Grp. Health Coop.v. Coon

193 Wash.2d 841

447 P.3d 139

GROUP HEALTH COOPERATIVE, a Washington nonprofit corporation, Petitioner,

v.Nathaniel COON and Lori Coon, husband and wife, Respondents.

No. 96516-1

Supreme Court of Washington.

Oral Argument Date: May 30, 2019

Filed August 22, 2019

Catherine Wright Smith, Howard Mark Goodfriend, Smith Goodfriend PS, 1619 8th Avenue N, Seattle, WA 98109-3007, Michael H. Church, Hailey Louise Landrus, Attorney at Law, 720 W. Boone Avenue, Suite 200, Spokane, WA 99201-2560, for Petitioner.

Eugene Melvin Moen, Chemnick Moen Greenstreet, 115 NE 100th Street, Suite 220, Seattle, WA 98125-8019, Ian S. Birk, Keller Rohrback, LLP, 1201 3rd Avenue, Suite 3200, Seattle, WA 98101-3052, for Respondents.

Daniel Edward Huntington, Richter-Wimberley PS, 422 W. Riverside Avenue, Suite 1300, Spokane, WA 99201-0305, Valerie Davis McOmie, Attorney at Law, 4549 NW Aspen Street, Camas, WA 98607-8302, for Amicus Curiae (Washington State Association For Justice Foundation)

STEPHENS, J.

¶1 Group Health Cooperative (GHO) provided health insurance benefits to Nathaniel (Joel) Coon, who suffered a serious fungal infection and amputation following knee surgery at the Everett Clinic (TEC). The Coon family later settled potential negligence claims against TEC, and GHO initiated this lawsuit seeking reimbursement of its payments from the settlement proceeds. We must decide if genuine issues of material fact preclude summary judgment in favor of GHO regarding whether the settlement constituted full compensation to Coon, and whether GHO suffered prejudice from the Coons’ failure to provide notice prior to finalizing the settlement. For the reasons explained below, we hold that summary judgment is inappropriate. We affirm the Court of Appeals and remand for further proceedings consistent with this opinion.

FACTS AND PROCEDURAL HISTORY

¶2 Coon lives in Snohomish, Washington, with his wife and two teenage daughters. In his early 20s, Coon started a residential lawn-care business that has seen steady growth over the years, even during a recession, and now includes an extensive commercial landscaping component. In addition to being heavily involved in the day-to-day operations of the business, Coon and his family have enjoyed a very active lifestyle with hobbies that include traveling, boating, fishing, and hunting. The Coon family’s lives changed dramatically in 2012 after Coon developed a rare fungal infection that ultimately led to an above-knee amputation of his right leg.

Initial Injury and Infection

¶3 In January 2012, Coon heard a "pop" in his right knee while playing tug-of-war on ice; he experienced immediate pain and disability. Clerk’s Papers (CP) at 153. Coon’s initial surgery was performed on March 1, 2012 at TEC’s Kemp Surgery Center; Coon tolerated the procedure well and was sent home the same day. Id. at 153-54.

¶4 Coon’s recovery seemed normal until March 19, when he returned to TEC complaining of worsening pain and fever. Lab tests revealed an elevated white blood cell count, although an aspiration¹ of Coon’s knee showed no organisms on the gram’s stain. The next day, Coon was admitted to Providence Regional Medical Center for further evaluation and initiation of antibiotic treatment. On March 26, the fungus Scedosporium prolificans (SP) was isolated from the knee aspiration fluid collected on March 19. SP, a fungus typically found in soil and polluted waters, is extremely rare, aggressive, and resistant to most known and United States Food and Drug Administration-approved antifungal agents.

¶5 After other cultures grew out of the SP, Coon began the difficult process of antifungal therapy. The University of Washington Medical Center (UWMC) analyzed the pathology of Coon’s SP infection and confirmed resistance to antifungal agents. Throughout the month of April, physicians "contacted the [Centers for Disease Control], researched the literature, tried multiple antifungal agents, and consulted with nationally recognized [infectious disease] experts." Id. at 155. During these treatment regimens, Coon suffered severe nausea, vomiting, visual and auditory changes, and hallucinations, and developed Stevens-Johnson syndrome.² Id. By the beginning of May it was clear that all attempted measures had failed to control the infection.

¶6 As his condition severely worsened, Coon consulted with orthopedic surgeons from the UWMC Department of Orthopedics, TEC, and Swedish Medical Center. All advised that they were unfamiliar with this type of aggressive fungal infection and lacked the requisite expertise to provide any new treatment plans. Id. at 155-56. As a result, Coon was referred to the Mayo Clinic for treatment. Id. at 156. From August to October, Coon was seen at the Mayo Clinic by leading orthopedic surgeons and infectious disease physicians. They attempted a combination of aggressive surgical procedures and antifungal therapies with no success. Eventually, Coon’s leg had to be amputated due to extreme pain and limited function. The amputation was performed at the Mayo Clinic on October 17, 2012.

¶7 After the amputation, Coon returned to Washington for rehabilitation, prosthesis fitting, and physical therapy. Id. at 157. At the initiation of this litigation, Coon was still suffering from "ongoing phantom pain, stump pain, socket pain, low back and hip pain, trouble sleeping, and poor fit of his prosthesis with multiple falls." Id. In addition to the physical effects of the amputation, Coon has been severely limited in his ability to manage his business, and he struggles to return to the active lifestyle he enjoyed with his family.

Litigation and Settlement

¶8 During the period of treatment and recovery, TEC worked cooperatively with the Coons and paid a total of $322,645 for uncompensated medical expenses, travel, and accommodations.

Id. at 160. The Coons retained counsel to investigate any possible legal claims. Id. at 353.

¶9 Counsel for the Coon family went to great lengths to determine the source of the fungal infection, consulting with various experts. One theory, which evolved after discussions with an expert at the Mayo Clinic, was that the spores were potentially tracked into the operating room by a provider and then somehow managed to settle onto the graft tissue prior to insertion. Id. at 145. Another expert called into question the operation of the positive pressure ventilation system in the operating room, hypothesizing that the SP spores could have been transmitted from construction sites near the clinic. Id. at 146. After examining infection prevention standards at TEC, the history of fungal infections at TEC, and the presence of any permitted or unpermitted construction work during the procedure, the source of the SP fungal spores has yet to be determined. TEC rejects the above potential theories of liability and maintains that Coon was the likely carrier of the SP spores due to his "occupation as a landscaper." Id. at 159. Without extensive discovery to pinpoint an exact theory of causation, counsel concluded that the Coons had a res ipsa loquitur case. Id. at 145.

¶10 In addition to investigating potential theories of liability, counsel notified GHO in December 2013 that the Coons were being represented in connection with the injury and amputation. At that time, counsel requested a breakdown of GHO’s subrogation lien for benefits provided to Coon. GHO responded that it had provided medical coverage in the amount of $372,634, in accordance with GHO’s individual and family plan 2012 medical coverage agreement. Id. at 390-91. GHO asked counsel to " ‘[p]lease keep us informed regarding settlement negotiations and contact us prior to final settlement to confirm Group Health’s subrogation amount.’ " Id. at 392 (alteration in original).

¶11 In January 2014, counsel notified GHO that mediation of the Coons’ claim against TEC was scheduled for February. GHO advised that Pamela Henley would be the GHO contact for the mediation. GHO maintains that while it was notified when the mediation was postponed until March 2014, it was never consulted during the mediation negotiations that led to the settlement.

¶12 On April 25, 2014, the Coons and TEC signed a settlement agreement for an additional $2 million. Id. at 254-56. In total, the Coons received $2,328,936.86 from TEC for their negligence claims. Id. After receipt of the settlement, counsel for the Coons advised GHO that his firm would hold back the amount of GHO’s lien in its trust account until May 30, 2014 and requested that GHO waive its reimbursement rights. Id. at 392. On May 30, 2014 at 3:39 p.m., Henley responded that GHO would not waive its reimbursement rights but would pay "its equitable apportionment of the collection costs and legal fees/expenses incurred to recover GH[O]’s subrogated interest." Id. Counsel informed Henley on June 2, 2014 that his firm had disbursed the remaining funds to the Coons. Id. at 393.

¶13 In 2016, GHO filed a complaint in Snohomish County Superior Court, seeking a determination of its subrogation rights and a judgment against the Coons for $372,634, the amount of medical expenses paid by GHO. Id. at 495. Both sides filed motions for summary judgment. The superior court granted GHO’s motion and held:

Reasonable minds can reach but one conclusion as to the following facts:

a. Parties may decide by agreement what amounts to full compensation for their damages taking into account their chances of success or failure at trial.

....

c. Once a party settles a claim, the party has identified and accepted the amount of settlement as full compensation for the party’s damages.

....

g. By settling for less than the available insurance policy limits in consideration of Defendants’ evidence of damages versus risk of failure at trial, NATHANIEL COON and LORI COON’s agreement to settle constitutes full compensation for their damages as a matter of law.

Id. at 511-12 (Order Granting Pl. GHO’s Mot. for Summ. J.). The superior court entered judgment against the Coons...