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Jury awards $58M to physicians group in lawsuit against Wellmont

Staff report • Dec 19, 2018 at 7:00 PM

BRISTOL, Tenn. — A Sullivan County jury has awarded $58 million to a physicians group in a lawsuit against the former Wellmont Health System.

Highlands Physicians (HPI) filed the lawsuit in Sullivan County Law Court in February 2016, claiming Wellmont tried for years to undermine or destroy the association. HPI is an independent practice association with 1,500 physicians and other medical practitioners, who are mainly located in Northeast Tennessee and Southwest Virginia.

In July 2017, Sullivan County Chancellor E.G. Moody granted class-action status for the lawsuit. In response, Wellmont unsuccessfully appealed the decision to the Tennessee Court of Appeals and then to the Tennessee Supreme Court.

In a class action lawsuit, a “class representative” (in this case HPI) sues on behalf of other people who have similar claims. The people together are a “class” or “class members.” One court resolves all issues for everyone in the class, except those who exclude themselves from the class.

The lawsuit sought compensatory damages of $15 million to $75 million, plus an additional $3.9 million for the difference in the reimbursement rate under the Wellmont employee health benefit plan.

According to the lawsuit, HPI and Bristol Hospital (a predecessor of Wellmont) formed the Highlands Wellmont Health Network — a physician-hospital organization — in 1993. HPI and Wellmont were both 50 percent owners, and per the stockholders agreement, both organizations are barred from competing with the network.

When Wellmont merged with Holston Valley Hospital some 20 years ago, an amendment was made to the stockholders agreement, but according to the lawsuit, the amendment did not materially change the obligations or relationship between HPI and Wellmont.

From 1993 through 2011, HPI successfully worked with five different administrations at Wellmont, with both sides generally fulfilling their obligations under the stockholders agreement. When occasional disputes arose, they were resolved amicably and constructively, the lawsuit stated.

The deterioration of the relationship between HPI and Wellmont began with the administration of former Wellmont CEO Denny DeNarvaez in August 2010, the lawsuit claimed. She resigned in 2013.

“From the outset, the new senior leadership took an adversary position to doctors not employed by Wellmont,” the lawsuit noted.

Wellmont merged with Mountain States Health Alliance to create Ballad Health.

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