Insurance company sues doctor

      A Minnesota insurance company has filed a federal lawsuit against a Las Vegas neurosurgeon, claiming he made fraudulent statements on his application for medical malpractice coverage.
      St. Paul Fire & Marine Insurance Co. filed the complaint last week against Dr. Albert Capanna, a Nevada Athletic Commission physician who has worked ringside at professional fights for the past decade. The lawsuit accuses the 50-year-old neurosurgeon of failing to inform the company about a criminal complaint filed against him in Michigan and about numerous malpractice claims.
      Michael Hall, a Las Vegas attorney representing St. Paul, said many of the allegations in his client's lawsuit came from information compiled by lawyers representing Kevin and Elizabeth Dailey in their medical malpractice case against Capanna. The Daileys claim Capanna operated on their infant son unnecessarily in 1992 and caused severe, irreversible brain damage.
      A state screening panel already has ruled there is a reasonable probability Capanna committed medical malpractice in the case, which is headed to trial in District Court. In 1995, a judge ruled after a settlement conference that Capanna's liability could be set at $6 million.
      Dr. Flip Homansky, chairman of the Nevada Athletic Commission's medical advisory board, said Capanna's "performance as a ringside physician is excellent, but I have no comment on the other issues."
      St. Paul's lawsuit accuses Capanna of making several omissions and misrepresentations on his insurance application and on his resume. According to the complaint, the neurosurgeon:
      --Failed to disclose numerous malpractice claims, including claims resulting in trials and substantial settlements, and made misrepresentations concerning the nature and scope of other malpractice claims.
      --Made omissions and misrepresentations concerning the cancellation of a professional liability policy and his inability to obtain malpractice insurance.
      --Made omissions concerning his status at health care facilities.
      "Most, if not all, of the misrepresentations and omissions set forth above were made knowingly, and in a conscious effort to obtain insurance through misrepresentation and nondisclosure," the lawsuit alleges.
      The insurance company wants to void Capanna's insurance contract. It also is seeking punitive damages, and damages for funds paid out under the policy and in defense of some claims against the neurosurgeon.
      Although Capanna hung up on a reporter who called to inquire about the allegations, one of the neurosurgeon's attorneys said his client disagrees with the claims in St. Paul's lawsuit.
      "They've raised those same issues in other proceedings," said attorney Mitchell Cobeaga, who represents Capanna in the Dailey malpractice case. Cobeaga said he has not seen St. Paul's complaint.
      The attorney said the settlement process is continuing in the Dailey case, and he hopes to resolve the matter without going to trial. He declined to comment on the allegations in that case.
      Hall said St. Paul has not insured Capanna since March 1994.
      According to the company's lawsuit, which also names Capanna's International Neuroscience Consultants Inc., the neurosurgeon applied for coverage with NML Insurance Co. in 1983. NML, a Nevada corporation, merged with St. Paul in 1996, and St. Paul assumed the obligations of NML's valid insurance policies.
      "In response to the questions concerning his claim history, Dr. Capanna represented that there was a single claim of malpractice which was made against him," the lawsuit states. "Further, in subsequent renewal applications, Dr. Capanna failed to list any additional claims of malpractice against him.
      "In truth, there were numerous acts of malpractice and pending malpractice claims against Dr. Capanna during the course of the policy. Indeed, there were as many as 15 claims of malpractice which were actually filed against Dr. Capanna."
      According to the lawsuit, at least two of those claims went to trial.
      The complaint also accuses Capanna of failing to reveal that his professional liability insurance had been cancelled previously and that numerous other carriers had refused to cover him.
      In addition, the lawsuit alleges, "Dr. Capanna failed to disclose that a criminal complaint had been filed against him based upon certain fraudulent representations which Dr. Capanna made to the Blue Cross, Blue Shield."
      According to police and court records from Michigan, prosecutors charged Capanna in 1984 with three felony counts of obtaining money under false pretenses.
      Authorities claimed Capanna had been performing one type of surgery, considered experimental at the time, then billing Blue Cross & Blue Shield of Michigan for another type of procedure. The insurance company had refused to pay for the experimental surgery.
      The criminal case was dismissed in 1986 after Capanna paid nearly $55,000 in restitution.
      A spokeswoman with the Board of Medical Examiners in Nevada said Capanna has been licensed in Nevada since 1982 and has had no disciplinary action taken against him.
      The spokeswoman said Capanna earned his medical degree in 1974 from Wayne State University in Detroit and then completed a one-year residency in general surgery at St. John's Hospital in Detroit.
      She said he later completed a four-year residency in neurological surgery at Wayne State University Hospital in Detroit and a six-month fellowship in neurological surgery at the University of Zurich in Switzerland.
      Capanna has been certified in neurological surgery since 1982, the spokeswoman said.
      A spokeswoman with the Nevada Athletic Commission said Capanna has been licensed with that agency since 1987.
      Capanna operated in 1995 on Jimmy Garcia after the 23-year-old boxer suffered head injuries in a superfeatherweight bout at Caesars Palace. The Colombian boxer died 12 days after the fight, for which Homansky had been the lead physician.
      A spokeswoman with the license verification unit of Michigan's Consumer and Industry Services said Capanna's medical license in that state expired in 1986. She said he had been licensed there since the mid- to late 1970s and had no disciplinary action taken against him during that time.
      The Daileys, who sued Capanna after he operated on their son in 1992, have denied a request for an interview. Their case is scheduled to go to trial Feb. 23 before District Judge Nancy Becker.
      The malpractice lawsuit also names Columbia Sunrise Hospital and Medical Center and its former owner, Humana Inc. The Daileys claim in their lawsuit that Capanna misdiagnosed their son's condition before operating on him at the hospital.
      According to court documents filed by the Daileys, their son, Erik, was born a healthy child on Aug. 8, 1991.
      "However, when Erik was approximately 3 months old, it was noted that he had an enlarged head," one document states. "And after diagnostic procedures were done, it was decided that the Daileys should consult with a neurosurgeon."
      According to the document, that neurosurgeon was Capanna, who determined Erik needed surgery.
      The Daileys contend in their lawsuit that Capanna incorrectly determined that their son had a brain cyst, then used a laser in January 1992 to remove it. The lawsuit describes the use of the laser in this case as an "untested, experimental" surgical treatment.
      Erik then began suffering from complications, the complaint alleges, and a second surgery was scheduled. According to the lawsuit, Erik lost all of his blood during the second surgery.
      "The massive blood loss that occurred and was not adequately controlled resulted in a failure to ensure oxygen went to Erik's brain," the complaint states. "As a direct consequence, Erik is now and for the remainder of his normal life span will be a quadriplegic who is spastic and blind. His parents will be required to endure the lifelong pain and anguish, the grief and sorrow of no longer having a normal healthy boy, realizing that if they had not entrusted the care of their son to these defendants, Erik would be normal today."
      According to the Dailey lawsuit, Erik had a benign condition that required no treatment.
      The state Insurance Division's Medical Legal Screening Panel later reviewed the case and found a reasonable probability that Capanna had committed medical malpractice.
      District Judge Lee Gates ruled in a 1995 settlement decision that the "reasonable value" of the claim was $15 million for all the defendants and $6 million for Capanna alone.
      Gates noted in his decision that the Daileys previously had offered to settle with Capanna for $3 million, but the offer had been rejected.
      The Dailey lawsuit accuses Capanna and the hospital of trying to cover up the malpractice that occurred in the case.
      It claims Capanna failed to record his medical and surgical findings "promptly and accurately" in Erik's medical chart, and it claims a CT scan was removed from the chart. The CT scan would have shown that a tube had been placed improperly in Erik's brain, according to the complaint.
      Hospital spokeswoman Ann Lynch declined to comment on the allegations in the lawsuit.
      "Since it's in litigation, I am unable to respond in any way," she said.
      Lynch said Capanna, an active member of the hospital's medical staff, served as chief of staff from 1993 to 1995. She said he was elected to that position by the medical staff.
      In addition to its malpractice claims, the Dailey lawsuit raises questions about Capanna's past.
      According to the complaint, "Humana failed to adequately review the background and qualifications of Capanna and failed to determine or ignored the fact that Capanna in his short period of practice in Michigan had been under investigation by St. John's Hospital in connection with patient care issues, and his resignation may have been an alternative mode of separation offered him by the hospital ad- ministration."