Appeals panel decides Chicago surgical center wanted malpractice trial, can't sue insurer for $1.3M

By Dan Churney | Apr 30, 2019

900 N. Michigan Ave., Chicago   Naipicnirp at English Wikipedia [CC BY-SA 3.0 (]

A Chicago federal appeals court says a Chicago surgical center is just as responsible as its insurer for the decision to take a medical malpractice case to trial rather than settle, meaning it can't now sue the insurer over the decision, which cost the surgical center $1.3 million.

On April 25, three judges with the U.S. Seventh Circuit Court of Appeals affirmed a lower court decision dismissing the lawsuit brought by The Surgery Center at 900 North Michigan Avenue LLC that alleged its malpractice insurer, American Physicians Assurance Corporation, cost it $1.3 million by taking a case to trial instead of settling for the $1 million policy cap.

The ruling was delivered by Circuit Judge Joel Flaum, with agreement from circuit judges Frank Easterbrook and Diane Sykes.

American Physicians is headquartered in East Lansing, Mich. The Surgery Center is an outpatient surgical facility in the 900 North Michigan tower on the Magnificent Mile.

Seventh Circuit Judge Joel Flaum  

The case stemmed from a 2003 medical malpractice suit brought against The Surgery Center by a woman , whose bowel was allegedly perforated during an operation. Surgical staff allegedly failed to notice the perforation. The 34-year-old woman later developed sepsis that left her quadriplegic, according to her suit.

The physician who did the surgery was not an employee of the Surgery Center. He settled with the woman in 2007 for $1 million, his policy limit.

American Physicians hired attorneys to defend the center and the case went to trial in 2010 in Cook County Circuit Court, with a jury returning a $5.2 million verdict. The woman eventually agreed to accept $2.3 million. However, The Surgery Center's coverage with American Physicians was only up to $1 million, leaving the center responsible for the rest.

The center then sued American Physicians in U.S. District Court for the Northern District of Illinois, alleging the insurer's attorneys acknowledged before trial there was "significant" risk that the center would be found liable, especially because the woman was "very sympathetic," but nonetheless refused to accept the woman's pretrial offer to settle the case for $1 million.

District Judge Sharon Johnson Coleman dismissed the case in 2018, finding evidence showed that the attorneys, rather than being doomsayers, believed they had a strong chance of winning and expressed that optimism to the center. And the center, through its president, Guita Griffiths, had pressed the insurer to contest the case.

"Everyone agreed, everyone from lawyers to medical to the plaintiff herself, that there was a really good chance  of — they would be successful as to no liability finding," Coleman said.

On appeal, Circuit Judge Flaum said Judge Coleman was not wrong.

"The district court relied on Griffiths’s emails to Lowis (one of the defense attorneys) insisting Surgery Center had done nothing wrong with respect to caring for" the woman, "imploring Lowis to be as aggressive as possible in defending the case, and expressing appreciation that American Physicians Assurance was not settling," Flaum pointed out.

As examples of Griffiths's exhortations to take the case to trial, Flaum drew attention to a passage in one of Griffiths's emails, in which she said: "The constant increase in premiums have literally made one of our centers not profitable, and we’re wondering how we’re going to get by." Another passage read: "I beg you to be as aggressive as possible and use every available means to make this painful and expensive for the plaintiff and her lawyer."

In another message, Griffiths described the malpractice suit as "frivolous," and entreated: "Please do not consider settling this case under any circumstances.”

Flaum noted that Griffths "severely undermined" the center's case against American Physicians, with "document after document" indicating Griffiths believed the malpractice suit was defensible, because the center was not negligent in treating the woman. 

Flaum further noted American Physicians told The Surgery Center of the $1 million policy limit and that an adverse verdict could be as much as $10 million, the difference of which the center would have to pay.

The Surgery Center is represented by the Chicago firm of Spellmire Bruck LLP. 

American Physicians is defended by Stamos & Trucco, of Chicago and Steptoe & Johnson, of Phoenix, Ariz.

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Organizations in this Story

Spellmire Law Firm Stamos & Trucco Steptoe & Johnson PLLC U.S. Court of Appeals for the Seventh Circuit U.S. District Court for the Northern District of Illinois

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