GOODIN (C. DALE), ET AL. VS. WHITE (ALLISON B.), ET AL.
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RENDERED: APRIL 15, 2011; 10:00 A.M.
TO BE PUBLISHED
Commonwealth of Kentucky
Court of Appeals
NO. 2009-CA-002261-MR
C. DALE GOODIN, M.D. AND
CENTRAL KENTUCKY MEDICAL
GROUP, P.S.C.
v.
APPELLANTS
APPEAL FROM WOODFORD CIRCUIT COURT
HONORABLE ROBERT G. JOHNSON, JUDGE
ACTION NO. 06-CI-00136
ALLISON B. WHITE AND
BLUEGRASS FAMILY HEALTH, INC.
APPELLEES
OPINION
AFFIRMING
** ** ** ** **
BEFORE: LAMBERT AND STUMBO, JUDGES; SHAKE,1 SENIOR JUDGE.
SHAKE, SENIOR JUDGE: Dr. Dale Goodin and the Central Kentucky Medical
Group, P.S.C. (collectively referred to as Goodin) appeal from a Woodford Circuit
Court Judgment, entered on September 29, 2009, and an Order, entered on
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Senior Judge Ann O’Malley Shake sitting as Special Judge by assignment of the Chief Justice
pursuant to Section 110(5)(b) of the Kentucky Constitution and Kentucky Revised Statutes
(KRS) 21.580.
November 19, 2009, denying Goodin’s motion for a new trial. Goodin claims that
he was denied a fair trial based upon what Goodin characterizes as a Mary Carter
agreement between Allison White (White) and Bluegrass Family Health, Inc.
(Bluegrass). After carefully reviewing the briefs, the record, and applicable law,
we affirm the Circuit Court Judgment and Order.
White is a former patient of Goodin. On May 17, 2005, White sought
treatment from Goodin and complained of abdominal pain and nausea. Suspecting
appendicitis or problems associated with her gallbladder, Goodin ordered that
White undergo a CT scan and an ultrasound of her abdomen. On the following
day, White had an ultrasound. White’s health insurance provider, Bluegrass,
denied coverage for the CT scan, which was not therefore done.
On May 19, 2005, White returned to Goodin’s office and complained
of worsening symptoms and severe pain. He misdiagnosed the pain as
musculoskeletal and applied a pain patch. When her pain did not subside, White
contacted Goodin’s office on May 23, 2005. At that time, Goodin ordered an xray, rather than a CT scan.
On May 25, 2005, Goodin’s office wrote a letter to Bluegrass
appealing its denial of coverage for the CT scan. The CT scan was finally
approved and was performed on June 9, 2005. The scan revealed that White’s
appendix had ruptured. An emergency appendectomy and ileocolectomy were
performed. As a result of these procedures, White lost her appendix and a portion
of her intestine and colon. Additional surgeries followed the initial emergency
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procedure. White’s medical bills totaled $109,259.05. In addition, White is likely
to require future medical treatment due to the appendix rupture.
On May 11, 2006, White filed suit in the Woodford Circuit Court
against Goodin. White claimed that Goodin was negligent and deviated from the
standard of care in his treatment of her condition. Goodin filed a third-party
complaint against Bluegrass based upon his contractual relationship with the
insurer2. Goodin claimed that Bluegrass wrongfully denied coverage for the CT
scan. Goodin alleged that he was entitled to indemnity from Bluegrass for any
judgment against him.
Shortly before trial, White and Bluegrass reached a settlement
agreement which was reduced to writing and signed after the trial had begun.
The redacted agreement provided in part:
1.1. In consideration of the following agreements, White
hereby releases and discharges Bluegrass from any and
all claims, demands, obligations, actions, causes of
action, rights, damages, costs, losses of services, expense
and compensation of any nature whatsoever, whether
based on a contract, tort, or other theory of recovery,
which White may have on account of which may in any
way arise out of the allegations as set forth in the
pleadings filed by the parties in this matter.
....
2.0 Bluegrass agrees to pay White up to a maximum of
____. As consideration for this agreement, White agrees
that Bluegrass shall receive a lien against any damages
that the jury awards against Dr. Goodin attributable to his
actions or omissions up to a maximum of _____. As
further consideration for this agreement, the parties agree
2
Goodin entered into a contractual relationship with Bluegrass, whereby the insurance company
paid Goodin for services that he performed for patients covered under their insurance coverage
and Goodin was listed by the company as a “preferred provider.”
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that Bluegrass retains a legal interest in this case and will
participate at trial. As further consideration for this
agreement, White agrees to indemnify and hold harmless
Bluegrass for any claim of indemnity or contribution by
Dr. Goodin which would result in payment by Bluegrass
over and above ______. Accordingly, under this
agreement Bluegrass will not pay more than _____ for
any and all claims arising out of this litigation, and will
not pay White less than ____ depending upon the
application of the lien described above if any.
....
6.0 As further consideration for this settlement, White
and Bluegrass and her attorneys agree to keep this
Release and Settlement Agreement strictly confidential
and will not disclose the amount or terms of the
settlement to any person, company or agency other than
the parties’ immediate family, legal counsel, insurers,
accountants or other financial advisors as necessary or if
ordered to do so by a court of competent jurisdiction or
as required by law. This is a material term of the Release
and Settlement Agreement.
Prior to trial, the court and Goodin were informed that White and
Bluegrass had reached a settlement agreement. The redacted agreement, however,
was not provided to the court and Goodin until after jury selection when the terms
of the written agreement were acknowledged on the record. Goodin moved to
admit the settlement agreement as evidence of bias. The trial court denied
Goodin’s motion, ruling that, if evidence of bias occurred, Goodin could renew his
motion. The trial court clearly stated, “If something comes up during crossexamination that indicates there’s some bias, then you might want to come up and
readdress the issue.”
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After four days of testimony, the jury returned a verdict in favor of
White and awarded her $1,359,259.05. The jury found that Goodin was 100% at
fault. Judgment in favor of White was entered on September 29, 2009.
Based upon the settlement agreement and its non-disclosure to the
jury, Goodin moved the court to set aside the judgment and requested a new trial.
He argued that the agreement was an unfair Mary Carter agreement that created
bias. The Woodford Circuit Court disagreed. This appeal follows.
A. Mary Carter Agreements
The term “Mary Carter agreement” derives from a 1967 case from
Florida, Booth v. Mary Carter Paint Co., 202 So.2d 8 (Fla.Ct.App.1967), rejected
by Ward v. Ochoa, 284 So.2d 385, 388 (Fla.1973), and abrogated by Dosdourian
v. Carsten, 624 So.2d 241 (Fla. 1993), which upheld the validity and nondisclosure
of an agreement that limited the liability of two out of three defendants. In a
classic Mary Carter agreement: (1) the settling defendant’s liability is limited
although that defendant remains a party at trial; (2) the agreement is not disclosed
to the non-settling parties and/or judge and jury; and (3) it guarantees to the
plaintiff a minimum recovery, even though the plaintiff may not recover a
judgment against the agreeing defendant or that the verdict may be less than that
specified in the agreement. Slusher v. Ospital by Ospital, 777 P.2d 437, 440 (Utah
1989).
Although courts generally agree about the basic elements of Mary
Carter agreements, jurisdictions differ in their treatment of the agreements. The
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Supreme Court of Utah upheld Mary Carter agreements, provided that the terms of
the agreement are disclosed to the jury. Id. at 441- 442. In Slusher, id., the Court
stated:
defendant tort-feasors enter into a settlement agreement,
the parties must promptly inform the court and the other
parties to the action of the existence of the agreement and
of its terms. Where the action is tried by a jury, the court
shall, upon motion of a party, disclose the existence and
basic content of the agreement to the jury unless the court
finds that, on facts particular to the case, such disclosure
will create substantial danger of undue prejudice, of
confusing the issues, or of misleading the jury.
Slusher v. Ospital by Ospital, 777 P.2d 437, 444 (Utah 1989).
In 1993, the Florida Supreme Court banned Mary Carter agreements
all together. The Court reasoned:
In addition, Mary Carter agreements, by their very
nature, promote unethical practices by Florida attorneys.
If a case goes to trial, the judge and jury are clearly
presuming that the plaintiff and the settling defendant are
adversaries and that the plaintiff is truly seeking a
judgment for money damages against both defendants. In
order to skillfully and successfully carry out the
objectives of the Mary Carter agreement, the lawyer for
the settling parties must necessarily make
misrepresentations to the court and to the jury in order to
maintain the charade of an adversarial relationship.
....
[w]e are convinced that the only effective way to
eliminate the sinister influence of Mary Carter
agreements is to outlaw their use. We include within our
prohibition any agreement which requires the settling
defendant to remain in the litigation, regardless of
whether there is a specified financial incentive to do so.
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Dosdourian v. Carsten, 624 So. 2d 241, 244 & 246 (Fla. 1993).
The Supreme Court of Texas described this rationale in Elbaor v.
Smith, 845 S.W.2d 240 (Tex. 1992). “No persuasive public policy justifies them,
and they are not legitimized simply because this practice may continue in the
absence of these agreements. The Mary Carter agreement is simply an unwise and
champertous device that has failed to achieve its intended purpose.” Id. at 249.
Although Mary Carter agreements have garnered national attention
over the past forty years as a means of settlement, Kentucky Courts have yet to
confront this issue. Certainly the agreement in this case shares many
characteristics of a Mary Carter agreement. The agreement limited the liability of
Bluegrass and required Bluegrass to participate in trial. The agreement guaranteed
that White would recover a minimum amount from Bluegrass, even though the jury
may render a judgment against Goodin. Further, the nature of the agreement was
not disclosed to Goodin or the court until trial was underway and was never
disclosed to the jury. The agreement, however, was disclosed to the court and to
Goodin once its terms were reduced to writing.
However, what distinguishes this case from typical Mary Carter
scenarios is that Bluegrass’s continued presence at trial was not only because of the
settlement agreement but also because Goodin never moved to dismiss its third
party action against Bluegrass.
B. Non-Disclosure to the Jury
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The trial court declined to admit the agreement into evidence absent
proof of bias or prior inconsistent statements. Goodin claims that non-disclosure of
the agreement to the jury resulted in a fundamentally unfair trial. The court’s
ruling on this issue was well grounded. As a means to encourage settlements,
Kentucky law generally disfavors the admission of settlement agreements into
evidence. See Green River Elec. Corp. v. Nantz, 894 S.W.2d 643, 646 (Ky. App.
1995). Completed settlement agreements are no more admissible than offers made
during the negotiation process. Id.
As in this case, however, Kentucky courts generally allow the
admission of settlement agreements for purposes of impeachment concerning prior
inconsistent statements and bias. Miller ex rel. Monticello Baking Co. v.
Marymount Med. Ctr., 125 S.W.3d 274, 281-82 (Ky. 2004). ‘“Any proof that
tends to expose a motivation to slant testimony one way or another satisfies the
requirement of relevancy. The range of possibilities is unlimited ....’” Id. at 281,
citing to Robert G. Lawson, The Kentucky Evidence Law Handbook § 4.15, at 183
(3d ed.1993).
Certainly, the alliance of a plaintiff and settling defendant could create
biased testimony and trial strategy. In those situations, the jury, as the finders of
fact, must be informed of potential bias in order to make an informed opinion
concerning witness credibility.
The interest of a witness, either friendly or unfriendly, in
the prosecution or in a party is not collateral and may
always be proved to enable the jury to estimate
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credibility. It may be proved by the witness' own
testimony upon cross-examination or by independent
evidence.
Miller ex rel. Monticello Baking Co., 125 S.W.3d at 282 (Citations
omitted).
The record does not indicate that White or any of White’s witnesses
changed their testimonies or made inconsistent statements after the settlement
agreement was executed. Further, Goodin did not preserve his assertions of bias
when the proof was coming in by moving the court to reconsider its earlier ruling.
In addition, no avowel testimony was taken.
Goodin argues that bias was evidenced in White’s trial strategy.
Specifically, Goodin claims that White was harsher during pre-trial depositions to
witnesses favorable to Bluegrass than White was at trial. However, White was
under no obligation to maintain the same strategy or to vigorously examine any
witness. With or without a settlement agreement, White had no reason to practice
the case in a manner that would benefit Goodin. The jury was fully informed that
White had settled with Bluegrass. The jury knew that White was no longer adverse
to Bluegrass and that White remained completely adverse to Goodin. Moreover,
Goodin’s attorney had wide latitude throughout the trial to hammer that point
home to the jurors.
Bluegrass’s participation does not indicate bias or an unfair alliance.
Aside from the terms of the agreement that required the Bluegrass’s continued
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participation at trial, Goodin filed a contractual indemnity claim against Bluegrass.
Dr. Goodin could have dismissed this claim but declined to do so.
Because the jury had been informed that White and Bluegrass had
settled, the jury was well aware that White and Bluegrass were not adversarial
parties but that Bluegrass and Goodin were adversaries and that Goodin and White
were adversaries. The agreement’s disclosure would not have altered that wellknown reality in any way.
Therefore, the trial court’s denial of White’s motion to admit the
settlement agreement did not result in unfairness and was not erroneous.
B. Preemptory Strikes
Goodin also claims that White and Bluegrass’s failure to inform the
trial court of the nature of the settlement agreement resulted in White and
Bluegrass receiving additional preemptory strikes than they otherwise would have
had. Kentucky Rules of Civil Procedure (CR) 47.03 (1) provides, “In civil cases
each opposing side shall have three peremptory challenges, but co-parties having
antagonistic interests shall have three peremptory challenges each.”
Whether co-parties have antagonistic interests is determined by
examining three elements: (1) Whether the co-parties are charged with separate
acts of negligence; (2) Whether the co-parties share a common case theory; and (3)
Whether cross-claims have been filed. Sommerkamp v. Linton, 114 S.W.3d 811,
815 (Ky. 2003). In addition, courts may consider whether the co-parties share
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counsel, whether the alleged negligence occurred together or at separate times,
whether the co-parties share the same defenses, and whether fault will be subject to
apportionment. Id. These elements and factors must be weighed by the court to
determine if the co-parties have antagonistic interests and are, thus, entitled to
separate peremptory challenges. Id.
Goodin argues that the number of preemptory strikes allocated to each
party may have been different if the terms of the agreement had been disclosed
prior to jury selection. The record indicates that although White and Bluegrass had
discussed a probable settlement, the settlement was not reduced to writing until
jury selection was complete. Therefore, at the time of jury selection there was no
written agreement to disclose.
Moreover, White and Bluegrass’s interests were not aligned, nor were
they co-parties. Significantly, Goodin’s indemnity claim proceeded against
Bluegrass.
Based upon the foregoing reasons, the trial court’s denial of Goodin’s
motion for a new trial based upon the Bluegrass preemptory strikes was not
erroneous.
Accordingly, the Woodford Circuit Court Judgment and subsequent
Order denying Goodin’s motion for a new trial is affirmed.
ALL CONCUR.
BRIEFS FOR APPELLANTS:
BRIEFS FOR APPELLEES:
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Todd D. Willard
Lexington, Kentucky
David L. Helmers
Lexington, Kentucky
Gerald R Toner
Brent T. Asseff
Louisville, Kentucky
C. David Ewing
David Klapheke
Louisville, Kentucky
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