This week’s jury verdict against the Saint Alphonsus hospital in Boise and a related nonprofit corporation was one of the largest in Idaho history: $52 million.
It’s headed for an appeal.
But the decision has broader implications. Regardless of who emerges victorious, a business that performs magnetic resonance imaging lost employees and profits and likely will close its MRI center housed on Saint Alphonsus property.
If the jury’s verdict withstands scrutiny in higher court, the millions of dollars in damages will be on the back of Saint Alphonsus, one of the state’s largest employers.
The case started with a 1985 deal between Saint Alphonsus and MRI Associates, a local radiology group. Doctors with the hospital would work with MRI Associates to do MRI scans. Radiologists, doctors from the Saint Alphonsus Radiology Group, would read them.
But the Saint Alphonsus radiologists decided about 14 years later to create their own business, Intermountain Medical Imaging, which currently does X-rays, MRIs and other scans that doctors use to diagnose and treat medical problems. Saint Alphonsus joined a partnership in 2001 with Intermountain Medical. It is now one of the hospital’s highest-paid contractors.
Lawsuits and countersuits followed.
In essence, it’s the business version of a messy divorce, according to a lawyer for MRI Associates.
“It’s the cheating spouse,” said Wade Woodard, an attorney with Banducci Woodard Schwartzman in Boise. “A partnership is basically a business marriage, and (Saint Alphonsus wasn’t) faithful to their partnership.”
Saint Alphonsus — not its parent, the Michigan-based health-care giant Trinity Health — would be on the hook for those damages.
The hospital made $13.8 million in net revenues in the year ending June 30, 2010.
The case has already risen to the Idaho Supreme Court, which in 2009 overturned a $63.5 million jury decision — corrected by a judge to $36 million — against the hospital. The Supreme Court sent the case back to District Court for a do-over.
“Saint Alphonsus is studying our grounds for appeal of (this week’s) jury verdict and believes that there are a number of substantial issues for consideration by the Idaho Supreme Court,” said Elizabeth Duncan, a hospital spokeswoman.
“The timing and amount of any payment by Saint Alphonsus will depend on the outcome of the appellate process and any further proceedings, which at a minimum would take many months,” she said.
Trinity Health put the cost of litigation at $20 million.
During the trial, Woodard argued that Saint Alphonsus broke a promise not to compete with its partner, acted in bad faith, conspired and intentionally interfered with the success of MRI Associates.
The MRI business hasn’t been profitable since 2005, Woodard said. Its center lost about $25 million in appraised value and has one contract left, with the Boise VA Medical Center.
The $52 million would repay lost profits.
If the MRI Center is defunct by the time any damages are paid, the money would go to the owners, including doctors and other individuals who invested in it in the 1980s.
“This has cost a lot of people their jobs,” Woodard said. “It’s hard to quantify, because some people went over to the competitor.”
Woodard said Saint Alphonsus wrecked the relationship so it could make more money, not to improve patient care.
He said it actually compromised patient care, because it meant the center got fewer patients, less income and less of the radiologists’ time.
Other MRI Associates partners — which include Ontario’s Holy Rosary and Caldwell’s West Valley medical centers, Woodard said — “suffered because money they would use for programs, they weren’t getting anymore ... and by making less money, were less able to fund their charitable programs,” Woodard said.
Saint Alphonsus doesn’t see it that way.
The Saint Al’s “mission of providing superior quality care to serve the community is at the forefront of every decision it makes,” Duncan said, “including those made in connection with this matter.”
Audrey Dutton: 377-6448
