Natchez Regional Medical Center Sues Quorum Health Resources for $46 million
On December 7, 2009 Natchez Regional Medical Center filed a fifty-three page Complaint against Quorum Health Resources and two Quorum employees (Jeffrey Wesselman and Michael Anderson) who formerly served as the CEO and CFO of NRMC. Here is the Complaint, which NRMC filed in federal court in the Western Division for the Southern District of Mississippi.
NRMC announced the lawsuit last March, as I reported here.
Quorum had a contract to manage NRMC. NRMC’s Complaint alleges that Quorum, Wesselman and Anderson committed fraud and gross mis-management of NRMC. The central allegation of the Complaint is that Quorum and its employees falsely reported to the NRMC board of trustees that the hospital was profitable when in fact, the hospital was actually losing money. The Complaint alleges that the false reports were made so that NRMC would renew Quorum’s management contract. Under the contract, NRMC paid Quorum $200,000 per year and covered the salary and costs associated with the CEO and CFO.
Allegations that Quorum mismanaged the hospital include that Quorum:
- directed NRMC to enter into contracts with physicians that violated federal Stark Laws;
- failed to increase medical services rates to reflect market conditions, resulting in millions of dollars in lost revenue;
- excessively staffed NRMC;
- directed NRMC to purchase supplies from vendors with relationships with Quorum;
- mismanaged physician contracts;
- accounting irregularities and misrepresentations; and
- other mis-management.
The Complaint provides many factual details to support the allegations.
The pleaded causes of action are:
- breach of fiduciary duty;
- breach of contract;
- breach of duty of good faith and fair dealing;
- negligence;
- fraud;
- negligent misrepresentation;
- aiding and abetting breach of fiduciary duty;
- fraudulent transfers under Mississippi Uniform Fraudulent Transfers Act; and
- corporate waste.
NRMC’s attorneys are John Maxey and Kelly Hollingsworth of Maxey Wann and William Ryan and Kevin Hroblac of the Whiteford Taylor firm in Baltimore.
So far no attorney has appeared for Quorum.
