Morgan v. Wesley Medical Center, LLC et al

Filing 486

MEMORANDUM AND ORDER re 452 Joint MOTION for Settlement Approval of Settlement & Motion for Dismissal with Prejudice as to Settling Defendants. Motion Hearing set for 8/6/2020 at 11:00 AM by Telephone CONFERENCE LINE 1-888-363-4749 ACCESS CODE 1654737 before District Judge Kathryn H. Vratil. See Order for additional details and deadline. Signed by District Judge Kathryn H. Vratil on 7/20/2020. (smc)

Case 2:18-cv-02158-KHV Document 486 Filed 07/20/20 Page 1 of 7

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS
D.M., a minor by and through his next friend
and natural guardian, KELLI MORGAN,

)
)
)
Plaintiff,
)
)
v.
)
)
WESLEY MEDICAL CENTER, LLC d/b/a
)
WESLEY MEDICAL
)
CENTER-WOODLAWN, et al.,
)
)
Defendants.
)
____________________________________________)

CIVIL ACTION
No. 18-2158-KHV

MEMORANDUM AND ORDER
On September 11, 2018, D.M., a minor by and through his next friend, Kelli Morgan, filed
an amended complaint against Wesley Medical Center, LLC d/b/a Wesley Medical CenterWoodlawn, Wesley-Woodlawn Campus, Lisa Judd, RN (“the Wesley Defendants”), Via Christi
Hospitals Wichita, Inc. d/b/a Via Christi-St. Francis, Aaron Kent, RN (“the Via Christi
Defendants”), Bridget Grover, PA-C, Dr. Gregory Faimon, Jennifer Chambers-Daney, ARNP,
Dr. Bala Bhaskar Reddy Bhimavarapu, CEP America-KS LLC, Dr. Connor Hartpence,
Dr. Stefanie White and Dr. Jamie Borick, alleging that defendants’ medical malpractice caused his
paralysis, neurological damage and other permanent injuries.

First Amended Complaint

(Doc. #121); see Pretrial Order (Doc. #435) filed May 4, 2020. This matter is before the Court on
the Joint Motion For Approval Of Settlement And Motion For Dismissal With Prejudice As To
Settling Defendants (Doc. #452), which plaintiff, the Wesley Defendants and the Via Christi
Defendants filed on May 26, 2020. Pursuant to Kan. Stat. Ann. § 40-3410 and § 7-121b, the Court
sets the motion for a hearing.

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Factual and Procedural Background
Plaintiff alleges that around March 3, 2017, he began suffering dizziness, nausea, headache,
vomiting and lethargy. See Pretrial Order (Doc. #435). On March 6, 2017, after defendants had
examined him multiple times, plaintiff suffered a catastrophic stroke which left him with rightside paralysis, neurological damage and other permanent impairments. After the stroke, a CT scan
revealed a brainstem tumor and significant obstructive hydrocephalus. Pathology testing later
confirmed that plaintiff had a treatable form of medulloblastoma.
On September 11, 2018, plaintiff, by and through Kelli Morgan, filed a First Amended
Complaint (Doc. #121) against defendants. See Pretrial Order (Doc. #435). On June 23, 2020,
plaintiff, the Wesley Defendants and the Via Christi Defendants provided an unredacted copy of
their proposed settlement.1 See Settlement, Release And Confidentiality Agreement (Doc. #4711). Pursuant to the agreement, plaintiff releases from liability the Wesley Defendants, the Via
Christi Defendants, Health Care Indemnity, Inc., the Ascension Health Alliance Self-Insured Trust
and the Kansas Health Care Stabilization Fund and its Board of Governors (“the Fund”), along
with all related entities.2 Id. at 1. In particular, the settlement releases these entities from all claims
which arise out of the medical treatment of plaintiff in March of 2017, or which “in any way
involve the diagnosis, care and treatment, or the failure to diagnose or treat” him, whether
“presently known or unknown, asserted or unasserted, present or future, direct or indirect.” Id.

1

The settlement agreement which the parties initially provided contained several
redactions. See Joint Motion For Approval Of Settlement And Motion For Dismissal With
Prejudice As To Settling Defendants (Doc. #452); see also Order To Show Cause (Doc. #469)
filed June 18, 2020.
2

As best the Court can ascertain, Health Care Indemnity, Inc. is the insurer for the
Wesley Defendants, and Ascension Health Alliance Self-Insured Trust is the insurer for the Via
Christi Defendants. The Fund applies to both sets of defendants.
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at 2. This release “is intended to cover any and all prior, current or future injuries, damages or
losses, whether known or unknown to the parties,” which “may later develop, or be discovered in
connection with” defendants’ treatment of plaintiff, including but not limited to wrongful death or
loss of consortium claims. Id.
In exchange for this release, on behalf of the Wesley Defendants, Health Care
Indemnity, Inc. and the Fund will pay a total of $400,000.

Specifically, Health Care

Indemnity, Inc. will pay $200,000 to Dugan & Giroux Law, Inc., which represents plaintiff.3 Id.
at 3. For plaintiff’s attorneys’ fees, expenses4 and plaintiff’s known and unknown medical liens,
the Fund will pay $200,000 to Dugan & Giroux Law. Id. The parties are currently aware of three
medical liens, which will require plaintiff to pay a total of $163,148.94. Id. at 4.
On behalf of the Via Christi Defendants, Ascension Health Alliance Self-Insured Trust and
the Fund will pay a total of $500,000. Id. at 3. Specifically, for plaintiff’s attorneys’ fees, expenses
and the medical liens described above, Ascension Health Alliance Self-Insured Trust and the Fund
will pay $200,000 and $51,206.64, respectively, to Dugan & Giroux Law. Id. Moreover, the Fund

3

The proposed settlement does not clarify whether this $200,000 stays with Dugan
& Giroux Law or goes to plaintiff. This is particularly confusing given the fact that the next item
specifies that Dugan & Giroux Law will receive $200,000 for “payment of attorney’s fees and
expenses.” Settlement, Release And Confidentiality Agreement (Doc. #471-1) at 3. In short, the
proposed agreement leaves unclear who ultimately receives this $200,000.
The parties do not specify an amount for plaintiff’s attorney fees and expenses. In
support of the present motion, plaintiff attaches a separate brief which asserts that “a 40% fee is
usual and customary for medical malpractice injury cases.” Exhibit B (Doc. #452-2) at 4. Because
they do not elaborate or proffer a specific dollar amount, the Court is unclear how much plaintiff’s
attorneys will recover.
4

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will pay $248,793.36 to Kelli and Kevin Morgan as trustees for initial funding of the D.M. Special
Needs Trust.5 Id.
Analysis
Pursuant to Kan. Stat. Ann. § 40-3410 and § 7-121b, the proposed settlement and its
allocation of attorneys’ fees require court approval.
The Fund “provides excess medical malpractice coverage to Kansas health care providers
who qualify under the Health Care Provider Insurance Availability Act.” Whittington v. Newman
Reg’l Health Ctr., No. 14-4008-DDC, 2015 WL 224814, at *1 (D. Kan. Jan. 15, 2015) (citations
omitted). When a health care provider who has Fund coverage is sued for medical malpractice in
Kansas, “the primary responsibility for defending the health care provider rests with the insurance
carrier.” Id. (citations omitted). If the insurance carrier believes that the provider’s liability
exceeds the applicable policy limits, however, the carrier may “tender the policy limits to the Fund,
and the Fund is then responsible for determining whether to mount a defense or settle the
malpractice claim.” Id. (citations omitted). If the Fund decides to settle, the settlement requires
approval by the court in which the malpractice action is pending. Id. (to trigger statutory court
approval provision, settlement must at least involve decision by Fund’s board of governors to pay
money from Fund itself); see Sanderford v. Malley, No. 14-2165-RDR-KGS, 2015 WL 1423157,
at *3 (D. Kan. Mar. 27, 2015) (because settlement does not involve decision by board of governors
to pay money from Fund, settlement does not require court approval). If the settling parties do not
show that the approval provision applies, the Court lacks jurisdiction to approve the settlement.

The settlement itself does not define the “D.M. Special Needs Trust,” but it is
apparently “a special needs trust for the benefit of [plaintiff’s] care, treatment and continued
medical needs.” Joint Motion For Approval Of Settlement And Motion For Dismissal With
Prejudice As To Settling Defendants (Doc. #452) at 3.
5

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Whittington, 2015 WL 224814, at *2 (court without jurisdiction to offer advisory opinion); see
Sanderford, 2015 WL 1423157, at *3.
If the court approval provision applies, Section 40-3410 requires the following procedures:
(a) A petition shall be filed by the claimant with the court in which the action is
pending against the health care provider . . . for approval of the agreement between
the claimant and the board of governors.
(b) The court shall set such petition for hearing as soon as the court’s calendar
permits, and notice of the time, date and place of hearing shall be given to the
claimant, the health care provider or inactive health care provider, and to the board
of governors.
(c) At such hearing the court shall approve the proposed settlement if the court finds
it to be valid, just and equitable.
Kan. Stat. Ann. § 40-3410 (if claimant and board of governors agree on settlement amount,
designated procedures must follow).6
Here, because the proposed settlement agreement requires payment from the Fund itself,
the parties must obtain the Court’s approval. See Kan. Stat. Ann. § 40-3410; see also Whittington,
2015 WL 224814, at *2. Accordingly, pursuant to Section 40-3410(b), the Court sets a hearing
for August 6, 2020 at 11:00 A.M. In preparation for the hearing, the parties must submit a
supplement brief by July 27, 2020 which clarifies how the proposed agreement allocates the
settlement funds. In particular, the parties must (1) explain who ultimately receives the $200,000
which Health Care Indemnity, Inc. must pay to Dugan & Giroux Law on behalf of the Wesley
Defendants, (2) specify the precise amount that plaintiff’s attorneys request for fees and expenses
and (3) provide a full itemized breakdown which shows plaintiff’s ultimate recovery after
applicable reductions, including attorneys’ fees, expenses and medical liens.

6

If the Court does not ultimately approve the settlement, it follows the procedure set
forth in Kan. Stat. Ann. § 40-3411. See Kan. Stat. Ann. § 40-3410(d).
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Pursuant to Kan. Stat. Ann. § 7-121b, the Court must also approve all attorney’s fees. See
Whittington, 2015 WL 224814, at *3. To do so, the Court must hold an evidentiary hearing to
determine whether the fees are reasonable. See Kan. Stat. Ann. § 7-121b(a) (fees “shall be
approved by the judge after an evidentiary hearing and prior to final disposition of the case by the
district court”). To determine whether fees are reasonable, the Court examines the following
factors:
(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 circumstances;
(6) The nature and length of the professional relationship with the client;
(7) The experience, reputation and ability of the attorney or attorneys performing
the services; and
(8) Whether the fee is fixed or contingent.
Id.
Here, the parties request the Court’s approval for the attorneys’ fees of plaintiff, the Wesley
Defendants and the Via Christi Defendants.
As the Court noted above, the particular fee which plaintiff’s attorneys request remains
unclear. They assert that “a 40% fee is usual and customary for medical malpractice injury cases,”
but they do not proffer a specific dollar amount or explain whether this 40 per cent applies to the
gross settlement amount. Exhibit B (Doc. #452-2) at 4. Additionally, plaintiff’s attorneys fail to
address most of the factors from Section 7-121b—they evaluate their experience and the
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contingency fee, and then conclude with little discussion that “Docket filings 1-450 and substance
therein clearly demonstrate the aforementioned Factors 1-7 have been met.” Id. at 3. Absent full
analysis, and particularly without knowing the total requested amount, the Court cannot approve
the fee request. See Whittington, 2015 WL 224814, at *3 (deferred ruling on fees where parties
failed to provide evidence on number of hours counsel expended on case).

The parties’

supplemental brief should also address these deficiencies.
The attorneys’ fees for the Wesley Defendants and the Via Christi Defendants also require
further explanation. They provide affidavits from attorneys who testify to the reasonableness of
the fees and evaluate the relevant factors from Section 7-121b. See Diane Waters Affidavit
(Doc. #452-3); Lawrence Logback Affidavit (Doc. #452-4). They do not, however, provide
adequate records which show the hours and billing rates for individual attorneys and staff. The
affidavits instead list total hours for all lawyers and paralegals and ranges of rates, followed by a
total requested amount. The supplemental brief should include more detailed lodestar calculations
which show the hours and rates for individual attorneys and staff.
IT IS THEREFORE ORDERED that the Court will hold a telephonic hearing on
August 6, 2020 at 11:00 A.M. to determine whether the proposed settlement is valid, just and
equitable, and whether the attorneys’ fees are reasonable. Parties are to join the hearing by
calling [phone] and entering access code 1654737. By July 27, 2020, the parties shall
submit a supplemental brief which addresses the issues that the Court identified above.
Dated this 20th day of July, 2020 at Kansas City, Kansas.
s/ Kathryn H. Vratil
KATHRYN H. VRATIL
United States District Judge

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