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Bankruptcy Follows Hepatitis Scrutiny For Doctor

Fri, 03/05/2010 - 7:13am

Dr. Dipak Desai, whose Las Vegas clinics were at the center of a 2008 hepatitis scare in Las Vegas, has filed for personal Chapter 11 bankruptcy reorganization. The filing could affect upcoming malpractice trials involving Desai and other defendants.

Litigation is automatically put on hold in bankruptcy cases, though plaintiffs can petition the bankruptcy court to proceed with their cases. Nevada's Bankruptcy Court has already allowed certain malpractice lawsuits to proceed against Desai's clinics, several of which filed for bankruptcy between July 17 and Jan. 20.

In the clinics' bankruptcy cases, attorneys are fighting over whether the clinics' malpractice insurance proceeds should be distributed to affected patients or to all creditors.

The companies filing for protection were the Endoscopy Center of Southern Nevada, Endoscopy Center of Southern Nevada II, the Gastroenterology Center of Nevada, Desert Shadow Endoscopy Center, SAI K LLC, Spanish Hills Surgical Center.

In Friday's personal bankruptcy filing, Desai listed assets of $22.3 million and liabilities of $1.89 million.

His assets include a $2 million Las Vegas home and interests in investments, partnerships and joint ventures. Liabilities include a $1.167 million mortgage against the home, $375,000 owed to a law firm and $350,000 for a malpractice claim.

Dozens of hepatitis lawsuits in District Court for Clark County in which Desai is among the defendants are listed in the filing, but his potential financial liability in those cases isn't spelled out. Attorneys for Desai have said some $30 million in malpractice coverage from Nevada Mutual Insurance Co. is available to him.

A December report from the Southern Nevada Health District on the hepatitis C outbreak associated with Desai's clinics found nine cases of hepatitis C were genetically linked to the Endoscopy Center and 106 more were possibly linked to the clinic, which in some cases passed along infection by reusing syringes and single-use medicine vials.

The outbreak prompted health officials in February 2008 to urge about 50,000 patients to be tested for hepatitis B, hepatitis C and HIV. Some 5,000 patients and their family members are now suing Desai, his clinics, associated medical personnel and pharmaceutical companies. Most of the patients weren't infected, but are seeking damages for having to live in fear their health had been jeopardized.

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