XML 29 R18.htm IDEA: XBRL DOCUMENT  v2.3.0.11
Note 12 - Litigation and Compliance with Health Care Regulations:
6 Months Ended
Jun. 30, 2011
Legal Matters and Contingencies [Text Block]
NOTE 12 – LITIGATION AND COMPLIANCE WITH HEALTHCARE REGULATIONS:

From time to time, we and our Partner fertility centers, and vein clinics and their physicians are parties to legal proceedings in the ordinary course of business. We are exposed to claims of professional negligence based on services performed by our employees, including physician assistants and nurse practitioners, as well as based on our relationships with physicians providing treatments at our Partner fertility centers and vein clinics.

On January 15, 2009, a patient of our Partner fertility center, Fertility Centers of Illinois, S.C.(“FCI”), filed suit (Heather Kornick vs. Lawrence A. Jacobs, M.D. and Fertility Centers of Illinois, S.C.), in the Circuit Court of Cook County, Illinois (the “Kornick Lawsuit”),  alleging, among other things, a failure to diagnose plaintiff's adrenal cortical carcinoma. In June 2009, plaintiff amended their complaint to add the Company and, more recently, two of the Company's nurse employees, as defendants.  The parties participated in a mediation on July 5, 2011 and have received a release from the plaintiff dated July 28, 2011, in consideration of $4.5 million, $1.65 million of which the Company is obligated to pay.  The balance of the settlement amount is the responsibility of the Company’s insurance carrier and FCI.  The Company’s obligation of $1.65 million is reflected on the financial statements for the three and six month periods ending June 30, 2011 as “Legal Settlement”.

In May 2009, a complaint entitled Sally Ware and Christopher Ware v. Daniel Baxter Whitesides and Reproductive Endocrinology Associates of Charlotte (REACh) was filed in the Superior Court Division, Mecklenburg County, State of North Carolina.  The lawsuit alleged that due to defendants’ negligence, an embryo with a genetic disease was implanted into Sally Ware which resulted in the birth of a child with cystic fibrosis.  The plaintiffs’ claims were adjudicated via binding arbitration. On April 11, 2011 the arbitration panel found no negligence on behalf of the physician and REACh, but found that plaintiffs were injured because of the negligence of a nurse who is a Company employee. The arbitrators awarded the plaintiffs $26,381 in damages for wrongful conception and $2.0 million in damages for severe emotional distress.   The insurance carrier for the physician and REACh who paid the plaintiffs approximately $1.5 million has, by letter dated April 19, 2011, demanded reimbursement from the Company of the amount paid to plaintiffs on behalf of the physician and REACh. The Company denies any obligation to reimburse the carrier and will vigorously defend any claims for such reimbursement although the Company can offer no assurances that it will be successful in defending any such claim, if brought against the Company.

The Company records accruals for contingencies when it is probable that a liability has been incurred and the amount can be reasonably estimated. These accruals are adjusted periodically as assessments change or additional information becomes available.  As of June 30, 2011, the Company has recorded an expense of $1.65 million  related to the Kornick Lawsuit.  Legal defense costs expected to be incurred in connection with a loss contingency are accrued when probable and reasonably estimable.

We currently maintain medical malpractice insurance with limits of $1 million per physician and $1 million for the entity, regardless of the number of the covered defendants, and $10 million per year in the aggregate, with respect to our Partner fertility centers, and with limits generally equal to $1 million per physician and $10 million per year in the aggregate, with respect to our vein clinics. Our Partner fertility centers, vein clinics and their physicians are additional named insured’s under our policies. All of our insurance policies are subject to deductibles or a self-insured retention. A portion of the insurance for certain of our fertility centers is provided by ARTIC (an entity which provides professional liability insurance to a number of the physicians that we contract with).