Dueling litigation stems from hospital, medical group breakup
Barton Memorial Hospital officials are accused of attempting to undermine the future of the Carson Valley Medical Group’s practice in a formerly underserviced market.
In a lawsuit filed March 20 in El Dorado County Superior Court, the medical group accused the hospital and Chief Executive Officer William Gordon of racketeering, trade libel and 11 other violations of state or federal law.
Although the plaintiffs have not determined the amount of damages they seek, their attorney, Matthew S. Steinberg, estimates the sum could be in the $100,000 range or more.
The lawsuit stems from lingering disputes following the 1995-96 breakup between the medical group and the hospital.
In a separate, still-pending lawsuit filed March 25 in Douglas County District Court, the hospital sued the medical group for more than $300,000. Hospital officials claim the amount represents a lease termination payout schedule outlined in their 1994 agreement.
Ironically, the feuding litigants were partners when Barton Memorial Hospital opened the Carson Valley Medical Center in June 1994.
Most of the 13 shareholders who formed the medical group were part of the Barton Memorial Hospital staff.
The hospital sought to anchor its new facility – in an area that lacked close access to medical services – with respected, trusted physicians and encouraged the group’s formation.
The hospital also formed a corporation, Barton Memorial Hospital Management Services Organization, Inc., to manage administrative duties for the medical group and the facility.
By mid-1995, that relationship apparently soured.
“The CVMG physicians believed that MSO was not acting in CVMG’s best interests, but rather, making business decisions based on what was best for BMH and Gordon,” the medical group’s lawsuit states. “MSO would provide the CVMG physician employees with unintelligible invoices and financial records that made it impossible to decipher what percentage of the profits the physician employees were actually receiving and what percentage MSO was actually entitled.”
Misgivings like these were cited as reasons behind CVMG’s decision to terminate MSO’s management contract during a transition period between July 1995 and January 1996.
The medical group subsequently contracted MMA, Inc., to oversee billing, payroll and other administrative duties.
About 10 doctors left the medical group during the transition period.
Five of these physicians later formed the Jobs Peak Medical Group, which in October 1996 set up a new practice at the Carson Valley Medical Center. MSO now manages the Jobs Peak group.
Steinberg and his clients – CVMG’s six remaining shareholders – contend that Gordon recruited the doctors and formed the new group to destroy their practice.
“(The lawsuit) is about the type of situation that will exist to provide the group an opportunity to practice medicine in the Carson Valley without interference from Barton Memorial Hospital,” Steinberg said.
Gordon on Thursday denied the allegations.
“We assured no one and we promised no one anything,” Gordon said. “That (allegation) is absolutely false.”
Besides compensatory and punitive damages from the hospital, the medical group seeks court orders preventing the alleged violations to continue.
The parties are scheduled to meet May 12 in the Douglas County court for matters related to the alleged debt in the hospital’s suit against the medical group.
A hearing on the medical group’s lawsuit against the hospital is scheduled July 14 in El Dorado County court.
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