the "claimant and the [Fund's] board of governors agree an amount to be paid [from the Fund].;"[4] Therefore, "to trigger the statute's court approval provision, the settlement, at a minimum, must involve a decision by the Fund's board of governors to pay money from the Fund itself."[5]

Here, the parties' settlement does not impose liability on the Fund. In the court's order setting this matter for a hearing, it directed the parties to review Whittington and then clarify in their supplemental briefs whether they still sought court approval of the settlement and if so, the legal basis for seeking court approval.[6] The parties state that they do still seek court approval of the settlement, and in support, they advance the same interpretation of the statute considered and rejected by Judge Crabtree in Whittington. Dr. Malley's supplemental brief states that he is a health care provider covered by the Fund. He and his insurer agreed to settle his liability. The board of governors met about this case, sent representatives to mediation, agreed with the settlement plan, and reached an agreement that the Fund would pay nothing. The briefs do not mention Whittington or set forth any legal argument as to why the judges presiding over this matter should reach a different conclusion from Judge Crabtree. For the same reasons set forth in Whittington, the undersigned finds that because this settlement does not involve a decision by the board of governors to pay money from the Fund itself, the statute does not require court approval of the settlement. The magistrate judge recommends the district judge deny the motion as to the request to approve the settlement.

II. Attorney Fees

K.S.A. 7-121b(a) requires the court to approve attorney fees in medical malpractice cases. Under the statute, the court must consider the following factors when determining whether the attorney fees are reasonable:

(1) The time and labor required, the novelty and difficulty of the questions involved and the skill requisite to perform the legal service properly.
(2) The likelihood, if apparent to the client, that the acceptance of the particular employment will preclude other employment by the attorney.
(3) The fee customarily charged in the locality for similar legal services.
(4) The amount involved and the results obtained.
(5) The time limitations imposed by the client or by the ...

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