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A judge’s decision earlier this month in the bankruptcy case involving the company that owned D.C.’s Greater Southeast Memorial Hospital presented a mixed bag for the law firms that advised the troubled health care company. Allegations of deepening the insolvency of Doctors Community Health Care Corp. and aiding and abetting breach of fiduciary duty against Kutak Rock and Epstein Becker & Green were dismissed by a judge in the U.S. Bankruptcy Court for the District of Columbia. But Judge S. Martin Teel Jr. declined to throw out a legal malpractice claim against the two firms brought by White & Case’s Sam Alberts, trustee for the bankrupt company’s debtors. At the heart of the claim are accusations that Kutak Rock and Epstein Becker negligently signed off on opinion letters that allowed an Ohio finance company to perpetuate a Ponzi scheme and swamp Greater Southeast in bad loans. The complaint also alleged that the two firms shouldn’t have collected legal fees for the opinion letters. In declining to dismiss the claims, Teel wrote: “It strains credulity to suggest that the Debtors received any value, let alone �reasonably equivalent’ value, for services that were performed so poorly as to rise to the level of a breach of professional duty.” Alberts is expected to file an amended complaint against the firms later this month.
Jason McLure can be contacted at [email protected].

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