A judge has refused to undo a $2.3 million medical malpractice judgment against a former Salem medical clinic that didn’t know it was being sued because its registered agent did not forward the suit papers.

A former patient obtained a default judgment and secured a jury verdict before the defunct clinic’s doctors were ever alerted to the patient’s lawsuit, according to pleadings in the case. The lawyer who was the clinic’s registered agent had failed to forward suit papers to the owners, the clinic claims.

Despite the clinic’s motion to vacate the judgment and allow a do-over, a circuit judge ruled the judgment would stand.

The judgment may not be worth much for the plaintiff. The company no longer operated as a clinic when it was sued and had few asset$ and no insurance, according to persons familiar with the case. Defendant doctors who moved on to new practices may still have exposure.

Unwelcome call

News of the judgment came as a surprise. Orthopedist Preston A. Waldrop of Salem got an unexpected phone call Sept. 17, he said in a written declaration. On the phone was Roanoke lawyer Phillip V. Anderson. Anderson said he was representing Sale_m:lawyer Jeffrey L. Dorsey, the lawyer that Waldrop’s medical group had hired in 2015 as registered agent.

Anderson told Waldrop that a $2.3 million judgment had been entered against Waldrop’s former practice group on Sept. 9. Waldrop, the president and a 25% owner of the group, said he talked with the other shareholders. None had been aware of the lawsuit or the judgment.

Salem Orthopaedics – formerly known as Virginia Orthopaedics – had ceased business operations in the fall of 2018 when most of its medical staff moved to the LewisGale Regional Health System, Waldrop said. Nevertheless, Salem Orthopaedics remained as an active business entity to receive payments and satisfy remaining obligations, Waldrop said.

The clinic contends Dorsey did not notify the business of the lawsuit after suit papers were delivered to Dorsey’s office. The malpractice plaintiff did not contest that claim.

Waldrop said Salem Ort opaedics “promptly retained counsel” to try to vacate the judgment and to allow the group to defend the case on the merits.

Clash over default 

The group’s lawyer, Josph M. Rainsbury of Richmond, filed a motion to vacate on Sept. 30. An amended final order entered Sept. 23 had extended the 21-day window for asking Judge Designate William N. Alexander to revisit the judgment.

“Because Defendant was not responsible for the procedural default and was unaware of it until a little over a week ago, and because Plaintiff has suffered little or no prejudice from the short delay occasioned by the procedural default, Defendant asks that this Court vacate its Amended Final Order and grant defendant leave to file its Answer,” Rainsbury wrote.

“The defendant offers n!) legitimate excuse for its delay,” responded lawyers for Kimberly Salyers, the patient who claimed a misplaced surgical suture damaged her peroneal nerve.

“Even if Mr. Dorsey was careless in his handling of the service of process, the defendant remains responsible for his error,” wrote Anthony M. Segura of Roanoke who, with Jonathan Rogers of Floyd, represents Salyers. “Inadvertence or failure to exercise due diligence in responding to legal process does not constitute a reasonable or legal excuse for failing to comply with filing requirements,” plaintiff’s counsel said.

The parties clashed over whether the breakdown in delivery of process should be attributable to the practice group. The group contended it never received “actual notice.”

“Salem Orthopaedics certainly regrets that events have unfolded the way they have. It would have preferred to have received timely notice of Plaintiff’s claim – either from its registered agent or from Plaintiff herself – so that it could promptly have filed responsive pleadings. But through no fault of its own, Salem Orthopaedics never received timely notice of Ms. Salyers’ claims against it,” Rainsbury wrote.

The clinic’s lawyer point’ed to the plaintiff’s nonsuit of claims against two individual medical professionals in the group, suggesting the clinic’s unwitting passivity was enabled by the plaintiff’s litigation strategy.

Alexander denied the motion to vacate the judgment in an order filed Oct. 8, court records showed.

Another action possible

The plaintiff’s nonsuit of the two medical providers could allow for separate lawsuits against them. Salyers said in her complaint she was treated by both orthopedist Mark L. Hagy MD and physician assistant Christopher R.
Deneault. Neither was ever served in the suit that led to the default judgment.

Hagy now practices primarily in South Dakota, according to Waldrop’s declaration.

Segura, Rainsbury and Anderson all declined comment on the record about the case.

Source: Virginia Layers Weekly