Gugelmin v. Florida Birth Related Neurological Injury Compensation Association, et al.

In July of 1994, Stella Gugelmin gave birth to
twin sons – Bernardo and Giuliano.
Unfortunately, there were complications during the
birth of the second child, Giuliano, and he
sustained brain or spinal cord injuries due to
oxygen deprivation. It was eventually determined
that Giuliano had sustained a birth-related
neurological injury, as defined by section
766.302(2), Florida Statutes. The issue in this
appeal is whether the Gugelmins may accept a
settlement in their medical malpractice suit and still
recover the benefits provided under Florida's
Birth-Related Neurological Injury Compensation
Plan ("NICA"). The trial court determined that,
under the circumstances of this case, the parents
could not recover both the civil settlement and
NICA benefits, requiring them to select a remedy.
We affirm this decision.

Florida's Birth-Related Neurological Injury
Compensation Plan

In 1988, the Florida Legislature created the
Florida Birth-Related Neurological Injury
Compensation Plan. See § 766.301(1), Fla. Stat.
(Supp. 1988). The statute authorized no-fault
compensation for birth-related neurological
injuries, but "exclude[d] all other rights and
remedies . . . arising out of or related to a medical
malpractice claim with respect to such injury . . .
." § 766.303(2), Fla. Stat. (Supp. 1988).

At the time of Giuliano's July 1994 birth,
NICA's exclusive remedy provision provided as
follows:

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The rights and remedies granted by this plan
on account of a birth-related neurologic al injury
shall exclude all other rights and remedies . . .
against any person or entity directly involved
with the labor, delivery, or immediate
postdelivery resuscitation during which such
injury occurs, arising out of or related to a
medical malpractice claim with respect to such
injury . . . .

§ 766.303(2), Fla. Stat. (1993).

In 1998, the legislature substantially amended
NICA's exclusive remedy provisions. While the
above-cited language of section 766.303(2)
remained the same, the legislature amended
section 766.304, vesting the administrative law
judge with exclusive jurisdiction to determine
whether the child had suffered a birth-related
neurological injury. See § 766.304, Fla. Stat.
(Supp. 1998). If the administrative law judge finds
that the child has sustained a birth-related
neurological injury, then a civil action may not be
"brought or continued." Id. Further, the 1998
amendments specifically bar a claim for NICA
benefits in the event that "the claimant recovers or
final judgment is entered."1

The Procedural History in the Instant Case

In February 1997, as a consequence of their
son's injuries, the Gugelmins filed a medical
malpractic e suit against Dr. Eric Freling, the
physician who delivered the twins, and his
professional association, Weinger, Zelnick and
Freling, P.A. (hereinafter "the Freling
defendants"). In the spring of 1999, the Freling
defendants tendered a $250,000 check to settle the
malpractice claim. The Gugelmins conditioned
acceptance of the settlement upon their ability to
also recover NICA benefits.

Thus, in June 1999, the Gugelmins filed a petition
for benefits with the Division of Administrative
Hearings. NICA agreed the child had sustained a
birth-related neurological injury, but, in light of the
exclusive remedy provision, contended that the
settlement tendered by the Freling defendants
precluded payment of benefits. In September
2000, an administrative law judge (ALJ) found that
the child had sustained a birth-related neurological
injury and, applying the 1998 amendments to the
NICA statutes, determined that, ordinarily, this
would preclude a civil suit. The ALJ went on to
find that there are two exceptions to the statute's
exclusive remedy provisions: bad faith and the
physician's failure to give notice. Here, the
physician had not provided notice. Consequently,
the ALJ determined that the Gugelmins could
either proceed in the civil suit and accept the
Freling defendants' settlement or they could
accept NICA benefits – they could not, however,
do both.2

The Gugelmins appealed, arguing that the ALJ's
determination that they had to elect between the
civil settlement and NICA benefits was in excess
of his jurisdiction. This court agreed that any
determination regarding election of remedies must
be made by a circuit court, reversing that portion
of the ALJ's order. See Gugelmin v. Div. of
Admin. Hearings, 815 So. 2d 764 (Fla. 4th DCA
2002).

In March of 2000, during the pendency of the
1

The current version of the statute provides that
"[a]n award may not be made or paid under ss. 766.301-
766.316 if the claimant recovers under a settlement or a
final judgment is entered in a civil action." § 766.304,
Fla. Stat. (2003).
2From its inception through the June 1999 NICA
petition filed in this case, there have been two
conditions precedent to the application of NICA and its
exclusive remedy provision: (1) the child must have
sustained a birth-related neurological injury as defined
by section 733.302(2), and (2) the defendant health care
provider must have provided the patient with notice of
the provider's participation in NICA. See §§ 766.302(2),
766.303(2), 766.316, Fla. Stat. (1988); §§ 766.302(2),
766.303(2), 766.316, Fla. Stat. (1997 & Supp. 1998);
Galen of Fla., Inc. v. Braniff, 696 So. 2d 308 (Fla. 1997).

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administrative proceedings, the Gugelmins were
granted leave to amend their complaint and to add
NICA as a defendant in the civil suit. By the time
the Second Amended Complaint was filed in
January 2001, the Gugelmins had added a claim
for declaratory relief, regarding their right to
recover both the civil settlement and NICA
benefits, and a new negligence theory. Originally,
the Gugelmins had alleged that both Dr. Freling
and his professional assoc iation were responsible
for Dr. Freling's negligence in delivering the twins.

In the new version, the Gugelmins added a claim
that Dr. Freling's professional association was
responsible for the actions of Dr. Waldman, the
employee physician who initially agreed to deliver
the twins and then "abandoned" them.
NICA filed a motion to strike the claim
pertaining to Dr. Waldman, alleging that (1) this
was an improper attempt to state a new cause of
action, (2) Dr. Waldman was not a party, (3) the
statute of limitations had run on any claim against
Dr. Waldman, and (4) the plaintiffs had failed to
comply with the pre-suit requirements that are a
condition precedent to any claim agains t
Waldman. NICA also argued that those counts
wherein the plaintiffs sought a declaration that
NICA's proposed construction of the statute failed
to account for the negligence allegations pertaining
to Dr. Waldman and denied the plaintiffs access to
the courts should be stricken as an improper
collateral attack on the ALJ's September 2000
order. Finally, NICA asserted that the Gugelmins
should be forced to elect a remedy.

In November 2000, the trial court granted
NICA's motions to strike and to dismiss and ruled
that the Gugelmins could either accept NICA
benefits or proceed in the civil suit, but they could
not do both. Thereafter, under protest, the
Gugelmins elected to accept NICA benefits. This
appeal followed. The Gugelmins have raised a
number of challenges to the trial court's order.

We affirm the judgment in all respects and write
to address a single issue – the Gugelmins'
contention that, under the NICA statutes in effect
at the time of their son's 1994 birth, they were
entitled to both the civil settlement and NICA
benefits and, thus, that the trial court erred in
forcing them to elect a remedy.

The Gugelmins' Entitlement to Recover Both
Civil Damages and NICA Benefits under the
1994 NICA Statutes

Following the 1998 amendments to NICA, it is
clear that a plaintiff's acceptance of a civil
settlement bars a claim for NICA benefits. In
Gilbert v. Florida Birth-Related Neurological
Injury Compensation Ass'n, 724 So. 2d 688 (Fla.
2d DCA 1999), however, the Second District
concluded that there was a loophole of sorts in the
pre-1998 NICA statutes; this loophole allowed a
plaintiff to recover NICA benefits where the
plaintiff first settled and disposed of the
malpractice claim without there having been a
determination as to whether the child had
sustained a birth-related neurological injury. The
Gugelmins assert that since their son was born
prior to the 1998 amendments,3 they too fit within
this loophole and, thus, they should have been
permitted to both retain the civil settlement and
recover NICA benefits.

The procedural posture of the Gilbert decision
is rather protracted. Michael McKaughan was
born on May 19, 1989; the child was a

3In enacting the 1998 amendments, the legislature
expressly stated that the amendments should apply to
any NICA claim filed on or after July 1, 1998, regardless
of the date of birth of the child. See Ch. 98-113, § 6, at
525, Laws of Fla. We note that in Romine v. Florida
Birth Related Neurological Injury Compensation
Ass'n, 842 So. 2d 148 (Fla. 5th DCA), review denied, 857
So. 2d 195 (Fla. 2003), the Fifth District held that these
1998 amendments could not be retroactively applied to
a child born prior to the passage of the amendments.

As we have concluded that the Gugelmins were not
entitled to both the civil settlement and NICA benefits
under either the statutes in effect at the time of their
son's 1994 birth or the 1998 amendments, we need not
reach this issue.

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quadriplegic and suffered substantial mental
impairment. In January 1992, Michael's parents
filed a medical malpractice suit. The defendants
countered that the suit was barred by NICA,
which provides the exclusive remedy for birthrelated
neurological injuries. The malpractice suit
was stayed and Michael's parents were directed
to file an administrative petition for NICA
benefits.

Michael's parents did file the NICA petition as
directed; however, they alleged that their son had
not suffered a birth-related neurological injury as
defined by NICA. As a consequence, the
administrative law judge dismissed the petition.

The Second District affirmed the dismissal, holding
that it was for the circuit court, in the malpractice
suit, to determine whether the child had sustained
a birth-related neurological injury and whether
NICA provided the exclusive remedy. See
Humana of Fla., Inc. v. McKaughan ex rel.
McKaughan, 652 So. 2d 852 (Fla. 2d DCA
1995).4

The malpractice suit resumed and a guardian ad
litem was appointed to represent the interests of
the child. In May 1996, the guardian ad litem filed
a second petition for NICA benefits. The
administrative proceedings were stayed, however,
pending a Florida Supreme Court decision
addressing pre-delivery notice of NICA
participation. The civil proceedings, though,
continued. Prior to trial, Michael's parents
reached a settlement and the civil suit was
dismissed with prejudice. There was no judicial
determination regarding whether the child had
sustained a birth-related neurological injury.
After the settlement was reached, the stay was
lifted in the administrative proceedings. Among
other things, the parties stipulated that the parents
had settled and dismissed the malpractice suit
without any judicial determination as to whether
the child had sustained a birth-related neurological
injury and that the guardian ad litem had
participated in the settlement. The administrative
law judge dismissed the petition for NICA
benefits, finding that the claim was barred by the
doctrine of election of remedies and that to permit
the NICA petition to proceed following the civil
s ettlement would thwart the purposes of the
statute. The guardian ad litem appealed.

When the case once again returned to the
Second District, the court rejected the
administrative law judge's conclusion that the
NICA claim was barred. In so doing, the court
reasoned as follows:

The sole issue is whether the obtaining of
benefits as a product of a civil action forecloses
access to Plan benefits. The answer is yes if
that action resulted in a factual determination
that the infant was not a NICA baby.

Conversely, if an administrative petition results
in a determination that the infant is a NICA
baby, a civil action is foreclosed. The remedies
are mutually exclusive, but only upon a
determination of whether the infant is a NICA
baby. That is the core issue of both the civil
action and the administrative petition.
724 So. 2d at 690.

The instant case is factually distinguishable from
Gilbert. In Gilbert, the court held that the earlier
civil settlement did not bar the petition for NICA
benefits because the suit was dismissed without

4The Second District certified the issue to the
supreme court. The supreme court affirmed, holding
that "the NICA plan does not vest exclusive
jurisdiction in an administrative hearing officer to
determine the nature of an injury suffered by a newborn
infant when a medical malpractice action is filed
and a defendant health care provider raises the
exclusive remedy of the NICA plan as an affirmative
defense." Fla. Birth-Related Neurological Injury
Comp. Ass'n v. McKaughan, 668 So. 2d 974, 980 (Fla.
1996). It was the supreme court's decision in
McKaughan that prompted the 1998 amendments to
section 766.304, Florida Statutes. See S.B. 1070, Senate
Staff Analysis and Economic Impact Statement (Mar. 4,
1998).

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there ever having been a determination as to
whether the child had sustained a birth-related
neurological injury. That is not the case here
where the settlement was never approved by the
court and the medical malpractice suit remained
pending. It is true that the Freling defendants
tendered a $250,000 check in settlement of the
civil suit. The Gugelmins themselves, however,
took the position that the settlement was
conditional. Further, Giuliano's guardian ad litem
objected to the court's approval of any settlement
until it was determined whether the child's injuries
were compensable under NICA.

During the pendency of the civil suit, the ALJ
determined that Giuliano Gugelmin had suffered a
birth-related neurologic al injury as defined by
NICA. The ALJ's determination in this regard
brings the instant case under that portion of the
Gilbert opinion wherein the Second District held
that "if an administrative petition results in a
determination that the infant is a NICA baby, a
civil action is foreclosed." 724 So. 2d at 690.

Thus, even under the statutes in effect at the time
of Giuliano's birth and the Gilbert decision, were
it not for the Freling defendants' failure to comply
with NICA's notice provisions – a condition
precedent to application of NICA and its exclusive
remedy provisions, the Gugelmins would be limited
to only NICA benefits.

The holding in this case is consistent with the
outcome in Romine v. Florida Birth Related
Neurological Injury Compensation Ass'n, 842
So. 2d 148 (Fla. 5th DCA), review denied, 857
So. 2d 195 (Fla. 2003). There, the court held that
under the statute in effect prior to the 1998
amendments, the Romines were not precluded
from receiving NICA benefits simply because
they had already received a settlement in their
medical malpractice case. The Romine court
noted that in construing the pre-1998 version of
NICA, Gilbert held that a NICA eligible claimant
was not barred from receiving a recovery in a
malpractice case (with no judicial determination
that the child was not a NICA baby) and then
seeking benefits under NICA. Nevertheless, the
court in Romine, citing Gilbert, recognized that a
claimant could not obtain an administrative
determination of NICA eligibility and then still be
entitled to maintain a civil lawsuit. See 842 So. 2d
151. That is what the Gugelmins attempt to do.