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Court reduces brain-damaged baby's malpractice award by settlement involving parents' claims

Mackenzie Greer suffered catastrophic brain injuries during birth at St. Mary's Hospital while under the care of Advantage Health and Anita R. Avery, M.D.  Her mother suffered a ruptured uterus during the delivery.  On the eve of trial, the Hospital paid $600,000.00 to the family to settle the claims of all three plaintiffs (Mackenzie for brain injury, her father for related future medical expenses as her Guardian, and her mother for her physical injuries). The case was tried against Advantage and Avery and the jury granted a verdict against the Defendants in favor of Mackenzie but awarded no damages to her parents.

The defendants sought to offset the entire amount of the hospital settlement against Mackenzie's verdict, but the trial judge refused:  he concluded that the settlement should be apportioned among all injured plaintiffs and set-off only a pro rata share allocated to Mackenzie.  The defendants also sought to reduce the award of past medical expenses ($425,533.75) by the group insurance discount that Priority and Aetna had negotiated with the providers. By a careful reading of the statute and comparison with prior cases, the judge concluded that the defendants were not entitled to a credit for the insurance discounts.  The Defendants appealed only these calculations and did not dispute the jury's finding of malpractice.

The Court of Appeals overturned the lower court and allowed the Defendants a credit for the full amount of the hospital settlement that included the parents' claims.  Two of the judges insisted that even though the father and mother had both compromised their claims pre-suit and taken the hospital out of the trial for negligence, with their daughter, they had suffered only a "single injury" and the jury's conclusion of no negligence by the remaining defendants should result in a full credit for the settlement being applied to the child's damages. This bears repeating:  the court deemed mother's ruptured uterus and the child's brain damage to be only a single injury; and these two judges believed that the jury's verdict finding no claim for the parents against Advantage and Avery represented a binding conclusion that the settling hospital defendants also had caused no injury to the parents.

If there is a bright side to the appeal for injury victims, it was that the Court rejected the medical defendants' argument that they should be required to re-pay the family for the full amount of medical expense the family was charged.  Michigan courts have previously held that an uninsured patient is not entitled to claim that the fair and reasonable cost of services should be limited to the amount that the vast majority of patients (those benefitting from insurance discounts) actually pay after discounts. The Courts have also held that the statutory language is clear:  if insurers claim a lien on an injured party's recovery, the negligent party may not deduct this "collateral source" benefit from the victim's jury verdict.

Faced with this background and the fact that the common law has always provided for re-payment of medical expenses incurred by a negligently injured plaintiff, all three Court of Appeals judges agreed that the Defendants could not legally reduce the verdict even further. 

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