Record malpractice case pits medical clinic against insurer – Iowa Capital Dispatch
A Johnson County medical clinic hit with a record-breaking malpractice lawsuit in 2022 is now being sued by its insurer over alleged attempts to scuttle an appeal of that decision.
A nationally prominent attorney at the clinic fired back, saying he plans to sue the insurer for more than $1 billion over the damage he says the company caused to Iowans.
In March 2022, a Johnson County jury awarded more than $97.4 million to the family of a boy who suffered severe brain damage during birth at an Iowa City hospital. The award, believed to be the largest medical malpractice judgment in Iowa history, was later reduced to $75.6 million.
The boy’s parents, Kathleen and Andrew Kromphardt, had sued the Iowa City and Coralville Associates of Obstetrics and Gynecology as defendants, along with Dr. Jill Goodman, one of the clinic’s directors.
The Kromphardts said their son’s brain damage was caused by the failure of health care workers to respond adequately to signs that the baby was deprived of oxygen in the hours before he was born in August 2018.
The boy, now 4, is unable to walk on his own and is largely unable to speak. At trial, the family’s attorney argued that the child will likely need around-the-clock care for the rest of his life.
The $75.6 million judgment was appealed by the clinic’s insurance company, MMIC Insurance Inc.
The clinic and its insurer are now at loggerheads
MMIC says last September, with its appeal of the ruling still pending, it offered to pay the policy limit, $12 million, into an escrow account for Kromphardt’s counsel, on the condition that the funds be returned to MMIC if the insurer prevailed in its appeal. .
According to MMIC, Kromphardts’ attorney allegedly rejected that offer and so, two months ago, MMIC agreed to simply pay the Kromphardts the $12 million.
Around the same time, however, the clinic reportedly hired a new legal counsel in the form of Nicholas C. Rowley, a high-profile attorney and Iowa native who claims to have won more than $2 billion for his clients in verdicts and agreements. Rowley, according to MMIC, was hired by the clinic to take any legal action against the insurer over its handling of the malpractice case.
Earlier this week, MMIC filed a federal lawsuit against the clinic in an attempt to block Rowley and the clinic’s alleged attempts to undermine MMIC’s appeal of the $75.6 million judgment. In court filings, MMIC says Rowley and the clinic are now considering bringing a “bad faith claim against MMIC stemming from the March 2022 verdict.”
According to MMIC, Rowley wrote to the insurance company on June 2 and said: “I went to see Judge Bennett and spent about half an hour in the room with (the Kromphardts) discussing how we could work together and push back the appeal and move forward”. with a joint action against MMIC.
Rowley’s letter is also purported to say, I believe the outlook on this case will change very soon and that after the unprecedented motions that we – the clinic – plan to file, the chances of MMIC getting a retrial will decrease to less than 10%.
Citing those alleged statements by Rowley, MMIC is now seeking a federal court order allowing its appeal of the $75.6 million judgment, noting that the appeal has been fully briefed on all parties and is simply pending. pending a decision by the Iowa appellate courts.
MMIC argues that “Rowley’s stated agenda is to eliminate or otherwise jeopardize the appeal” and is seeking an injunction that protects the Iowa Supreme Court’s opportunity to decide the appeal and protects what MMIC calls the its “right to supervise” any litigation over the matter.
When asked about MMIC’s allegations, Rowley told the Iowa Capital Dispatch on Friday, MMIC is a greedy out-of-state insurance company that has been causing harm to Iowa patients, families and healthcare workers for far too long. MMIC comes to Iowa and takes money and refuses to give back when it should. This case is where it is due to MMIC’s textbook insurance bad faith that it wouldn’t get away with it in other states. This out-of-state company influences Iowa politicians and passes laws that harm the civil rights of Iowa residents. In fact, I intend to sue MMIC on behalf of the clinic. The suit will be for over $1 billion for the harm this greedy insurance company has caused to good people in my home state. I will be successful no matter what shenanigans MMIC throws at us.
The lawsuit follows the bankruptcy filing
This latest round of litigation follows a failed bankruptcy filing by the clinic last fall. Kromphardts’ lawyers had disputed the filing, claiming it was filed in bad faith to avoid payment of the malpractice award.
Court records indicate that prior to the trial, Kromphardts’ attorneys extended offers to settle the dispute over the $12 million insurance policy limit. to the clinical location in the case.
Following the verdict, the clinic appealed and requested that a stay be imposed to halt any collection efforts until the appeal was heard. The Iowa Supreme Court denied that request, but the appeal remained in effect.
Last October, the sheriff arrived at the clinic to initiate the seizure of company assets, and the clinic filed for Chapter 11 bankruptcy to protect its assets and stay in business.
On Jan. 20, the liquidator in the bankruptcy lawsuit filed a motion in the court, alleging that the clinic was acting in bad faith by filing for bankruptcy, arguing it was a litigation tactic to avoid paying a bond that would have secured some of the clinic’s resources. .
In a March 29 decision that dismissed the bankruptcy case, US Bankruptcy Judge Anita L. Shodeen expressed concern about the relationship between the clinic and its insurer, MMIC. The judge suggested that the insurance company may have given the clinic some financial favors in exchange for filing the clinic for bankruptcy as part of an effort to protect MMIC from having to pay out a $12 million policy.
He noted that MMIC paid fees to the clinic’s bankruptcy practitioners and offered the clinic favorable terms on its insurance coverage when no one else would. Additionally, the judge said, MMIC had offered to extend credit to the clinic.
A question arises as to whether the bankruptcy was motivated by an appropriate purpose or to obtain financial benefit from MMIC in exchange for filing for bankruptcy to attempt to protect it from paying out under the policy, Shodeen said in its decision.
The clinic, meanwhile, had provided little evidence to demonstrate its good faith on the matter, Shodeen added. The clinic appealed Shodeen’s decision in the case.
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