ORDER (M/Intervene — #23)

PEGGY LEEN, Magistrate Judge

The court conducted a hearing on Summerlin Hospital Medical Center's Motion to Intervene and For Determination of Good Faith Settlement (#23) on July 1, 2008. Kerry L. Earley, Esq., appeared on behalf of the plaintiffs; Nicholas Wieczorek, Esq., appeared on behalf of defendant Baxa; and Ken Webster, Esq., appeared on behalf of the movant, Summerlin Hospital. The court considered the motion, the Opposition of defendant McKesson (#24), defendant Baxa's Response (#39), Plaintiffs' Joinders (##40, 48), Summerlin's Memorandum of Good Cause (#43), Baxa Corporation's Supplemental Response (#46), Summerlin's Supplement (#47), and the arguments of counsel at the hearing.

BACKGROUND

This a wrongful death action arising out of the death plaintiffs' infant who was born October 19, 2006 and treated at Summerlin Hospital. Baby Alyssa died at Summerlin Hospital on November 9, 2006. The infant was administered a lethal dose of zinc intravenously through a Total Parental Nutrition ("TPN") which provided her nutrition. Plaintiffs assert their child received 1000 times the appropriate dose and was slowly poisoned to death. Her death and the circumstances which caused it received intense public scrutiny and publicity.

The Nevada State Board of Pharmacy conducted public hearings and took testimony from Pamela Goff, Nazanin Rezvan, Asia Cornelius, Jackson Yu, and Gretta Woodington, Summerlin Hospital employees who were involved in processing and administering the doctor's order for the zinc. The State Board's hearings were widely publicized, and portions of the hearings were televised live. At the conclusion of the hearings, the Pharmacy Board made findings of fact and conclusions of law, finding that Ms. Goff, Ms. Cornelius, Ms. Rezvan, and Mr. Yu had violated certain provisions of the Nevada Revised Statutes and the Nevada Administrative Code. The Board also found the Summerlin Pharmacy violated Nevada Revised Statute and Nevada Administrative Code in establishing and enforcing the policies and procedures and in owning and operating the pharmacy in which all of the Board's factual allegations and legal violations occurred. (See Findings of Fact and Conclusions of Law of the Nevada State Board of Pharmacy, attached as exhibit "A" to Baxa's Response (#39)).

Plaintiffs sued defendant Baxa in this lawsuit asserting it developed, researched, designed, manufactured, and supplied the compounding device and related component software which delivered the lethal dose of zinc to the plaintiffs' infant, Alyssa Shinn. Plaintiffs reached a confidential settlement with Summerlin Hospital prior to filing this lawsuit. Summerlin seeks to intervene for the limited purpose of obtaining a determination that its settlement with the plaintiffs was entered in good faith for purposes of extinguishing contribution and equitable indemnity claims pursuant to the provisions of N.R.S. 17.245.

Summerlin Hospital refused to produce a copy of its Settlement Agreement with the plaintiffs to counsel for Baxa, and counsel for Baxa, therefore, sought the court's assistance in compelling a copy of the Agreement. Counsel for Baxa indicated that the defendant may or may not have an opposition to the motion by Summerlin Hospital, but was unable to evaluate its options without an opportunity to review the settlement agreement. The court entered an Order (#41) directing Summerlin Hospital to provide a copy of the Settlement Agreement and Release to counsel for Baxa, finding fundamental fairness and due process dictated that the defendant have an opportunity to examine the Agreement in order to take a position concerning whether the settlement reached between the plaintiffs and Summerlin Hospital was in good faith. A protective order was entered precluding the parties from disclosing the terms of the Settlement Agreement and Release for any purpose unrelated to Summerlin Hospital's Motion to Intervene and For Determination of Good Faith Settlement, without further leave of the court. Finally, the order permitted Summerlin Hospital to file a copy of the Settlement Agreement and Release under seal, but required submission of a memorandum supported by affidavit or declaration that good cause exists to protect the information from public disclosure under the standards articulated by the Ninth Circuit in Kamakama v. City and County of Honolulu, 447 F. 3d. 1172 (9th Cir. 2006).

DISCUSSION

A judicial determination that the settlement between the plaintiffs and Summerlin was made in good faith releases the settling parties from contribution and equitable indemnity claims of any non-settling joint tortfeasors under N.R.S. 17.245(1)(b). The parties agree that the court has broad discretion in determining the fairness and overall appropriateness of the proposed settlement. See, Duk v. MGM Grand Hotel, Inc., 320 F.3d 1052, 1060-1061 (9th Cir. 2003), citing, Velsicol Chem. v. Davidson, 107 Nev. 356, 811 P. 2d 561, 563 (Nev. 1991) (per curium). The parties also agree that this court should apply the factors identified by this court in In Re MGM Grand Hotel Fire Litigation, 570 F. Supp. 913, 927 (D. Nev. 1983), in determining whether the settlement between the plaintiffs and Summerlin Hospital was reached in good faith. These factors include: 1) the amount paid in settlement, 2) the allocation of the settlement proceeds among the plaintiffs, 3) the insurance policy limits of the settling party, 4) the financial condition of the settling party, and 5) the existence of collusion, fraud, or tortuous conduct aimed to injure the interests of non-settling defendants.

In Veslicol, the Nevada Supreme Court held that the determination of whether a settlement was reached in good faith "should be left to the discretion of the trial court based upon all relevant factors available, and that in the absence of an abuse of that discretion, the trial court's findings should not be disturbed." Id. In The Doctors Company v. Vincent, 120 Nev. 644, 651-652, 98 P. 3d. 681 (2004), the Nevada Supreme Court found that the MGM factors adopted by this court "may be relevant to a district court's determination of good faith", but were not the "exclusive criteria for determinations of good or bad faith". Id. The Nevada Supreme Court found that in addition to the MGM factors, a court deciding whether a settlement was reached in good faith may

. . . assess the relative liability permutations of the particular contribution or indemnity action known to it, including the strengths and weaknesses of the contribution or indemnity claims. This standard of review vests the district court with considerable discretion.

ANALYSIS

Baxa also argues that the plaintiffs' settlement with Summerlin Hospital is not a good faith settlement on a number of grounds. First, both plaintiffs and Summerlin Hospital relied on the damages cap in N.R.S. 41A.035 to evaluate plaintiffs' damages in reaching their settlement. Baxa asserts that the applicability of the statutory damages cap to this case is uncertain because the statute only applies to professional negligence actions, and plaintiffs asserted negligent hiring and negligent training claims against the hospital which may not be covered by the statute. Second, Baxa argues that the N.R.S. 41A.017 which defines who is a provider of health care for purposes of N.R.S. 41A.035 does not mention pharmacists or pharmacy technicians. Baxa concedes that Summerlin Hospital's pharmacists and pharmacy technicians "might qualify" as employees of a hospital for purposes of the damages cap limitation, but asserts that this interpretation of the statute would cover almost any employee of a hospital, including for example, security guards and janitors. Third, Baxa argues that it is unclear whether the Nevada medical malpractice damages cap applies to these plaintiffs because arguably both parents and the estate of baby Alyssa each qualify as an injured plaintiff for purposes of the cap. If so, Summerlin Hospital's damages would be capped at $1,050,000 (three times $350,000), which is less than the amount of plaintiffs' settlement with Summerlin. Finally, Baxa argues that the amount of Summerlin Hospital's settlement with the plaintiffs was not adequate because Summerlin had significant exposure for punitive damages, and punitive damages are not compensatory in nature and, therefore, not capped by the provisions of N.R.S. 41A.035.

During oral argument, counsel for plaintiffs urged the court to find the settlement was reached in good faith. Counsel for plaintiffs has more than 25 years of litigation experience in the field of personal injury and medical malpractice law. She articulated the rationale for reaching the settlement with Summerlin Hospital prior to filing suit, and how she evaluated the settlement value of this case. In response to the court's inquiry, she represented that between the two settlements reached with Summerlin Hospital and Baxa, she believed her clients had been made whole for their legally compensable claims. She also explained her analysis of the provisions of N.R.S. 41A.035 which established a $350,000 damages cap for non-economic compensatory damages in an action for professional negligence against a provider of health care. She indicated that she was familiar with the legislative history and legislative intent behind the statute as she had served as a lobbyist on behalf of doctors seeking the legislation. Counsel for plaintiffs also pointed out during oral argument that she had asserted claims against Baxa for strict products liability, failure to warn, and negligence and that plaintiffs sought punitive damages against Baxa. None of the plaintiffs' claims against Baxa are capped by the provisions of N.R.S. 41A.035. Finally, she represented that plaintiffs' economic damages were either non-existent or nominal because the plaintiffs had personal insurance coverage.

Having reviewed and considered the moving and responsive papers and the arguments of counsel, the court finds that the settlement reached between the plaintiffs and Summerlin Hospital is a good faith settlement for purposes for N.R.S. 17.245. Without disclosing the specific amounts of the settlement plaintiffs have reached with both Summerlin Hospital and Baxa, all parties agree that the combined settlements fairly compensate the plaintiffs for their legally compensable losses. In fact, Baxa takes the position that the amount of Summerlin Hospital's settlement alone fairly compensates the plaintiffs for their legally compensable losses. (See, Supplement Response (#46) 7:1-5.) Summerlin Hospital paid two-thirds of the total settlement, and Baxa paid one-third. Baxa makes no claim that the equal allocation of settlement proceeds among the plaintiffs is not equitable.

In evaluating the fairness and overall appropriateness of the proposed settlements, the court has considered the extensive pre-filing investigation of this case, and the public hearings conducted by the State Pharmacy Board concerning the acts and omissions of the hospital, pharmacy, and individuals involved in the series of events which resulted in the death of baby Alyssa. Counsel for all of the parties involved in this litigation have extensive litigation experience in evaluating liability and damages claims of this nature, and were well informed about the State Board of Pharmacy's Findings of Fact and Conclusions of Law. In fact, at a hearing conducted on the parties' proposed discovery plan and scheduling order, counsel for the parties informed the court that the substantial investigation conducted by the State Board of Pharmacy would narrow the focus and need for certain discovery.

Baby Alyssa was born prematurely at 26 weeks, weighing slightly over one pound and died within three weeks of her birth. The nature of her parents' compensatory damages claim are for the loss of probable economic support to the family resulting from her death. Although the plaintiffs were optimistic about their daughter's prognosis, her premature birth and its implications about her future health were factors counsel for plaintiffs took into account in evaluating plaintiffs' compensatory damages. Summerlin Hospital's settlement far exceeded the $350,000 damages cap for non-economic compensatory damages. Although counsel for Baxa argued that it is uncertain whether the damages cap can be "stacked" to provide a $350,000 compensatory recovery per plaintiff, counsel for plaintiffs analyzed the cap differently. Counsel for plaintiffs was intimately familiar with the legislative process which resulted in enacting the non-economic compensatory damages cap in professional negligence actions as she served as a lobbyist for doctors who successfully obtained this legislation. She, therefore, has more expertise than most lawyers concerning the legislative process, legislative intent, and applicability of the statutory cap on damages as they apply to her clients in this case.

Summerlin Hospital is self-insured for this loss, and the combined Summerlin and Baxa settlements with the plaintiffs are well below the excess liability insurance policy limits. Summerlin Hospital did not offer any evidence of its financial condition. However, all counsel believe the plaintiffs have been fairly compensated by the combined settlements paid by Summerlin Hospital and Baxa. In fact, counsel for Baxa asserted in its Supplemental Response (#46) that Baxa did not believe the plaintiffs were entitled to recover more than the amount they received in settlement with Summerlin, but agreed to settle with the plaintiffs because it was aware of cases involving baby overdoses that resulted in jury awards as high as $24 million. Baxa, therefore, agreed to settle with the plaintiffs notwithstanding its position that the plaintiffs had already been fully compensated by the recovery from Summerlin Hospital because of Baxa's own potential multi-million dollar exposure to the plaintiffs. Baxa's argument that Summerlin Hospital's settlement alone fairly compensated the plaintiffs belies any suggestion of collusion, fraud, or tortious conduct aimed at injuring Baxa. Finally, plaintiffs' claims against Baxa for strict products liability, failure to warn, and negligence are clearly not statutorily capped.

Under all of these circumstances, the court finds counsel for the parties had more than adequate information to evaluate the strengths and weaknesses of their respective liability and damages claims and defenses, and that the settlement reached between the plaintiffs and Summerlin Hospital was a good faith settlement. Specifically, the court finds that the amount Summerlin Hospital paid in settlement to the plaintiffs was fair, and that the equal allocation between the plaintiff parents was appropriate. Summerlin Hospital did not have a primary insurance policy applicable to this law, was self-insured, and settled well below its excess policy insurance limits. Therefore, the lack of information concerning Summerlin Hospital's financial condition does not militate against a finding of good faith. Finally, now that the amount in terms of the plaintiffs' settlement with Summerlin Hospital have been disclosed, there is nothing in the record to support a finding of the existence of collusion, fraud, or tortious conduct aimed at injuring the interests of Baxa. In fact, Baxa's position that the plaintiffs were fully compensated by the amount of Summerlin Hospital's settlement alone belies the suggestion of collusion, fraud, or tortuous conduct designed to injure Baxa as Baxa concedes it settled with plaintiffs to avoid its own potential multi-million dollar exposure to the plaintiffs.

CONCLUSION

Applying the MGM Grand Hotel factors and having considered the fairness and overall appropriateness of the settlement between Summerlin Hospital and the plaintiffs, the court has exercised its broad discretion and determined the settlement was reached in good faith. Summerlin Hospital's good faith settlement with the plaintiffs, therefore, discharges the settling parties from all liability for contribution and for equitable indemnity to any other joint tortfeasor by operation of N.R.S. 17.245(1)(b). The determination that the settlement was reached in good faith does not, however, preclude Baxa from pursuing any rights expressly provided for in a written agreement. See, N.R.S. 17.245(2).

For all of the foregoing reasons,

IT IS ORDERED Summerlin Hospital's Motion to Intervene and For Determination of Good Faith Settlement (#23) is GRANTED.