Tennessee jury rules for doctors in $58M case against Wellmont
- A Tennessee court sided with a physician-owned independent practice association in a $58 million class-action lawsuit against Wellmont Health System.
- The complaint, filed in Sullivan County Law Court, accused Wellmont of breaching contractual nonsolicitation and noncompete agreements with Highlands Physicians and inking payer contracts outside the physician network. The decision, handed down Tuesday, did not include punitive damages, which HPI had requested.
- Wellmont merged with Mountain States Health Alliance earlier this year to form Ballad Health, a 21-hospital system. HPI, based in Kingsport, Tennessee, has 1,500 primary and specialty care physicians.
According to information on HPI’s website, the lawsuit alleged breach of contractual and fiduciary duties, including a stockholders agreement that created the Highlands Wellmont Health Network. Wellmont’s conduct also harmed HPI members by reducing fee-for-service level, the page says.
Wellmont expressed disappointment in the decision, saying in a written statement that it “believes it acted appropriately regarding the operations of Highlands Wellmont Health Network in serving patients and employers in our communities.”
The health system said “errors and other issues” that occurred during the 13-day jury trial will form the basis for an appeal.
Such disputes are likely to become more common as more health systems acquire physician practices.
Large health systems see physician practices as a way to expand specialty offerings, bring in new patients and solidify market share. Between 2015 and 2016, hospitals snapped up 5,000 physician practices and employed 14,000 doctors, according to an Avalere analysis done by the Physician Advocacy Institute. The report showed a 100% increase in hospital-owned physician practices and 63% rise in hospital-employed doctors since 2012.
In February, 92 doctors in Mecklenburg Medical Group sued Atrium Health seeking release from restrictive work covenants and the right to form a standalone practice.
The complaint, filed in Mecklenburg County Superior Court in North Carolina, alleged the health system engaged in anticompetitive practices including noncompete agreements and pushing doctors to refer patients to Atrium facilities if they required further care. In April, Atrium agreed to let the doctors separate from the health system.