After record-breaking malpractice award, Coralville clinic files for bankruptcy

An Iowa medical clinic that is facing a multimillion-dollar malpractice judgment has filed for bankruptcy.

In March, a Johnson County jury awarded more than $97.4 million to the family of a boy who sustained serious brain damage during his birth at an Iowa City hospital.

The boy’s parents, Kathleen and Andrew Kromphardt, had sued Mercy Hospital of Iowa City and Obstetric and Gynecologic Associates of Iowa City and Coralville as defendants, along with Dr. Jill Goodman, one of the directors of the Coralville clinic.

The Kromphardts contended their son’s brain damage was caused by medical workers’ failure to properly respond to signs the baby was deprived of oxygen in the hours leading up to his birth in August 2018.

The boy, now 4, is unable to walk by himself and is largely unable to speak. At trial, the family’s lawyer argued the child will likely need 24-hour care for the rest of his life.

The jury award in the case is believed to be the largest medical malpractice judgment in Iowa history.

Court records indicate the jury found Mercy Hospital and the Coralville clinic to each be 50% at fault in the case.

But as a result of a pretrial agreement between Mercy Hospital and the Kromphardts, the hospital’s liability was capped at $7 million, which the hospital paid shortly after the trial was concluded.

That left the Coralville clinic liable for the remainder of the award – although there is a dispute as to how much that obligation is.

Under Iowa law, if defendants are found to be 50% or more at fault in a civil case, their share of the total liability for economic damages and non-economic damages is treated differently.

The Kromphardts’ attorney has taken the position that the Coralville clinic’s total liability in the matter is now $75 million, while the clinic’s lawyers have taken the position that the clinic is responsible for roughly $45 million, or half of the $97 million award once the hospital’s $7 million payment is subtracted.

On Monday, the clinic filed for bankruptcy, citing the full $97.4 million judgment in the case as a claim against the company.

Court records suggest the jury award is the sole reason for the bankruptcy: Only six other creditors of the clinic are listed in the bankruptcy filing, and their claims are small, ranging from $243 to $37,043.

The three directors and shareholders of the clinic are Dr. Goodman, Dr. Lori Wenzel and Dr. Jami Shepard.

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