Soto v. Super. Ct. of Riverside Cty.

321 Cal.Rptr.3d 531

Arasely SOTO et al., Petitioners,

v.The SUPERIOR COURT OF RIVERSIDE COUNTY, Respondent;

State Teachers’ Retirement System, Real Party in Interest.

E081902

Court of Appeal, Fourth District, Division 2.

Filed May 29, 2024

ORIGINAL PROCEEDINGS; petition for writ of mandate. Daniel A. Ottolia, Judge. Petition denied. (Super.Ct.No. CVRI2102358)

Law Offices of Russell G. Petti and Russell G. Petti for Petitioners.

Klinedinst, Natalie P. Vance, Sacramento, Robert M. Shaughnessy, San Diego, and Kaleigh E. Thomas, for Real Party in Interest.

No appearance for Respondent.

OPINION

MENETREZ J.

Arasely Soto was injured during a routine medical procedure and had to retire from her job as a public school teacher. She sued her medical providers for medical malpractice and also sought disability retirement benefits from the California State Teachers’ Retirement System (CalSTRS). She and her husband, Raul Soto, settled with several of the medical malpractice defendants. (We occasionally refer to the Sotos by their first names for the sake of clarity. No disrespect is intended.)

CalSTRS brought this action against the Sotos, seeking to enforce its light to subrogation or reimbursement. The complaint alleges that CalSTRS is entitled to be reimbursed for Arasely’s disability benefits from her settlement with the malpractice defendants. CalSTRS moved for summary adjudication on its declaratory relief cause of action, and the Sotos moved for summary judgment. In connection with both motions, the Sotos argued that Civil Code section 3333.1 bars any subrogation claim that CalSTRS would have asserted against the malpractice defendants. (Unlabeled statutory citations are to this code.) Subdivision (a) of section 3333.1 "authorizes a defendant in a medical malpractice action to introduce evidence of a variety of ‘collateral source’ benefits—including health insurance, disability insurance or worker’s compensation benefits. Apparently, file Legislature’s assumption was that the trier of fact would take the plaintiff’s receipt, of such benefits into account by reducing damages." (Barme v. Wood (1984) 37 Cal.3d 174, 179, 207 Cal.Rptr. 816, 689 P.2d 446 (Barme).) Subdivision (b) of the statute "provides, in turn, that '[n]o source of collateral benefits introduced pursuant to subdivision (a) shall recover any amount against the plaintiff nor shall it be subrogated to the rights of a plaintiff against a defendant.’ " (Barme, at pp. 179-180, 207 Cal.Rptr. 816, 689 P.2d 446.)

The trial court granted CalSTRS’s motion and denied the Sotos’ motion. The court concluded that CalSTRS was entitled to seek reimbursement from the Sotos and rejected the Sotos’ section 3338.1 defense.

The Sotos filed this petition for writ of mandate asking us to vacate the trial court’s orders. They argue that CalSTRS cannot assert a statutory reimbursement claim against them and that any equitable claim is barred by section 3333.1. In opposition, CalSTRS argues that (1) it has a statutory reimbursement claim against the Sotos, (2) as a matter of law section 3333.1 does not apply to its claim, and (3) in the alternative, even if section 3333.1 could apply in principle, there is no evidence to support application of section 3333.1 in this case.

We agree with CalSTRS’s first and third points: CalSTRS has a statutory reimbursement claim against the Sotos, and the evidence in this case does not support application of section 3333.1 to bar CalSTRS’s claim. We accordingly express no opinion on the parties’ legal arguments concerning the applicability of section 3333.1 in general. Because the Sotos’ section 3333.1 defense is factually unsupported, we deny the writ petition.

BACKGROUND

I. Arasely’s Injury, the Malpractice Action, and Her Disability Benefits¹

Arasely was a teacher at an elementary school in the Beaumont Unified School District. She is a member of CalSTRS and its defined benefit program. In March 2015, Arasely suffered a cerebral artery stroke during a routine medical procedure at San Gorgonio Memorial Hospital (the hospital). The stroke resulted in a brain injury and other physical and cognitive impairments. Dr. Devin Borna was one of Arasely’s treating physicians.

In July 2015, the Sotos filed a malpractice action against the hospital, Dr. Borna, and others. Raul brought the action in his individual capacity and as guardian ad litem for Arasely.

The medical malpractice complaint alleged causes of action for negligence and loss of consortium. The complaint sought compensatory damages for lost wages and lost earning capacity, hospital and medical expenses, and general damage.

Dr. Borna served a subpoena on CalSTRS in March 2017. The subpoena sought the production of "[a]ny and all records regarding [Arasely’s] pension benefits." CalSTRS responded the following month by producing the requested documents. It also sent a letter to Arasely’s counsel in the malpractice action informing counsel that CalSTRS was complying with the subpoena.

The Sotos attended a CalSTRS benefits planning session in January 2018. CalSTRS gave them information and documents about applying for disability benefits. The documents explained CalSTRS’s "[r]ight of subrogation" as follows: "[I]f you pursue a claim against a third party for the same impairment that entitles you to a disability benefit from CalSTRS, you must notify us. This is true even if the claim has not yet resulted in a court action. [¶] CalSTRS has the right to participate in the claim by filing our own action against the responsible party, intervening in your claim, or filing a lien against any judgment you may recover. [¶] If you don’t notify CalSTRS and you recover—or have already recovered—a monetary sum from the third party, you may be required to reimburse CalSTRS for part of the costs of your disability benefit."

One day after the Sotos’ benefits planning session with CalSTRS, they released their claims against Dr. Borna in exchange for a six-figure settlement.

Ten days later, Arasely filled out an application for disability benefits. Her application stated that her injuries were caused by employees of the hospital, including Dr. Borna. CalSTRS acknowledged receipt of Arasely’s application for disability benefits in February 2018. That same day, the court in the malpractice action granted the Sotos’ request to dismiss Dr. Borna from the lawsuit.

CalSTRS asked Arasely for documents to substantiate her claim for disability benefits in February and May 2018, and she responded by producing over 1,600 pages of documents.

In May 2018, the Sotos released their claims against the hospital in exchange for a seven-figure settlement. Eight days later, the Sotos dismissed the malpractice action with prejudice.

CalSTRS approved Arasely’s application for disability benefits in late June 2018. CalSTRS learned of the Sotos’ settlements with the hospital and Dr. Borna after it had approved Arasely’s application.

II. CalSTRS’s Complaint and the Motions for Summary Adjudication and Summary Judgment

CalSTRS brought this action against the Sotos in May 2021. The complaint alleges that CalSTRS has a right of subrogation against the malpractice defendants because they caused Arasely’s disabling injuries, but the Sotos deprived CalSTRS of that right by failing to notify it of the malpractice action and the settlements and failing to obtain CalSTRS’s consent to the settlements. The complaint further alleges that because of the Sotos’ failures, CalSTRS is entitled to reimbursement directly from the Sotos. On that basis, the complaint alleges eight causes of action, including statutory subrogation (Ed. Code, §§ 24500, 24502), equitable subrogation, breach of contract, constructive trust, declaratory relief, offset, breach of statutory duties, and breach of quasi-contract.

CalSTRS moved for summary adjudication on its cause of action for declaratory relief and to resolve an issue of duty. It sought a declaration that it was entitled to statutory and equitable subrogation from the Sotos or a ruling that the Sotos had a duty to reimburse CalSTRS for Arasely’s disability benefits. CalSTRS argued that Education Code section 24500 generally gave it a right of subrogation against third-party tortfeasors who caused a member’s disabling injury, but it was entitled to reimbursement from the injured member if the member settled with the tortfeasors without prior notice to CalSTRS. CalSTRS further argued that it had an equitable right of subrogation from the Sotos to prevent them from receiving a double recovery for Arasely’s injuries.

In addition, CalSTRS argued that its reimbursement claim was not barred by section 3333.1. CalSTRS argued that section 3333.1 did not apply in this case for three reasons: (1) CalSTRS was not a source of collateral benefits for purposes of section 3333.1; (2) Arasely’s disability retirement benefits were never introduced as evidence in the malpractice action; and (3) the statutes governing CalSTRS’s right of subrogation were enacted after section 3333.1, and the later-enacted statutes prevailed.

The Sotos moved for summary judgment on the complaint. In relevant part, they argued that Education Code sections 24500 and 24502 authorized CalSTRS to recover from third-party tortfeasors who injured Arasely, but the sections did not authorize recovery from the Sotos. They additionally argued that section 3333.1’s bar on subrogation or reimbursement applied in this case. Raul’s declaration in support of their summary judgment motion stated that he filled out Arasely’s application for disability benefits with the assistance of counsel, and he wrote in the application that employees of the hospital, including Dr. Borna, had caused Arasely’s injuries. He did not know that CalSTRS needed more information. But if CalSTRS had asked for any other information about the litigation, the Sotos would have given it to them.

The trial court granted CalSTRS’s motion for summary adjudication on the declaratory relief cause of...