Oh wow I am so sorry to hear, I had a similar situation, my dog needs 2,500$ LP surgery which the lady said she cannot afford to pay for and did not tell me about the problem til after the fact. I was going to go ahead and do something but I am in a different country and the process was just too much to deal with, luckily my baby didn't have any illnesses. I would definitely go ahead and sue her, at least it will help pay for vet bills. How much did you pay do you mind me asking and do you have any papers for the dog? This lady is just plain wrong and SO horrible!
