Judge considers letting hepatitis trials go forward

By Jeff Pope

Wednesday, Aug. 26, 2009 | 7:29 p.m.

Federal Bankruptcy Court Judge Mike Nakagawa said Wednesday that he would consider a request to lift a stay against three beleaguered endoscopy centers to allow trials to move forward. Nakagawa said he would issue a written decision but did not give a timeline.

Time is running out for the sickest of the patients to have their day in court, said attorney Will Kemp, who represents many people who claim they acquired hepatitis C from unsafe medical procedures at the clinics founded by Dr. Dipak Desai.

Kemp said the bankruptcy is preventing patients from trying to collect on insurance policies, estimated at $6 million, from the centers’ provider, Nevada Mutual Insurance.

Lifting the stay would allow the trials to continue and could encourage the insurer to pay on all claims. Without the trials, there is no foundation for the claims, Kemp said.

The U.S. bankruptcy trustee opposed lifting the stay, saying it may allow a select group of creditors to collect the limited available insurance money, which would leave other creditors empty-handed.

Attorney Jason Redd, who represents the trustee, said his client also needs more time to review the lawsuits, which have been under way for about two years.

“We do not want to see a race to the courthouse,” he said.

The civil trials against the Endoscopy Center of Southern Nevada, the Gastroenterology Center of Nevada and the Desert Shadow Endoscopy Center have been on hold since the health centers filed Chapter 7 bankruptcy on July 17. The filing enacted an automatic stay preventing creditors from taking action against the centers.

The first trial scheduled in Clark County District Court on Oct. 19.

The centers and Desai lack the assets to cover the claims of the 300 patients who tested positive for hepatitis C and the more than 4,000 who filed suits to recover testing costs and compensate for emotional distress while awaiting the results, Kemp said.

Three drug makers are being sued on the theory that their sale of jumbo-sized 50-milliliter propofol anesthetic vials contributed to the infections by prompting reuse of the vials, since the drug makers’ literature said smaller 10-milliliter vials were ideal for endoscopies.

Kemp said the drug makers’ potential liability could significantly reduce the potential damages to be paid by the bankrupt clinics.

The first 10 trials are “test cases” that could serve as foundations for settling the remaining suits, Kemp said.