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Johnson County clinic was ‘forced’ into bankruptcy after $75M malpractice award

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Johnson County clinic was ‘forced into bankruptcy after 75M malpractice

IOWA CITY — A Johnson County medical clinic that owes a $75 million malpractice judgment to parents of a newborn who suffers permanent brain damage said its recent filing for bankruptcy protection wasn’t a “tactic” to sue its insurance provider.

Earlier this month, both the parents’ lawyer and another Cedar Rapids lawyer not involved in the case said the clinic likely filed its bankruptcy petition in anticipation of a suing its insurance provider because the provider hasn’t paid the clinic’s policy limits of $12 million for the judgment.

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However, Dr. Jill Goodman with OB-GYN Associates, which has locations in Iowa City and Coralville, said in a statement this week that the petition was a difficult business decision the firm was “forced” to make because of the “aggressive actions” of the lawyers who represent the infant’s parents, Andrew and Kathleen Kromphardt of Iowa City.

“We have been silent regarding repeated smears of our name and reputation by the plaintiff’s attorneys, but we want the truth to be heard,” Goodman said.

She denies there was any negligence by the clinic and said it was “shocking” that a plaintiff could succeed in a lawsuit at the “lower court” based on “repeated half-truths and unethical tactics.”

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“We empathize with the family that were long time patients of our clinic and we’re thankful to understand that their health insurance had covered all but $460 of their medical bills,” Goodman said. “We believe the appeal process will properly address these wrongs.”

A Johnson County jury in March found Mercy Hospital in Iowa City and OB-GYN Associates equally were negligent and equally responsible for damages and awarded the Kromphardts a $97.4 million judgment.

Geoffrey Fieger, a Michigan lawyer for the Kromphardts, said during the trial that the health care providers “improperly used forceps and a vacuum, crushing the baby’s head” during delivery in 2018. 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.

Sixth Judicial District Judge Kevin McKeever previously denied the clinic’s motions for new trial or a reduced verdict of the largest judgment of its kind ever awarded in Iowa, and ordered the judgment to be paid after his rulings on post-trial motions.

Mercy Hospital has paid its liability, which was capped at $7 million, according to a pretrial agreement between Mercy Hospital and the Kromphardts.

In a letter to the Kromphardts, a lawyer for the clinic’s provider, MMIC Insurance, based in Minneapolis, 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 asks the court for a hearing to order MMIC to explain why it hasn’t yet paid.

Goodman said MMIC had made several attempts to find a “suitable resolution” with the Kromphardts to allow the clinic to remain in operation during the pending appeal. She said MMIC also was willing to pay above policy limits to prevent an execution of judgment on the clinic’s assets, but it was rejected by the Kromphardts’ lawyers and they “improperly sent a sheriff to our clinic without a proper court order to intimidate us into foregoing the appellate process to which we are entitled.”

The Kromphardts’ attorneys filed an execution of judgment — order 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 on Oct. 31, according to court documents. Chapter 11 allows a corporation to remain in business while it seeks to reorganize.

The clinic also served a formal notice to the family’s lawyers, stating they violated an automatic stay — to suspend legal proceedings — as a result of the bankruptcy filing.

Judge McKeever said he would rule on the show cause motion and violation of stay once both sides have responded.

Comments: (319) 398-8318; trish.mehaffey@thegazette.com

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