Palacio, et al v. United States of America

Filing 155

FINDINGS OF FACT AND CONCLUSIONS OF LAW signed by Judge John A. Mendez on 10/28/2015 ORDERING Defendant is ORDERED to pay I.P. (through her guardian ad litem, Facundo Palacio Diaz) $9,359,305 in economic and noneconomic damages; Defendant is ORDERED to pay Micaela Palacio $250,000 in noneconomic damages; the Gov't has stated its intent to invoke CA's periodic payment statute, CA Code of Civil Procedure section 667.7; the Court GRANTS the Govt's request for further briefing on this subject in order to advise the Court about the propriety of applying section 667.7 and how periodic payments would affect final judgment; Both parties are to prepare briefs to be filed within 10 days from the date of this Order; the Court may set this matter for a further hearing if it so requires. (Reader, L)

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UNITED STATES DISTRICT COURT
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EASTERN DISTRICT OF CALIFORNIA
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I.P., A MINOR, BY AND THROUGH
HER GARDIAN AD LITEM, FACUNDO
PALACIO DIEZ; MICAELA
PALACIO,

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Plaintiffs,

No.

2:13-cv-01012-JAM-CKD

FINDINGS OF FACT AND CONCLUSIONS
OF LAW

v.
UNITED STATES OF AMERICA,
Defendant.

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I.

BACKGROUND AND PROCEDURAL HISTORY

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Plaintiff I.P., a minor, and her mother, Micaela Palacio
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(collectively, “Plaintiffs”) originally sued the hospital where
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I.P. was born for negligently failing to perform a timely C24
section, causing I.P. brain damage that rendered her severely and
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permanently disabled.

That case proceeded in Lassen County

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Superior Court.

Upon learning that the United States employed

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the two doctors involved in the delivery – Drs. Paul Davainis and
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Paul Holmes – Plaintiffs brought this action against the United

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States (“Defendant”) under the Federal Tort Claims Act (“FTCA”),

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28 U.S.C. § 2671 et seq.

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pursuant to 28 U.S.C. § 1346(b).

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This Court is vested with jurisdiction

Plaintiffs’ federal complaint alleged three causes of

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action: negligence as to I.P., and negligence 1 as well as

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negligent infliction of emotional distress as to Micaela Palacio.

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Facundo Palacio Diaz, I.P.’s father, also asserted a claim

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against the hospital in the Lassen County case, but appears in

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this FTCA action only as I.P.’s guardian ad litem.

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this Court confirmed a settlement between the hospital, I.P. and

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her father.

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trial.

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In July 2015,

In the federal action, the parties proceeded to

This Court conducted a nine-day bench trial beginning

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September 24, 2015.

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percipient witness including I.P.’s parents, both doctors, and a

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nurse, as well as expert testimony on each doctors’ negligence,

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causation, and several damages issues.

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the parties’ stipulations reached prior to and during trial

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(Docs. ##98, 131) as to certain causation and damages issues.

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The parties offered testimony from

The Court also considered

After the close of Plaintiffs’ case, the government moved

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for partial judgment as to the issue of Dr. Holmes’s negligence.

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The Court agreed with the findings of fact and conclusions of law

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argued and submitted by the government (Doc. #153), and granted

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the motion pursuant to Federal Rule of Civil Procedure 52(a)(1)

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As confirmed at trial, Mrs. Palacio abandoned her negligence
claim and asserted only a claim for negligent infliction of
emotional distress.
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and (c).

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negligent and his actions did not result in injury to Plaintiffs,

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all issues involving Dr. Holmes are resolved and this Order does

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not address them.

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Because the Court concluded that Dr. Holmes was not

As to Dr. Davainis, the Court’s findings of fact and
conclusions of law pursuant to Rule 52 follow.

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II.
1.

FINDINGS OF FACT AS TO LIABILITY

Banner Health is a nonprofit corporation that owns

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BLMC, a 25-bed hospital that provides medical care in Lassen

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County, California.

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2.

Micaela Palacio presented to BLMC around 11:00 PM on

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the evening of April 29, 2012, in active labor.

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weeks of gestation and had delivered two prior children vaginally

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without complications.

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3.

She was at 39

Facundo Palacio Diaz is I.P.’s father and Mrs.

Palacio’s husband.
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Mrs. Palacio and her husband were both 34 years old as

of April 2012.
5.

In April 2012, Dr. Paul Davainis and Dr. Paul Holmes

were Northeastern Rural Health Clinic employees.
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Northeastern Rural Health Clinic is located in

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Susanville, California and is a Federally Qualified Health

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Center.

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7.

Dr. Davainis and Dr. Holmes are doctors with a

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specialty in Family Medicine who were in April 2012 deemed

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federal employees pursuant to the Federally Supported Health

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Centers Assistance Act.
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In April 2012, Kelly DelCarlo was a registered nurse

and a Banner employee.
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Ms. DelCarlo and Ms. Ginger Leeth were working at BLMC

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the evening of April 29, 2012 and provided nursing care to Mrs.

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Palacio.

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10.

Dr. Davainis was on call for Obstetrics during the

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evening of April 29, 2012.

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was called to come in by the nursing staff around 2:00 AM on the

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morning of April 30, 2012.

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Dr. Davainis was at his home when he

At that time, the nursing staff informed him that Mrs.

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Palacio had dilated to 9 cm and that her membranes had

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spontaneously ruptured.

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Palacio remained at 9 cm dilation from 2:00 AM until the C-

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section.

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The nursing notes state that Mrs.

Dr. Davainis had not provided Mrs. Palacio’s prenatal

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care, and the early morning of April 30 was the first time the

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two had met.

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he was not generally familiar with her or her medical history.

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13.

He examined her medical records that morning, but

The nurses and Dr. Davainis monitored I.P.’s wellbeing

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prior to birth by using an external electronic fetal heart rate

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monitor.

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approximately 11:06 PM and 5:07 AM.

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the entire strip when he arrived, and continued to examine it

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throughout Mrs. Palacio’s labor.

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The heart rate was measured on a tracing strip between
Dr. Davainis looked back at

The first stage of labor involves dilation of the

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cervix.

Once the cervix is fully dilated, labor moves to the

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second stage, in which contractions push the baby down the birth

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canal.
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At 2:15 AM when Dr. Davainis arrived, it was expected

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that Mrs. Palacio would fully dilate and deliver within the hour,

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because she had dilated rapidly since arriving at the hospital,

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she had a history of two prior vaginal deliveries without

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complication, and in general, the last part of dilation is the

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most rapid.

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When Dr. Davainis examined Mrs. Palacio around 2:15 AM,

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he determined that she had dilated to between 8 and 9 cm and that

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the cervix “seemed loose.”

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Around 2:15 or 2:30 AM, Mrs. Palacio had an urge to

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push, so Dr. Davainis turned down the epidural and directed her

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to attempt pushing.

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caused swelling of the cervix.

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up and the swelling subsided.

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They then abandoned the attempt because it
Dr. Davainis turned the epidural

Over the next hour to hour and a half, Dr. Davainis

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observed that Mrs. Palacio went from “between 8 and 9 cm” to 9 cm

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dilated.

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her position.

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The nurses administered oxygen, IV fluids, and changed

At 4:00 AM, Mrs. Palacio had a “rim of cervix.”

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cervix did not dilate any further.

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the second stage of labor, because her cervix never fully

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dilated.

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The

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Mrs. Palacio never reached

Between 4:00 and 5:00 AM, Dr. Davainis had Mrs. Palacio

resume pushing as he attempted to reduce the cervix.
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Dr. Davainis felt the baby’s head slightly descending

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at times between 4:00 and 5:00 AM.

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might be in occiput posterior position, which could slow labor,

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or that there was cephalo-pelvic disproportion, which could
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He considered that the baby

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prevent vaginal delivery.
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At 5:00 AM, Dr. Davainis called for a C-section.

He

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described his reasons in a preoperative note recorded at 5:01 AM,

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indicating that the fetal heart rate tracing was worsening and he

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felt that “a vaginal delivery [was] too far off for this baby and

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that she will have a difficult time tolerating any prolonged

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pushing.”

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would] be proven.”

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He also was “afraid [cephalo-pelvic disproportion

Dr. Holmes was at his home when he was called at 5:00

AM on April 30, 2012, to assist with the delivery of I.P.
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After Dr. Davainis called for a C-section, the nurses

prepared Mrs. Palacio for surgery.
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In preparing her for surgery, they disconnected the

fetal heart rate monitor at approximately 5:07 AM.
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I.P. experienced a hypoxic ischemic injury of the acute

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profound pattern due to near-total cessation of oxygenated blood

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through the umbilical cord sometime between approximately 5:08

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and 5:13 AM.

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This injury led to neonatal encephalopathy, which

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ultimately resulted in spastic quadriplegic cerebral palsy,

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cortical visual impairment, and severe global development delay.

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The nurses reconnected Mrs. Palacio to the fetal heart

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monitor once inside the operating room, around 5:13 AM.

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nurses were unable to find a fetal heart rate.

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observed a heart rate, but a very slow one.

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The

Dr. Davainis

Dr. Davainis immediately thereafter performed a C-

section on Mrs. Palacio, assisted by Dr. Holmes.
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I.P.’s time of birth was sometime between 5:24 and 5:28
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AM.

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of life, respectively.

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I.P. had APGAR scores of 0, 2, and 3 at 1, 5, and 10 minutes

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and was assisted by hospital staff in the resuscitation.

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I.P. was later transferred to U.C. Davis Medical Center

NICU.

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After I.P. was delivered, Dr. Holmes resuscitated her

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I.P. was cared for at U.C. Davis Medical Center from

April 30, 2012 to June 5, 2012.

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Further findings of fact are described and explained below.

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III.

OPINION AS TO LIABILITY

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A.

Legal Standard

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The FTCA makes the United States liable for the negligent

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actions of its employees.

28 U.S.C. § 1346(b)(1).

Because the

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allegedly negligent medical care in this case was provided in

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this state, California law applies.

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Telles-Hernandez v. United States, 665 F. Supp. 2d 1064, 1076

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(N.D. Cal. 2009) (citing Richards v. United States, 369 U.S. 1,

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11-12 (1962)).

Id.; Hernandez ex rel.

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To prove negligence, Plaintiffs must demonstrate by a

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preponderance of the evidence that (1) Dr. Davainis had a duty

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to use such skill, prudence, and diligence as other members of

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his profession commonly possess and exercise (the standard of

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care); 2 (2) he breached that duty; and (3) the breach was the

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The evidence in this case demonstrated agreement between the
parties that the standard of care applicable in this case was
that of an obstetrician (not a family practice physician) and
that this standard of care is the reasonable degree of skill,
knowledge and care ordinarily possessed and exercised by
obstetricians under similar circumstances.
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proximate cause of (4) Plaintiffs’ injuries.

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76 Cal.App.4th 601, 606 (1999) (citing Budd v. Nixen, 6 Cal.3d

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195, 200 (1971) & Gami v. Mullikin Med. Center, 18 Cal.App.4th

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870, 877 (1993)); Mgmt. Activities, Inc. v. United States, 21 F.

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Supp. 2d 1157, 1174 (C.D. Cal. 1998).

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B.

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Analysis
1.

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Hanson v. Grode,

Negligence of Dr. Davainis
a.

Duty and Breach of Standard of Care

Dr. Davainis breached a duty owed to his patients if he

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failed to “exercise that reasonable degree of skill, knowledge

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and care ordinarily possessed and exercised by members of [his]

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profession under similar circumstances.”

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Hosp., 5 Cal.App.4th 208, 215 (1992); see Burgess v. Superior

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Court, 2 Cal.4th 1064, 1069 (1992) (holding that negligence as to

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delivery of a fetus also breaches a duty owed to the mother).

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The central issue in dispute is whether Dr. Davainis complied

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with the standard of care by calling for a C-section at 5:00 AM,

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or whether that standard required him to call for a C-section

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earlier.

Alef v. Alta Bates

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In general, the evidence showed that the standard of care

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indicates a C-section in the face of arrest of labor and fetal

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intolerance to labor.

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(Drs. Frank Manning and Maurice Druzin, respectively) opined that

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there were medical indications for a C-section as early at 3:00

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AM and that those indications persisted throughout Mrs. Palacio’s

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labor until delivery.

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Both Plaintiffs’ and Defendant’s experts

The government argues that at best the evidence shows that a
C-section before 5:00 AM was permissible, not required.
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The

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government further contends that the standard of care did not

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require a C-section before 5:00 AM, because labor had progressed

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up to that point and the baby was tolerating labor sufficiently.

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Contrary to the government’s representations, labor in this

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case was arrested much earlier than 5:00 AM, and under the

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circumstances, the standard of care required Dr. Davainis to call

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for a C-section around 4:00 AM.

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defined arrest of labor.

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labor occurs where the cervix dilates at less than 1.5 cm per

Only one witness, Dr. Druzin,

Dr. Druzin testified that arrest of

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hour.

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cervix dilated (at most) 1.5 cm over two hours: between 2:00 and

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4:00 AM.

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Dr. Manning did, that the progress reported by Dr. Davainis was

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not appreciable and the standard of care required Dr. Davainis to

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recognize that labor was arrested by at least 4:00 AM.

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According Dr. Davainis’s own testimony, Mrs. Palacio’s

The Court therefore concludes, as Plaintiff’s expert

Once labor was arrested, it was unreasonable for Dr.

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Davainis to have Mrs. Palacio push for an hour in the presence of

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worsening fetal wellbeing.

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him to make one last attempt to vaginally deliver this fetus at

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4:00 AM, but the evidence showed that he fell below the standard

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of care by waiting until 5:00 AM to intervene.

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The standard of care may have allowed

The Court reaches this conclusion after a thorough and

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careful consideration of the trial record, as well as an

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assessment of and conclusions about the credibility and relative

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persuasiveness of witnesses and exhibits.

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The record here reveals numerous divergent and contradictory

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opinions regarding interpretation of the fetal heart rate tracing

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and what the standard of care required Dr. Davainis to do in
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response.

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strip had a different interpretation - from the nurses present

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during labor to Dr. Davainis to the testifying experts.

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experts even appeared to have had a difficult time interpreting

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the strip consistently over time, evidenced by the divergence in

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their descriptions of the strip during depositions and at trial.

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In fact, almost every individual who analyzed this

The

The Court finds it unnecessary and impractical to choose a

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particular interpretation from this mess of opinions.

The range

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of opinions appears to be a normal consequence of asking multiple

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individuals to interpret a strip minute-by-minute; indeed, Dr.

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Ivonne Wu testified that interpretation of fetal heart rate

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tracings can be subjective, that interrater reliability is poor,

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and that the same person may view a strip differently at

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different times.

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borne out in this case.

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These reliability issues appear to have been

But the fact that fetal heart rate tracings are subjective

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and unreliable does not make them worthless.

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testified, the standard of care required using and interpreting

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this tool.

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interpretation of the strip included at least the following:

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(1) the strip showed a Category I tracing from its inception

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until about 1:30 AM; (2) the strip then depicted a Category II

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tracing from 1:30 AM until at least 4:45 AM; (3) Category II

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meant, among other things, that the tracing was no longer in

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Category I; (4) Category I would have been a good indicator that

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the baby was doing well, and by 1:30 AM, Dr. Davainis no longer

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had that reassurance; (5) the fetus was increasingly stressed by

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the labor (evidenced by some combination of the type, frequency,

As each witness

And the witnesses generally agreed that a reasonable

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and length of decelerations and the decrease in variability); and

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(6) at some point – a point that no one could predict – this

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increasingly stressed fetus would be unable to compensate and

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would metaphorically “fall off the cliff.”

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So the situation faced by Dr. Davainis raises the following

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questions: by 4:00 AM, why wait?

Why wait when labor has been

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arrested for over an hour without apparent explanation and no

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appreciable progress?

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produced swelling of the cervix?

Why wait when the previous pushing attempt
Why wait with a patient whose

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medical history is unfamiliar and when a language barrier impedes

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communication?

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– especially when it is impossible to determine where the cliff

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is?

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were clear medical indications for a C-section?

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Why wait when at every time between 3:15 and 5:00 AM, there

Dr. Manning 3 offered credible and reasoned answers to these

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Why wait for the fetus to get closer to the cliff

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The government attempts to cast Dr. Manning’s trial testimony
as a devious scheme to manufacture causation and as evidence that
he is not qualified to offer a medical opinion. The Court
disagrees. The Court found his testimony at trial to be
credible, forthcoming, and professional. As a Professor of
Obstetrics with over forty years of experience, Dr. Manning is
qualified to opine on the issues in this case. Also, where the
government contends that Manning changed his answers between
deposition and trial, the Court finds no important discrepancies.
For example, the government pointed out that Manning testified at
his deposition that the strip became Category III at 4:50 AM,
whereas at trial he stated it was 4:45 AM. As discussed above,
the Court finds it unnecessary and impractical to decide what
exactly the strip showed at each minute or when exactly the strip
moved from Category II to Category III. The government also
contends that Dr. Manning changed his testimony at trial to
indicate that a C-section was required by 3:15 AM versus 4:50 AM
(which he supposedly testified to at deposition). This
characterization of his testimony and his statements at
deposition is inaccurate; the thrust of his opinion has always
remained the same: worsening fetal wellbeing required Dr.
Davainis to call for a C-section when it became clear that labor
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questions.

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Davainis to recognize the warning signs of a worsening fetal

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condition and intervene in the face of minimal progress.

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Davainis had many opportunities to intervene starting around 3:15

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AM, and he took an unreasonable risk by waiting in the presence

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of all the factors discussed above.

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He opined that the standard of care required Dr.

Dr.

Dr. Manning testified that in certain circumstances, it

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would in fact be reasonable to attempt a course of pushing even

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in the presence of worsening fetal distress.

Those circumstances

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include where the patient is experiencing rapid progress in

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labor, such that she is likely to deliver before a C-section

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could be completed.

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not progressing rapidly.

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appreciable progress for over an hour - and the fetal heart rate

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was worsening.

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But in this case, Mrs. Palacio’s labor was
To the contrary, there had been no

Dr. Druzin, in contrast, was unable to offer a reasoned

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answer to the questions posed above.

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of how long it was permissible to wait under the circumstances,

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Dr. Druzin stated that there is no standard of care governing how

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long Dr. Davainis should have waited.

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you’ve got to call it,” and Davainis called it.

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When pressed on the subject

Simply put, “at some point

The Court cannot accept that no standard of care governed

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Dr. Davainis’s decision.

“No standard” cannot possibly be the

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standard applied in this legal context.

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was arrested. This reliable and credible opinion is what the
Court has considered herein in forming its findings and
conclusions.
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The Court is also skeptical of Dr. Druzin’s testimony 4 that

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waiting for a vaginal delivery was reasonable because Dr.

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Davainis was “hoping for” and “expecting” such a delivery.

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Although the Court acknowledges a role for medical judgment in

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these situations, Dr. Druzin’s analysis would make the standard

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of care entirely subjective.

That is, under Dr. Druzin’s theory,

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a doctor would always meet the standard of care so long as he

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recounted a hope of vaginal delivery or stated that he

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subjectively believed that there was progress, no matter how

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slight.

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The Court also rejects this testimony even assuming that Dr.

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Davainis’s expectation of a successful vaginal delivery between

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4:00 and 5:00 AM was most likely objectively accurate.

The Court

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A further reason for the Court’s partial skepticism toward Dr.
Druzin’s testimony is that he did not appear unbiased. He
testified that he does 99.9% of his medical-legal work for
defendants, indicating that his opinion may be colored by the
financial benefit of providing defense-friendly testimony in
these kinds of cases. He also revealed himself to be more an
advocate for the defense than a neutral observer. For instance,
he became argumentative with Plaintiffs’ attorney and the Court
when pressed about the divisive issues in this case, and made at
least one sarcastic comment impugning plaintiff-side work in
medical malpractice cases. The Court does not however wholly
disregard this expert’s testimony (since he is very well
qualified in this area), and relies on it in part as discussed
throughout this opinion. The Court has discounted his opinion in
areas where he became argumentative and appeared to adapt his
answers to counter Plaintiffs’ theories. For example, the Court
did not find credible his testimony that by “stalled” labor, he
meant “slowly progressing” labor in response to questioning about
whether arrest of labor justified a C-section in this case.
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accepts the fact (agreed to by all witnesses) that it is possible

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for a patient similar to Mrs. Palacio to push past a rim of

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cervix and deliver vaginally.

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that, in general, a fetus can withstand a significant amount of

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stress and that it is possible – or even very likely – that a

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stressed fetus showing a Category II tracing for long periods

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will not develop cerebral palsy.

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possibilities do not absolve the government of liability.

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Indeed, an unlikely event is not always unforeseeable.

The Court also accepts the fact

But these objective

And here,

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the harm was foreseeable at least by 4:00 AM, because of the

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worrying and worsening signs of fetal distress and the arrest of

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labor for over an hour.

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Dr. Davainis took an unreasonable risk by attempting pushing

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for a full hour rather than calling for a C-section around 4:00

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AM.

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to take this risk under the circumstances fell below the required

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standard of care.

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warning signs at 4:00 AM (i.e., unexplained arrest of labor for

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over an hour and a progressively worsening fetal heart rate) that

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the standard of care required him to consider and act upon.

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hoped and expected that these warning signs would not spell

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disaster for I.P.

The Court agrees with Dr. Manning that Dr. Davainis’s choice

Dr. Davainis overlooked or discounted the

He

But they did.

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Dr. Druzin also testified that waiting for a vaginal

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delivery during that hour was reasonable because Dr. Davainis

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observed progress in the labor (i.e., the head moving down

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slightly with pushing) and because the variability on the fetal

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heart monitor tracing showed that the baby was tolerating labor.

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The Court finds Dr. Druzin’s testimony less persuasive than
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that of Dr. Manning.

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progressing based on the baby’s head moving slightly contradicts

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Dr. Druzin’s other testimony defining arrest of labor as dilation

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of less than 1.5 cm per hour.

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dispute that the first stage of labor was arrested, since by all

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accounts the cervix dilated much slower than 1.5 cm per hour.

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finding of arrest of labor is also bolstered by Dr. Davainis’s

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observation prior to 4:00 AM of swelling of the cervix upon

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pushing.

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The statement that labor was still

No witness here could reasonably

A

The Court agrees with Dr. Manning that labor was

arrested and the reported progress was not appreciable.
Moreover, the Court was not convinced by Dr. Druzin’s

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testimony on direct examination that the presence of at least

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some variability meant that the baby was fine and there was no

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need to imminently intervene.

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well as Druzin’s subsequent testimony on cross examination,

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militate to the contrary.

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Druzin included – opined that the fetal heart rate was worsening.

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No one thought the tracing would improve; everyone thought it

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would continue to deteriorate.

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increasingly worrisome signs in his notes that morning.

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warning signs were there and Dr. Davainis should have heeded

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them, particularly when the danger of veering off course if the

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signs are ignored or misread, is so significant.

The weight of the evidence, as

In particular, every witness – Dr.

Dr. Davainis himself noted the
The

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The Court does not reach its conclusions herein lightly and

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recognizes the possibility that its decision today could subject

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physicians to criticism and possible liability in cases involving

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the subjective interpretation of fetal heart rate tracings.

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standard of care indeed allows for a range of reasonable
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The

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interpretations and differences in close calls of judgment, and a

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court should not venture to second guess a doctor whose decisions

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fall within these bounds.

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of this case, the Court concludes that the evidence and testimony

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presented at trial was sufficient to establish that Dr.

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Davainis’s decision to wait until 5:00 AM to call for a C-section

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breached the standard of care.

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favored Plaintiffs’ persuasive explanation of this standard and

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how it was breached.

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But under the specific circumstances

The weight of the evidence

For these reasons, the Court finds that the standard of care

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required Dr. Davainis to be more conservative and to order a C-

12

section around 4:00 AM or shortly thereafter.

13

b.

Causation

14

As to causation, the parties have stipulated that

15

1. Neuroradiologists analyzing the May 1, 2012
ultrasound and the May 7, 2012 MRI of I.P.’s brain
concluded that those images are consistent with I.P.
having experienced hypoxic ischemic injury of the
acute profound pattern.

16
17
18
19

2. A hypoxic ischemic injury of the acute profound
pattern results from a near-total cessation of
oxygenated blood reaching the fetus for a short amount
of time, typically 10 to 20 minutes.

20

22

3. These imaging results are consistent with I.P.
having experienced a sentinel event such as a cord
compression occurring within the last 15 to 20 minutes
prior to birth.

23

Despite this stipulation, the government offers two theories in

24

an attempt to defeat causation.

21

25

Neither is persuasive.

First, the government argues that even if Dr. Davainis did

26

not meet the standard of care, Plaintiffs cannot show that

27

compliance with the standard would have prevented I.P.’s

28

injuries.

The reasoning is that even if Dr. Davainis had called
16

1

for a C-section at 4:50 AM and properly performed it within

2

thirty minutes, I.P. still would have been injured.

3

discussed above, the Court finds that the standard of care

4

required Dr. Davainis to call for a C-section around 4:00 AM.

5

Had he done so, I.P. would have been delivered well before 5:08

6

AM, which is the earliest I.P.’s injuries are estimated to have

7

occurred.

8
9

But as

The Court therefore rejects this theory.

The government has also argued that the word “sentinel” in
the third stipulated fact above indicates that the injury was not

10

foreseeable, which would therefore defeat a showing of proximate

11

cause.

12

“sentinel” means an “unanticipated” event that is “not related to

13

the natural history of the disease.”

14

by Dr. Druzin’s testimony, because the evidence at trial

15

established that cord compression is in fact related to labor and

16

childbirth, and occurs to varying degrees in every labor. 5

17

Moreover, the evidence showed that the standard of care required

18

Dr. Davainis to be alert to signs of fetal distress – such as the

19

possibility of cord compression – by using the electronic fetal

20

heart rate monitor.

21

been fully predictable, it cannot be said that I.P.’s injuries

22

were unexpected given the risks that Dr. Davainis took between

23

3:15 and 5:00 AM.

26
27
28

The Court is not persuaded

While the extent of the harm may not have

As the parties’ stipulation strongly implies, there is clear

24
25

The argument relies on Dr. Druzin’s testimony that

5

Dr. Druzin also admitted on cross examination that the Joint
Commission defined “sentinel event” by stating, “Such events are
called sentinel because they signal the need for immediate
investigation and response, and that each accredited organization
is strongly encouraged, but not required to report sentinel
events to the Joint Commission.”
17

1

proof beyond a preponderance of the evidence that I.P.’s injuries

2

were proximately caused by Dr. Davainis’s negligence.

3
4
5
6

IV.

CONCLUSIONS OF LAW AS TO LIABILITY

For the reasons set forth above, the Court concludes as
follows:

7

1.

8

mother.

9

2.

10
11

Dr. Davainis owed a duty of care to I.P. and her

Dr. Davainis was negligent as to both Plaintiffs in

failing to call for a C-section until 5:00 AM.
3.

That negligence caused the injuries to Plaintiffs.

12
13
14

V.
1.

FINDINGS OF FACT AS TO DAMAGES

Because of her injuries, I.P. will never be able to

15

conduct the activities of daily living or otherwise care for

16

herself.

17

2.

She will never be able to speak.

18

3.

She will never be able to walk.

19

4.

She will never be able to work.

20

5.

I.P. will always require 24-hour/day care.

She cannot

21

eat and must be fed through a gastronomy tube.

22

swallow and requires frequent suctioning, including during the

23

night.

24
25

6.

She cannot

Her need for this care will continue for her entire life.
I.P. is at risk for complications, including pneumonia,

seizures, and joint dislocation and deformity.

26

7.

I.P. turned three years old on April 30, 2015.

27

8.

On or about November 20, 2012, I.P. and Mrs. Palacio

28

presented administrative tort claims to the Department of Health
18

1
2
3
4
5
6
7
8
9
10
11
12

and Human Services.
9.

Mrs. Palacio’s administrative claim sought $500,000 for

severe emotional distress.
10.

I.P.’s administrative claim sought $25,000,000 for

personal injury.
11.

Mr. Palacio Diaz did not present an administrative tort

claim to the Department of Health and Human Services.
12.

Mr. Palacio Diaz brought a loss of consortium claim in

the Superior Court action against Banner Health.
13.

Mr. Palacio Diaz and I.P. entered into a settlement

with Banner Health before trial in the amount of $500,000.
14.

At the time of trial, Medi-Cal had issued a lien for

13

payments made by the Medi-Cal program for medical services

14

related to I.P.’s injury of $87,521.

15

Further findings of fact are described and explained below.

16
17

VI.

18

OPINION AS TO DAMAGES

According to the proof at trial, Dr. Davainis’s negligence

19

has caused and will cause I.P. economic and noneconomic damages.

20

As to the amounts of those damages, the parties initially offered

21

separate life care plans and costs for each specific item needed

22

for I.P.’s future medical care.

23

effect of future health insurance on damages.

24

They also argued about the

After trial was underway, the parties reached a stipulation

25

(Doc. #131) that resolved most issues related to future medical

26

care.

27

government’s life care plan prepared by expert Tim Sells, except

28

for attendant care.

Plaintiffs accepted the items and costs in the

Plaintiffs also agreed to the government’s
19

1

method of taking insurance into account.

2

agreed upon by the parties therefore include expenses for future

3

insurance premiums and out-of-pocket costs, as well as a

4

corresponding offset for future insurance benefits.

5

also agreed on four calculations of the present cash value of

6

these future care costs (except attendant care), contingent on

7

the Court’s determination of I.P.’s life expectancy and the net

8

discount rate.

9
10

The future-care costs

The parties

Pursuant to the parties’ stipulation, the only remaining
issues as to future damages before the Court are:

11

1.

I.P.’s life expectancy;

12

2.

What type of attendant care I.P. needs;

13

3.

The present cash value for this future attendant care;

14

4.

The amount of I.P.’s projected lost earnings; and

15

5.

The net discount rate(s) to apply.

16

The Court addresses each of these items below.

17

considered together as they involve similar issues.

18

also determines the amount of past economic and noneconomic

19

damages, to which the parties have not stipulated.

Items 3 and 5 are
The Court

20

A.

Life Expectancy

21

The high end of Plaintiffs’ life expectancy range for I.P.

22

and the low end of the government’s range are only two years

23

apart (age 24 versus age 26), thus evidencing near agreement on

24

this issue between the parties.

25

demonstrated that life expectancy is an epidemiological concept

26

based on probabilities.

27

to Dr. Steven Day’s opinion, which was based on a comprehensive

28

statistical analysis of numerous population studies including

The evidence at trial

The Court therefore gives greater weight

20

1

persons with characteristics and risk factors similar to I.P.

2

Dr. Ira Lott, in contrast, based his estimate on his “experience”

3

of treating patients with cerebral palsy.

4

considered “literature,” he did not undertake any apparent

5

statistical analysis to arrive at his conclusion.

6

Although Dr. Lott also

Plaintiffs argue that Dr. Lott’s opinion is more accurate

7

because he personally examined I.P. and Dr. Day did not.

8

Day reviewed extensive medical records for I.P. as well as the

9

recorded observations of her examining doctors, treating

10

physicians, and her parents in reaching his conclusion.

11

examination, Dr. Lott conceded that he could not identify any

12

particular risk factor or characteristic of I.P. that Dr. Day had

13

overlooked in his analysis.

14

But Dr.

On cross

For these reasons, the Court is persuaded by Dr. Day’s

15

analysis and determines I.P.’s life expectancy to be

16

approximately 20 additional years (to 23 years of age).

17

B.

Type of Attendant Care

18

As to attendant care, Plaintiffs offered a plan providing

19

I.P. with 24-hour/day Licensed Vocational Nurse (“LVN”) care

20

provided by an agency plus 24 hours/year of case manager time,

21

while the government offered two proposals: (a) 24-hour/day

22

private-hire Home Health Attendant (“HHA”) care, plus two weeks

23

of 24-hour LVN agency care, 48 hours of case manager time,

24

payroll services, and 100 hours of conservator-fiduciary time for

25

the first year (and 60 hours/year thereafter), or (b) 18-hour/day

26

private-hire LVN care plus 6 hours/day HHA care, two weeks of 24-

27

hour agency LVN care, 48 hours/year of case manager time, payroll

28

services, and 100 hours of conservator-fiduciary time for the
21

1

first year (and 60 hours/year thereafter).

2

the type of attendant care is the only issue before the Court.

3

As discussed above,

The Court finds that I.P. requires 24-hour/day care from an

4

LVN.

Plaintiffs’ evidence on this issue was far more persuasive

5

than that introduced by the government.

6

HHA as the government proposes, will provide the appropriate

7

level of care, because LVNs are trained in medical decision-

8

making, are supervised, and can be responsive to I.P.’s

9

particular and developing medical needs and risk factors.

An LVN, rather than an

10

Defendant’s expert, Dr. Joseph Capell, conceded that it would be

11

“entirely appropriate” for I.P. to have care from an LVN, and

12

that certain tasks essential to I.P.’s daily care (such as

13

gastronomy tube feeding) require an LVN.

14

government’s position, I.P. needs LVN care around the clock,

15

because her medical needs and complications will arise around the

16

clock and cannot be scheduled in an 18-hour/day window.

17

Contrary to the

With respect to the issue of whether I.P. needs an agency or

18

private LVN, the Court finds that an agency will more likely

19

ensure that I.P. experiences no gaps in coverage due to

20

unavailability of individual staff members.

21

would offer employee screening, bonding, insurance, and medical

22

record compliance.

23

the risks of gaps in care or low quality care, would fall on

24

I.P., her family, and the few hours of case manager time offered

25

by the government’s plan.

26

IP or her family.

27
28

Moreover, an agency

If not for an agency, this burden, as well as

That is neither fair or reasonable to

For these reasons, the Court concludes that I.P. requires
and is entitled to 24-hour/day LVN agency care.
22

1

C.

2

Determination of present cash value depends on the net

Present Cash Value

3

discount rate.

The Court finds, based on the expert testimony,

4

that the best estimate of the net discount rate is 1%.

5

reaching this conclusion, the Court was more persuaded by Dr.

6

Peter Formuzis’s analysis than that of Dr. Erik Volk.

7

Formuzis considered a more compressive dataset over a longer time

8

period, and his opinion better aligned with current projections

9

of the Congressional Budget Office.

In

Dr.

The Court declines to apply

10

a different discount rate for growth in attendant care wages,

11

because the dataset that Dr. Volk relied on was even more

12

temporally limited and was also not commensurate with official

13

projections.

14

D.

Conclusion as to Present Cash Value of Future Care
Costs

15
16

The Court calculates future costs assuming a 1% discount

17

rate and a life expectancy to 23 years of age, as determined

18

above.

19

LVN agency care using those assumptions is $7,753,349.

20

those same assumptions and pursuant to the parties’ stipulated

21

calculations, the present cash value of I.P.’s future medical

22

expenses other than LVN agency care is $544,139.

23

medical costs therefore amount to $8,297,488 in present cash

24

value.

Relying on Dr. Formuzis’s analysis, 6 the present value of
Using

Total future

25

E.

Projected Lost Earnings

26

The Court is persuaded that I.P.’s projected lost earnings

27
6

28

The government did not offer a calculation for agency LVN care
based on the above parameters.
23

1

should be based on an assumption that, absent the injury, she

2

would have achieved an education of 13.5 years.

3

expert Dr. Formuzis testified, this number represents the average

4

educational attainment in the United States.

5

expert, Mr. Sells, provided no basis for estimating her education

6

to be lower, except that her parents did not obtain college

7

degrees and she is Hispanic.

8

methodology that would justify lowering the estimate of I.P.’s

9

capacity for educational attainment based on these or other

10
11

factors.

As Plaintiffs’

The government’s

Mr. Sells did not cite any

The Court therefore uses the national average.

Both parties’ experts – Mr. Sells and Dr. Formuzis – agreed

12

that whatever education she obtained, I.P. would have been likely

13

to work full time.

14

Based on these assumptions, and applying a net discount rate

15

of 1%, I.P.’s lost earnings were proven at trial to have a

16

present cash value of $967,796.

17

F.

Past Medical Expenses

18

Plaintiffs proved I.P.’s past medical expenses at the time

19

of trial to be $87,521 pursuant to the Medi-Cal lien.

The

20

government has not disputed this figure.

21

expenses have been covered by health insurance, and are subject

22

to the parties’ stipulation about insurance issues, discussed

23

above.

Other past medical

24

G.

Noneconomic Damages

25

In addition to economic damages, I.P. is also entitled to

26

noneconomic damages.

These damages are “subjective, non-monetary

27

losses including, but not limited to, pain, suffering,

28

inconvenience, mental suffering, emotional distress, loss of
24

1

society and companionship, loss of consortium, injury to

2

reputation and humiliation.”

3

medical malpractice actions such as this, damages are capped at

4

$250,000.

5

Cal. Civ. Code § 1431.2.

In

Cal. Civ. Code § 3333.2(b).

The evidence here showed that I.P.’s medical condition has

6

caused and will forever cause severe impairment preventing her

7

from fully enjoying life, forming relationships, and expressing

8

her thoughts.

9

indignity, inconvenience, and humiliation of being unable to

Her injuries will subject her always to the

10

conduct even the most basic of tasks or to control bodily

11

functions.

12

incurred noneconomic damages of $250,000.

13

H.

This evidence overwhelmingly establishes that she has

Negligent Infliction of Emotional Distress as to
Micaela Palacio

14
15

A physician whose negligence caused harm to a baby during

16

delivery is liable for damages not only to the child, but also to

17

the mother for negligent infliction of emotional distress.

18

Burgess, 2 Cal.4th at 1073 (“Any negligence during delivery which

19

causes injury to the fetus and resultant emotional anguish to the

20

mother . . . breaches a duty owed directly to the mother.”).

21

These damages are limited to “emotional distress arising from the

22

‘abnormal event’ of participating in a negligent delivery and

23

reacting to the tragic outcome with fright, nervousness, grief,

24

anxiety, worry, mortification, shock, humiliation and indignity,

25

physical pain, or other similar distress.”

26

are also limited by California Civil Code section 3333.2(b) to a

27

maximum of $250,000.

28

Id. at 1085.

Damages

The evidence here was more than sufficient to establish
25

1

noneconomic damages.

2

anguish and helplessness at realizing the severe and permanent

3

injury to her child.

4

painfully apparent.

5

damages of $250,000.

Mrs. Palacio’s testimony demonstrated her

The profound effect on her well-being was
The Court therefore awards the maximum

6

I.

Offset of Damages Due to Settlement with Banner Health

7

California Code of Civil Procedure section 877 “requires a

8

setoff for preverdict settlement amounts paid by any tortfeasors

9

claimed to be liable for the same tort.”

Hellam v. Crane Co.,

10

239 Cal.App.4th 851, 863 (2015) (quoting Poire v. C.L. Peck/Jones

11

Bros. Construction Corp., 39 Cal.App.4th 1832, 1837 (1995))

12

(quotation marks and alterations omitted).

13

to offset damages, the Court first looks to the settlement to see

14

if it “differentiate[s] between economic and noneconomic

15

losses[.]”

16

722 (2014)).

17

determine “the amount of the settlement attributable to each type

18

of loss,” id., by applying the methodology described in Espinoza

19

v. Machonga, 9 Cal.App.4th 268, 276-77 (1992).

20

To determine how much

Id. at 862 (quoting Rashidi v. Moser, 60 Cal.4th 718,
If it does not differentiate, the Court must

First, the Court determines the percentage of the award at

21

trial attributed to economic damages.

22

722-23 (describing and applying Espinoza).

23

applies that percentage to the plaintiff’s settlement recovery to

24

determine the amount of settlement dollars attributable to

25

economic loss.

26

is then deducted from the economic damages proved at trial.

27
28

Id.

Rashidi, 60 Cal.4th at
The Court then

The resulting amount of settlement dollars
Id.

I.P. and her father previously entered into a settlement
with Banner Health for $500,000.
26

Petition to Approve Compromise

1

(Doc. #102) ¶ 11.c, Attachment 11.

2

$250,000 to I.P.’s father and $250,000 to I.P.

3

Decl. at 2.

4

$250,000 is for economic versus noneconomic losses.

5

states that this money was held by Plaintiffs’ counsel’s law firm

6

to satisfy attorneys’ fees and costs pending resolution of the

7

federal action.

8

apply Espinoza to determine how much of I.P.’s settlement is

9

attributable to economic loss.

10

That settlement apportioned
Id. ¶ 11.c; Fagel

The settlement does not specify how much of I.P.’s

Fagel Decl. at 2.

It only

The Court therefore must

I.P.’s damages determined herein are 97.4% economic and 2.6%

11

noneconomic.

12

recovery, $243,500 of that recovery is attributable to economic

13

loss and $6,500 to noneconomic loss.

14

entitled to an offset of the economic damages in this case by

15

$243,500.

16

Applying these same percentages to her settlement

The government is therefore

For noneconomic damages, the calculation is different.

17

Under California Civil Code section 1431.2, liability for

18

noneconomic damages is several, not joint.

19

§ 1431.2(a) (“Each defendant shall be liable only for the amount

20

of non-economic damages allocated to that defendant in direct

21

proportion to that defendant’s percentage of fault . . . .”).

22

order to be entitled to an offset of noneconomic damages, the

23

defendant at trial must demonstrate the comparative fault of the

24

settling defendants.

25

Bard, Inc., 231 Cal.App.4th 763, 785 (2014).

26

Cal. Civ. Code

In

Rashidi, 60 Cal.4th at 727; Scott v. C.R.

Defendant here put on no evidence of Banner Health’s degree

27

of fault in causing Plaintiffs’ noneconomic injuries.

28

government is not entitled an offset of these damages.
27

So the

1

///

2

///

3

///

4

J.

5

Summary of Total Damages Awarded By the Court
Type of Damages

Amount Proved by a
Preponderance of the Evidence

6
24-hour/day LVN agency care

$7,753,349 (in present cash
value)

All other future medical
expenses

$544,139 (in present cash
value)

Projected lost earnings

$967,796 (in present cash
value)

11

Past medical expenses

$87,521

12

I.P.’s noneconomic damages

$250,000

13

Micaela Palacio’s noneconomic
damages

$250,000

7
8
9
10

14

TOTAL: $9,852,805

15
16
17
18
19
20

VII.

CONCLUSIONS OF LAW AS TO DAMAGES

For the reasons set forth above, the Court concludes as
follows:
Because of Dr. Davainis’s negligence, the United States is
liable to I.P. in the amount of $9,602,805.

21

The United States is entitled to an offset of I.P.’s

22

economic damages by $243,500 pursuant to her prior settlement

23

with Banner Health.

24
25

1.

Because of Dr. Davainis’s negligence, the United States

is liable to Micaela Palacio in the amount of $250,000.

26
27

VIII.

ORDER

28
28

1

Given the above conclusions of law:

2

1.

Defendant is ordered to pay I.P. (through her guardian

3

ad litem, Facundo Palacio Diaz) $9,359,305 in economic and

4

noneconomic damages.

5
6
7

2.

Defendant is ordered to pay Micaela Palacio $250,000 in

noneconomic damages.
The government has stated its intent to invoke California’s

8

periodic payment statute, California Code of Civil Procedure

9

section 667.7.

The Court grants the government’s request for

10

further briefing on this subject in order to advise the Court

11

about the propriety of applying section 667.7 and how periodic

12

payments would affect final judgment.

13

prepare briefs to be filed within ten (10) days from the date of

14

this Order.

15

if it so requires.

16
17

Both parties are to

The Court may set this matter for a further hearing

IT IS SO ORDERED.
Dated: October 28, 2015

18
19
20
21
22
23
24
25
26
27
28
29