An Iowa City medical clinic on the hook for over a $75 million malpractice judgment — in which a newborn suffered permanent brain damage during delivery due to negligence — filed last month for bankruptcy protection after its Minnesota insurance provider hasn’t paid its part of the liability.
Legal experts told The Gazette that the clinic likely filed for bankruptcy in anticipation of suing its insurance carrier for not paying its policy limits of $12 million.
The bankruptcy will further delay the infant’s family from receiving the judgment it was awarded by a jury. Besides the appeal process, now the family will have to file a claim in bankruptcy court.
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Sixth Judicial District Judge Kevin McKeever previously denied motions for new trial or a reduced verdict of the $97.4 million a Johnson County jury awarded in March against Mercy Hospital in Iowa City and OB GYN Associates in Iowa City and Coralville.
The jury found the hospital and clinic equally were negligent and equally responsible for damages and awarded the parents, Andrew and Kathleen Kromphardt of Iowa City, the $97.4 million.
The Kromphardts sued the hospital and Dr. Jill Goodman and OB GYN Associates for negligence after the 2018 birth. Their attorney, during trial, said the health care providers “improperly used forceps and a vacuum, crushing the baby’s head” during delivery.
The child, now 4, has cerebral palsy, a learning disability, cannot walk by himself and requires 24-hour care for the rest of his life.
The jury award is the largest ever made in an Iowa medical malpractice case, Geoffrey Fieger, lead attorney for the Kromphardts from Southfield, Mich., said after the 14-day trial.
However, according to a pretrial agreement between Mercy Hospital and the Kromphardts, the hospital’s liability was capped at $7 million, which the hospital has paid.
Court documents state the clinic is liable for over $75.6 million and is now required to pay its damages following the judge’s orders on the post-trial motions. The clinic’s insurer, MMIC Inc., with headquarters in Minneapolis, is required to pay $12 million, which is what the clinic is insured for under its policy.
In a letter to the Kromphardts, a lawyer for MMIC stated it would be willing to pay its $12 million policy limits pending appeal, according to a show-cause motion filed by the Kromphardts. The motion is asking the court for a hearing to order MMIC to explain why it hasn’t paid yet and why the company shouldn’t be held in contempt.
Even after a MMIC lawyer admitted its liability obligation, it still hasn’t paid its debt, the motion stated. The company now has proposed placing $12 million in an interest-bearing account to be paid only pending the completion of the appeal.
The Kromphardts’ attorneys filed an execution of judgment — orders requiring the payment of money, or possession of property — in Johnson County last month on both the clinic and MMIC, according to court documents. The demand of payments were made by the Polk and Johnson county sheriff offices but neither MMIC or the clinic paid their obligations.
The clinic then filed for bankruptcy under Chapter 11 in U.S. Bankruptcy Court for the Southern District of Iowa on Oct. 31, according to court documents. Chapter 11 allows a corporation to remain in business while it seeks to reorganize.
Fieger said Friday this “tactic” — filing for bankruptcy — could have been avoided if MMIC would have paid the clinic’s policy limits of $12 million. He said he is planning on filing a complaint with Iowa Insurance Commissioner Doug Ommen and will make a claim for his clients in the bankruptcy action.
Tim Semelroth, a Cedar Rapids lawyer who regularly handles medical malpractice cases, pointed out a lawsuit — in which he is not involved — filed in Polk County that also involves MMIC not wanting to pay policy limits to another Iowa medical clinic.
That clinic is being sued for performing a “radical prostatectomy” when it mistakenly diagnosed a patient with prostate cancer, according to the lawsuit. In that suit, Nick Rowley and Dominic Pechota with Trial Lawyers for Justice in Decorah, asserted MMIC has refused to act in good faith.
There were three cases in Iowa that went to trial over the past six years that resulted in jury verdicts totaling over $150 million. In each of these cases, MMIC made “low ball” offers to settle, forcing the cases to go to trial, the suit said.
Semelroth said this is the first time in his 25 years handling medical malpractice cases that he’s seen a defendant take this step because its carrier wouldn’t pay its part of the liability.
The clinic filed bankruptcy to protect its assets, but also as a legal strategy in the event it decides to file a suit against MMIC, he said.
The Kromphardt’s show-cause motion is asking for the court to set an in-person hearing this month.
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Legal experts told The Gazette that the clinic likely filed for bankruptcy in anticipation of suing its insurance carrier for not paying its policy limits of $12 million.
The bankruptcy will further delay the infant’s family from receiving the judgment it was awarded by a jury. Besides the appeal process, now the family will have to file a claim in bankruptcy court.
Advertisement
Sixth Judicial District Judge Kevin McKeever previously denied motions for new trial or a reduced verdict of the $97.4 million a Johnson County jury awarded in March against Mercy Hospital in Iowa City and OB GYN Associates in Iowa City and Coralville.
The jury found the hospital and clinic equally were negligent and equally responsible for damages and awarded the parents, Andrew and Kathleen Kromphardt of Iowa City, the $97.4 million.
The Kromphardts sued the hospital and Dr. Jill Goodman and OB GYN Associates for negligence after the 2018 birth. Their attorney, during trial, said the health care providers “improperly used forceps and a vacuum, crushing the baby’s head” during delivery.
The child, now 4, has cerebral palsy, a learning disability, cannot walk by himself and requires 24-hour care for the rest of his life.
The jury award is the largest ever made in an Iowa medical malpractice case, Geoffrey Fieger, lead attorney for the Kromphardts from Southfield, Mich., said after the 14-day trial.
However, according to a pretrial agreement between Mercy Hospital and the Kromphardts, the hospital’s liability was capped at $7 million, which the hospital has paid.
Court documents state the clinic is liable for over $75.6 million and is now required to pay its damages following the judge’s orders on the post-trial motions. The clinic’s insurer, MMIC Inc., with headquarters in Minneapolis, is required to pay $12 million, which is what the clinic is insured for under its policy.
In a letter to the Kromphardts, a lawyer for MMIC stated it would be willing to pay its $12 million policy limits pending appeal, according to a show-cause motion filed by the Kromphardts. The motion is asking the court for a hearing to order MMIC to explain why it hasn’t paid yet and why the company shouldn’t be held in contempt.
Even after a MMIC lawyer admitted its liability obligation, it still hasn’t paid its debt, the motion stated. The company now has proposed placing $12 million in an interest-bearing account to be paid only pending the completion of the appeal.
The Kromphardts’ attorneys filed an execution of judgment — orders requiring the payment of money, or possession of property — in Johnson County last month on both the clinic and MMIC, according to court documents. The demand of payments were made by the Polk and Johnson county sheriff offices but neither MMIC or the clinic paid their obligations.
The clinic then filed for bankruptcy under Chapter 11 in U.S. Bankruptcy Court for the Southern District of Iowa on Oct. 31, according to court documents. Chapter 11 allows a corporation to remain in business while it seeks to reorganize.
Fieger said Friday this “tactic” — filing for bankruptcy — could have been avoided if MMIC would have paid the clinic’s policy limits of $12 million. He said he is planning on filing a complaint with Iowa Insurance Commissioner Doug Ommen and will make a claim for his clients in the bankruptcy action.
Tim Semelroth, a Cedar Rapids lawyer who regularly handles medical malpractice cases, pointed out a lawsuit — in which he is not involved — filed in Polk County that also involves MMIC not wanting to pay policy limits to another Iowa medical clinic.
That clinic is being sued for performing a “radical prostatectomy” when it mistakenly diagnosed a patient with prostate cancer, according to the lawsuit. In that suit, Nick Rowley and Dominic Pechota with Trial Lawyers for Justice in Decorah, asserted MMIC has refused to act in good faith.
There were three cases in Iowa that went to trial over the past six years that resulted in jury verdicts totaling over $150 million. In each of these cases, MMIC made “low ball” offers to settle, forcing the cases to go to trial, the suit said.
Semelroth said this is the first time in his 25 years handling medical malpractice cases that he’s seen a defendant take this step because its carrier wouldn’t pay its part of the liability.
The clinic filed bankruptcy to protect its assets, but also as a legal strategy in the event it decides to file a suit against MMIC, he said.
The Kromphardt’s show-cause motion is asking for the court to set an in-person hearing this month.
Iowa City clinic owing $75M judgment files bankruptcy
An Iowa City medical clinic that owes parents of a newborn who has permanent brain injury files for bankruptcy protection after its insurance carrier hasn’t paid policy limits.
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