Michael D’Eramo

Graves-Gilbert Clinic has been approved by the Western Kentucky U.S. Bankruptcy Court for a reorganization plan that effectively wipes out most of the debt associated with lawsuits brought against the Bowling Green-based multi-specialty physician clinic.

The physician-owned clinic filed for Chapter 11 bankruptcy protection in December 2022, following an August 2022 verdict in Warren Circuit Court in which a jury awarded a total of $21.3 million in damages to Alice Duff and her husband Lloyd Duff in a medical malpractice lawsuit.

That award meant the Duffs were by far the largest unsecured creditors on the bankruptcy filing.

In the reorganization plan approved by the bankruptcy court last week, GGC will establish a pool of $1.8 million to be shared among all claimants.

According to a news release from GGC, the plan will allow the clinic to “pay its vendors and establish a fund to be shared among current tort claimants, and the amounts to be distributed exceed what is required by bankruptcy law.”

The news release said the reorganization plan will allow the clinic the opportunity to “modernize its operational and financial models to help protect against potential future liability.”

When it filed for bankruptcy protection, GGC cited a need to continue meeting its obligations to its employees and continue its business operations. The plan for exiting Chapter 11 will accomplish that, according to the physician who serves as president of the GGC board of directors.

“It is important we ensure there are no disruptions in patient care, and the exit plan approval provides that opportunity,” GGC President Dr. Jerry Roy said in a news release.

GGC, established in 1937 and now encompassing more than 200 providers across 30 medical specialties and a total of 26 locations across Bowling Green and surrounding counties, may not have its legal troubles behind it despite the reorganization approval.

Chad Gardner, the attorney representing the Duffs, said Friday he plans an appeal.

“There is an appellate process for relief from bankruptcy judgments,” he said. “We do plan to appeal, unless we can work out a different agreement.”

That will mean a continuation of the Duffs’ lengthy legal journey that has now lasted a decade.

The Duffs sued GGC and Dr. Tage Haase in 2014, alleging negligence on the part of the doctor who performed in 2013 elective hernia surgery on Alice Duff, who developed serious complications from a perforated bowel.

Attorney Gardner brought out in the trial that Alice Duff underwent a total of five surgeries beyond the initial hernia surgery and that bloodstream infection caused retinal damage that left her legally blind.

A jury awarded $13,310,887.24 to Alice Duff and an additional $8 million to Lloyd Duff, but they stand to see only a fraction of those amounts under the reorganization plan.

“It’s a disappointment to us,” Gardner said. “But the Duffs are wonderful people and very strong people of faith. While disappointed, this is not the end of the world for them.”

In addition to appealing the bankruptcy judgment, Gardner is moving forward with a claim against GGC insurer State Volunteer Insurance Company.

GGC’s new CEO, Michael D’Eramo, said in a news release that the bankruptcy ruling will now allow the clinic to continue providing medical care to what the news release said is more than 1 million patients annually.

“Graves-Gilbert Clinic is pleased to be able to continue to be a key provider of health care in southcentral Kentucky,” D’Eramo said in the news release. “We will act on the lessons learned through this process and, going forward, see how we can ensure high-value medical care.”