A recent New Jersey Law Journal story by Micheal Booth, “Justices to Hear Appeal in Denial of Med Mal Counsel Fees Ruling” reports that the New Jersey Supreme Court will hear the appeal of a medical malpractice plaintiff who took the rare step of seeking counsel fees under the offer-of-judgment rule but failed to recover those fees because an appeals court ruled that the settlement agreement did not address the issue.

In February, an appeals court refused to award the plaintiffs the counsel fees because of the failure to address the issue at settlement.  "Without evidence that the parties agreed to allow plaintiff to seek amounts in excess of the high, [the plaintiff] was not entitled to any other payments," the Appellate Division said in its ruling.

"Parties are always free to preserve any claim they might have pursuant to a court rule or otherwise when settling a case … but they must clearly state that intention at the time of the settlement," Judge Garry Rothstadt wrote for the panel.

In the suit, plaintiff Ben Serico of West Caldwell claimed he was administered a colonoscopy by physician Robert Rothberg in December 2007, but two years later he was diagnosed with colon cancer that had spread to his liver.  Serico died two years after his diagnosis, in December 2011, at age 62, after which his wife, Lucia Serico, continued to pursue claims that Rothberg negligently failed to treat the cancer.

The appeals court said Lucia Serico made an offer of judgment of $750,000 before trial, to which Rothberg never responded.  Settlement negotiations began in earnest during the trial, and the parties entered a high-low agreement providing for a minimum recovery of $300,000 and a maximum of $1 million.  During the negotiations, neither side raised a possible fee award, or a reservation or waiver of rights, or the offer of judgement, according to the decision.

A jury found for the plaintiff after a two-week trial before Essex County Superior Court Judge James Rothschild Jr., and awarded $6 million, thus triggering the $1 million "high."  (The jury attributed 20 percent of damages to the decedent's pre-existing cancer, which, absent the high-low, would have reduced the award to $4.8 million.)

Because the $1 million judgment was more than 120 percent of the previous $750,000 offer, Serico, citing Rule 4:58, moved for an award of fees and costs.  Each side acknowledged that the issue hadn't been raised at the negotiations during trial, the decision said.

Rothschild denied the motion.  He found there was no evidence of intent to determine that Serico's rights to a fee sanction under the rule had been preserved.  He also referred to his 42 years' experience as a civil lawyer and judge, as well as the experience of colleagues he consulted, and said high-low settlements were rarely if ever followed by fee applications under Rule 4:58, according to the decision.

Judges Ellen Koblitz and Susan Reisner joined Rothstadt in the appellate ruling.  "By entering into the high-low agreement, plaintiff could not recover any amount beyond the 'high' to which she agreed because the agreement limits the total amount of defendant's obligation to that amount," Rothstadt wrote, adding that such agreements are "subject to traditional rules of contract interpretation."  The panel did warn against Rothschild's approach in the case, holding that "reliance on [his] personal experience was misplaced."

Serico’s attorney, Robert Solomon, said he was pleased the court took the case.   “The Appellate Division put the burden on the plaintiff” to demonstrate that counsel fees should be awarded, said Solomon, of Roseland’s Nagel Rice.  “The burden should be on the defendant to obtain relief from sanctions.”