The death of an infant boy shortly after birth prompted a lawsuit filed by the baby’s mother against the obstetrician, nurse midwife and the hospital where they were employed.
Following a settlement agreement, the state high court reviewing the case rejected the plaintiff’s attempt under the theory of successor liability to pursue action against the hospital’s new owner, which had purchased the hospital nine months after the original filing. The Connecticut Supreme Court cited the two covenants not to sue contained in the settlement agreement.
Miami medical malpractice attorneys recognize that while this is an out-of-state case, the general principle is applicable here in Florida, particularly as it relates to negotiating settlement agreements. A settlement agreement can no doubt be advantageous to a client in some situations. However, signing usually means giving up the right to sue one or more defendants. It’s important to fully understand all the implications before agreeing to a settlement offer.
In signing a covenant not to sue, a person acknowledges that despite the fact that he or she has the legal right to sue the other party, he or she is now contractually barred from doing so. There are several different types of covenants not to sue, though usually for personal injury purposes, they are signed in conjunction with a settlement agreement. Often, they do not require the defendant to concede liability, while the plaintiff receives a set sum without the expense of a trial.
In Robbins v. Physicians for Women’s Health LLC, the plaintiff gave birth to a son at a hospital in October 2005. A short time after his birth, the baby died. The defendant doctor and certified nurse midwife were present at the time of birth and were responsible for administering care to both the plaintiff and her baby. The plaintiff sued both caregivers, as well as their employer, the hospital. When a new company purchased the defendant hospital, it filed a motion for summary judgment, arguing it had no connection to the care or treatment rendered to the child, nor was there an existing contractual relationship at the time of the child’s birth such that it could be held liable for a medical malpractice claim.
The plaintiff’s responded by indicating that the buyer of the hospital was liable under the theory of successor liability. This holds that buyers of corporations inherit not only the wealth and assets of that firm, but also the liabilities – including pending litigation.
In Florida, the courts have held that a corporation that acquires the assets of another business does not, as a matter of law, assume liabilities unless: • The successor expressly or impliedly assumes such obligations; • The transaction is a de facto merger; • The successor is simply a continuation of the predecessor; • The transaction is fraudulent with the sole purpose of attempting to avoid liabilities of the predecessor.
In the Robbins case, the plaintiff reached a settlement agreement that included two separate covenants not to sue, and subsequently withdrew her claims against the obstetrician, the midwife and the original hospital defendant. The settlement allowed for monetary compensation through the defendants’ medical malpractice insurance policy that covered both the doctor and midwife. Both were insured for policy limits of up to $1 million, and a total of $2 million was paid to the plaintiff.
Subsequently, the new-owner defendant filed a second motion for summary judgment, arguing that the plaintiff couldn’t proceed with any pending claim because the covenant not to sue protected the original hospital defendant from liability.
The trial court granted this motion. It was later reversed by a divided appellate court, but that decision was reversed by the state supreme court. The ruling protects subsequent purchasers of corporate assets in successor liability cases where a settlement has already been reached with the original defendants.
If you have been the victim of Florida medical malpractice, contact the Law Offices of Jose M. Francisco.
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