Any award of damages in a Massachusetts injury case, whether through a plaintiff’s verdict or settlement agreement, can still present challenges if the defendants either fail to pay or cannot pay the ordered amount. The federal First Circuit Court of of Appeals addresses this in Vargas-Colon v. Foundation Damas, Inc. (Nos. 16-1213 and 16-1620). The underlying injury happened to a child who was born by cesarean section after the mother had been in the hospital for several hours. Because of this delay, the child did not receive enough oxygen and suffered permanent neurological defects.
The parents initiated a medical malpractice action in the federal district court, alleging the doctor and hospital were negligent in the care and delivery of the child. The parties reached a settlement agreement with the defendants paying $1.5 million in eight installments. This was entered into a judgment, and the district court retained jurisdiction over the terms of the settlement. After the first payment of $400,000, the hospital failed to make the scheduled payments. Instead, the hospital filed for bankruptcy. The plaintiffs moved to dismiss the hospital’s bankruptcy petition alleging several claims including fraud and bad faith.
The bankruptcy case proceeded, and a reorganization plan was confirmed for the hospital for the court. Within the plan was a supplement that assured any medical malpractice claimant that they could still file a motion or legal action against the hospital in the pursuit of an action or collection of funds. The plan also did not preclude medical malpractice claimants from pursuing actions against third parties. At this point the plaintiffs only received a little under $645,000 – less than half of the $1.5 million agreed upon in the settlement agreement.