Med Mal Claim "Right to Settle" an Asset
A ruling on Wednesday by the 10th U.S. Circuit Court of Appeals in Denver could pave the way for a Utah couple to reach a settlement in a medical malpractice lawsuit. Robert and Paea Olah allege their daughter suffered brain damage during delivery because of negligence by osteopathic physician Ronald Baird, who denies the allegation and who refuses to grant permission to his insurer to settle the claim out of court.
However, a bankruptcy filing by Baird and the ruling by the Court of Appeals could bring a resolution to the litigation. The court said the "right to settle" is an asset and the trustee in the bankruptcy case has the option of "selling" that right to the Olahs. If they obtain the right to settle, the Olahs can submit their claim for $1 million to the doctor's insurance company for a fair evaluation.
Baird has a liability policy with a $1 million limit issued by the Utah Medical Insurance Association (UMIA). Court records say that under the policy terms, the association could not evaluate a claim or make a settlement offer without Baird's permission. The doctor said Wednesday that the Olahs do not have a case and that the ruling takes away his right to defend himself.
Baird filed for bankruptcy in 2006, two years after the Olahs brought their suit in 4th District Court in Provo. The parents offered the trustee of the bankruptcy estate $20,000 for all powers that could be exercised under the insurance policy, including the right to have UMIA consider their claim and the authority to accept a settlement offer.
After the trustee concluded that he was not allowed to give rights held by Baird to the Olahs, the couple filed suit in bankruptcy court seeking a declaration that the policy was part of the doctor's assets. A bankruptcy judge ruled against them, and that decision was upheld by U.S. District Judge Bruce Jenkins in Salt Lake City. The case then went to the 10th Circuit.
If the trustee decides to sell the right to consent to a settlement, the Olahs likely would be the only ones interested in buying it.