The Seventh Circuit Court of Appeals ruled Monday that a federal judgment creditor's claim takes priority over a state court judgment that was retroactively corrected to fix a defendant naming error, resolving a complex asset dispute in *MedLegal Solutions, Inc. v. Premium Healthcare Solutions, LLC*.
The case involved two separate creditors seeking to collect from the same healthcare company through different court systems. Vivek Bedi first obtained a money judgment in state court against what he believed was Premium Healthcare Solutions, LLC. However, his judgment was actually entered against Premier Healthcare Solutions, LLC due to a naming error.
Years after Bedi's initial judgment, MedLegal Solutions, Inc., doing business as Atticus Medical Billing, secured its own money judgment in federal court against Premium Healthcare Solutions, LLC. The company then began post-judgment collection proceedings to recover the debt.
The dispute arose when Bedi intervened in MedLegal's federal collection efforts. During this intervention, Bedi discovered that his original state court judgment contained a critical error - it was against Premier Healthcare Solutions rather than Premium Healthcare Solutions. The misnomer meant his judgment was against the wrong legal entity entirely.
Seeking to correct this error, Bedi returned to state court and obtained an order fixing the defendant's name in his judgment. The state court granted this correction but made it retroactively effective to the date of Bedi's original judgment, which predated MedLegal's federal judgment by years.
This retroactive correction created a priority conflict. Under the corrected judgment, Bedi's claim would have seniority over MedLegal's later federal judgment. However, MedLegal argued that the timing of the actual correction - which occurred after MedLegal had already obtained and was enforcing its federal judgment - should govern priority determinations.
Concerned that Bedi's retroactive correction would unfairly prejudice its secured interest in Premium Healthcare Solutions' assets, MedLegal sought relief in federal court. The company asked the U.S. District Court for the Northern District of Illinois to declare that its secured interest was superior to any interest Bedi might claim.
District Judge Jorge L. Alonso granted MedLegal's request, ruling that MedLegal's secured interest took priority over Bedi's corrected judgment. This ruling prompted Bedi's appeal to the Seventh Circuit.
On appeal, the three-judge panel led by Chief Judge Brennan first addressed two jurisdictional challenges before reaching the merits. The court examined whether the district court had entered a final appealable order and whether the Rooker-Feldman doctrine prevented federal court review of the state court's corrective order.
The Rooker-Feldman doctrine generally prohibits federal district courts from reviewing state court judgments, functioning as a jurisdictional bar to prevent federal courts from acting as appellate courts over state decisions. However, the Seventh Circuit determined this doctrine did not apply to the priority determination at issue.
After resolving these preliminary questions, the appeals court turned to the substantive issue of creditor priority. The court affirmed thedistrict court's holding that MedLegal's secured interest was superior to Bedi's purported interest in Premium Healthcare Solutions' assets.
The decision appears to establish that retroactive corrections to judgments cannot unfairly prejudice intervening creditors who obtained valid judgments and began enforcement proceedings in the interim period. This principle protects the integrity of the collection process and prevents manipulation through after-the-fact corrections that could disadvantage good-faith creditors.
The case highlights the importance of accuracy in legal proceedings, particularly in naming defendants correctly in judgments. It also demonstrates how complex priority disputes can arise when multiple creditors pursue the same debtor through different court systems.
For creditors, the ruling reinforces that diligent verification of defendant information is crucial when obtaining judgments. The decision also suggests that federal courts will protect creditors who properly obtain and begin enforcing judgments from retroactive state court corrections that could undermine their collection rights.
The Seventh Circuit's decision was argued on Nov. 12, 2025, and decided on Feb. 3, 2026. The case originated from the Northern District of Illinois and involved an appeal from post-judgment collection proceedings in Case No. 1:24-cv-00463.
This ruling may influence how courts handle similar priority disputes between judgment creditors, particularly where retroactive corrections to earlier judgments are involved. The decision emphasizes that timing and procedural fairness considerations can override the apparent seniority that retroactive corrections might otherwise create.