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HCA, Mo. nonprofit settle suit over capital improvements

Judge originally ordered hospital chain to pay $434M

ST. LOUIS – A long-running lawsuit between a Kansas City nonprofit and a national hospital chain has concluded with a $188 million settlement.

HCA, a Nashville, Tennessee-based company, and its affiliate HM Acquisition LLC, reached the agreement Jan. 30 with the Health Care Foundation of Greater Kansas City.

The settlement was equal to a judgment modified by the Western District Court of Appeals earlier this month.

Paul Seyferth of Seyferth Blumenthal & Harris in Kansas City represented the foundation. He was pleased with the settlement.

“This is a great day for the Kansas City community and we’re very happy with this outcome,” he said.

The foundation sued HCA in 2009, alleging that the company failed to fulfill its capital improvement commitments to the hospitals it purchased from Health Midwest in 2003.

The $1.1 billion purchase was considered at the time the largest transfer of a nonprofit hospital to a for-profit hospital in U.S. history.

The foundation alleged that the company spent money building new hospitals in suburban Kansas City instead of upgrading facilities in the urban core.

In December 2015, Jackson County Circuit Judge John Torrence filed a $433.7 million judgment in favor of the foundation.

That judgment was slashed to $188 million by a Jan. 17 ruling from the Western District Court of Appeals.

The panel found that new hospital construction by HCA in Lee’s Summit and Independence counted towards their obligations and reduced the portion of the shortfall from $239.4 million to $165.7 million.

The judges also reversed a portion of Torrence’s judgment that ordered HCA to pay prejudgment interest, instead ordering that simple interest accrue on the total of more than $188 million, the amount of the shortfall plus $22.3 million in attorneys’ fees and costs.

In a statement, HCA spokeswoman Christine Hamele said the company is pleased with the appeals court ruling that the company had complied with its agreement to make $450 million in capital expenditures to improve health care in the region.

“While we disagree with the remainder of the court’s ruling, we believe that it is in the best interest of the Kansas City community to resolve this issue,” she said. “It allows us to focus on serving this community.”

Foundation officials said in a press release that it will receive nearly $160 million after legal fees. Combined with a $15 million settlement from 2015 over uncompensated care, the foundation is slated to receive about $175 million from the case.

Wayne Powell, chairman of the foundation’s board of directors, said in a statement the organization is pleased to have reached the settlement.

“When the foundation’s board of directors began this lawsuit, our goal was to ensure commitments made by HCA to the communities we serve were fulfilled,” he said. “We are confident we’ve achieved that goal.”

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