A federal judge has ruled that a $5,000 bankruptcy settlement prevents a family from collecting a $2.1 million jury award tied to a nursing home injury case that has stretched on for more than a decade.
In a Feb. 12 decision, U.S. District Judge Mark T. Treadwell sided with Ironshore Specialty Insurance, finding that the estate of Mary Francis Logan released its claims years earlier when it accepted a small payout during the bankruptcy of Macon Rehabilitation and Healthcare Center.
Logan fractured her hip during a shower transfer at the facility in 2014. Her family later sued. But after the nursing home entered bankruptcy, the family signed a general release in exchange for $5,000 as part of the liquidation process. The agreement described the payment as “full satisfaction, settlement, discharge, and release” of their claims.
Despite that language, the family continued to pursue litigation and, in 2023, secured a $2.1 million verdict against Ironshore in state court.
Ironshore challenged the ruling in federal court, arguing that because the family had already released the facility from liability, there was no remaining loss for the insurer to cover. Under standard insurance principles, carriers are obligated to cover actual losses suffered by policyholders.
Last year, Treadwell paused payment of the verdict and ordered additional briefing, citing questions about how the bankruptcy proceedings might affect the case. In his latest ruling, he said the family failed to offer a meaningful legal analysis explaining why the earlier release did not bar their collection efforts.
“When it allowed the parties to develop the record, the Court thought they would provide that analysis,” Treadwell wrote. “They did not.”
In a separate judgment issued the following day, the court also allowed Ironshore to recover its legal costs.
