If Michael D’Eramo has any trepidation about taking the reins of a physician-owned medical clinic in the midst of a Chapter 11 bankruptcy reorganization, he isn’t showing it.

D’Eramo, an Ohio native who has filled the CEO role at Bowling Green-based Graves-Gilbert Clinic after the recent retirement of Chris Thorn, goes into the job open to both the pitfalls and the possibilities at a multi-specialty medical group that experienced rapid growth during Thorn’s 16 years at the helm.

Started in 1937 by doctors G.Y. Graves and J.T. Gilbert, GGC has grown along with Bowling Green and now has more than 200 providers across 30 medical specialties and a total of 26 locations across Bowling Green and surrounding counties.

GGC’s smooth route to expansion, though, hit a pothole last year. A Warren Circuit Court jury’s August 2022 award of $21.3 million in a medical malpractice case was the main factor leading to the clinic filing in December for bankruptcy protection and reorganization in U.S. Bankruptcy Court for the Western District of Kentucky.

“It’s an unfortunate state for the group right now,” D’Eramo said Thursday during an interview at GGC’s Park Street headquarters. “But, based on what I’ve learned, it probably was an essential move.”

It was a move necessitated by that $21.3 million jury award to Alice Duff and her husband Lloyd Duff that stemmed from a 2014 lawsuit brought by the Duffs against GGC and Dr. Tage Haase.

The Duffs alleged 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.

According to GGC’s bankruptcy filing, the heavy load of debt resulting from the jury award put the clinic in an untenable position.

A declaration in the bankruptcy filing by GGC Chief Financial Officer Steven Sinclair said the action was needed “to preserve the debtor’s ability to continue to care for the over 1 million patients seen by the clinic each year.”

The impact of the jury award is evident in the bankruptcy filing. It lists 20 unsecured creditors totaling $28 million, so the Duffs are by far the largest of those creditors.

So large, in fact, that the Duffs’ attorney alleges that the bankruptcy filing is an effort to illegally avoid GGC’s obligations in circuit court.

Attorney Chad Gardner has filed a motion to dismiss the bankruptcy case for cause.

In that motion, Gardner writes: “The law prohibits use of the bankruptcy system for the improper purposes of avoiding responsibility for state court obligations or to escape the responsibilities of state court judgments when evidence demonstrates a debtor is otherwise financially sound.”

A ruling hasn’t yet come on Gardner’s motion, GGC’s submittal of a plan of reorganization, or GGC’s appeal of the Duff verdict; but D’Eramo is hopeful for a resolution before the end of the year.

“Our hope is that by the end of the year we’ll be on the right track,” he said. “Anything less than a resolution is damaging to our patients and to Bowling Green.”

Working through a reorganization won’t be a new experience for the 64-year-old D’Eramo, who has encountered similar situations during some 40 years in physician management, most recently as CEO for eight years of the Toledo Clinic in that Ohio city.

“It’s not the first time I’ve had to help an organization get from point A to point B,” he said. “We’ve had situations where we’ve had to restore the fiscal stability of both hospitals and doctor groups.

“They’re all different. It might be a restructuring post-merger, where you need to go in and re-organize the financial infrastructure, or you might have to change the governance or the compensation.”

D’Eramo promises to be “assertive in risk management and assertive in taking care of patients”, and he says he will try to adopt policies that head off the type of lawsuits that can lead to large jury verdicts.

“I’m a big believer in alternative dispute resolution,” he said. “If a patient is harmed, the first thing you need to do is apologize. The second thing you need to do is make sure that money and bills are reconciled and the patient is taken care of.

“When you get to where attorneys are putting tens of millions of dollars in their pockets, I don’t see how that helps the patient or the community.”

Despite the difficulties brought on by the bankruptcy, D’Eramo promises to continue Thorn’s practice of reaching out to the greater Bowling Green community through organizations like the Bowling Green Area Chamber of Commerce.

“I think the chamber is essential,” he said. “Employers have a common complaint: the cost of health care has gotten out of hand.

“They want to know how they can provide benefits to employees and how they can ensure quality. If we’re not helping with that conversation through the chamber, we’re not doing our job.”