Idaho Supreme Court rules against Saint Al's in $52M lawsuit

newsroom@idahostatesman.comJune 17, 2014 

The Idaho Supreme Court on Tuesday ruled against Saint Alphonsus Regional Medical Center in a $52 million lawsuit, concluding a court battle that has played out for almost a decade.

"This case involved many years of litigation, including a prior favorable ruling by the Idaho Supreme Court," said Joshua Schlaich, a spokesman for Saint Alphonsus. "We respect the work of the Court, but are disappointed with this ruling."

Attorneys for the other side said the ruling was a confirmation of justice.

"We are pleased that the Supreme Court affirmed what already two juries decided, which is that Saint Al's didn't treat its partners fairly," said Wade Woodard, an attorney for the partnership that brought the lawsuit against Saint Alphonsus. "Regardless of whether you're a charitable institution or a taxable institution, you need to play by the rules, and it's not appropriate to cheat your partner."

WHAT HAPPENED?

Saint Alphonsus Regional Center and others, including Caldwell hospital West Valley Medical Center, formed a partnership in 1985 named MRI Associates. The purpose of MRI Associates was to buy and operate an MRI scanner and other equipment and devices.

Two other MRI partnerships followed — one to own and run an MRI on the hospital campus, another to own and run a mobile MRI unit.

About 13 years after the creation of MRI Associates, a group of radiologists with a long-standing, exclusive contract to do medical imaging at Saint Alphonsus started to plan a new outpatient imaging center that would include MRIs.

That new center opened in 1999, the lawsuit said.

THE BREAK-UP

Saint Alphonsus shifted its business to the new imaging center and notified its MRI Associates partners that it was pulling out of the partnership in 2004.

The hospital sued in late 2004 to reclaim the value of its interest in the partnership. But MRI Associates filed its own lawsuit against Saint Alphonsus, arguing that it broke its contract by pulling out of the partnership and going into business with a competitor.

After two court battles, a jury found against Saint Alphonsus and awarded $52 million in damages to the three partnerships that grew up around MRI Associates. As for the Saint Alphonsus lawsuit for its share in the partnership, it won $4.6 million.

THE CONCLUSION

The Supreme Court upheld the ruling of the District Court and the jury's award.

Brent Bastian, another attorney who worked on the case for MRI Associates, said the lawsuit wasn't about patient care at Saint Alphonsus.

"We have nothing but respect for the nurses and doctors," he said, adding that former hospital administrators "made some real mistakes here and breached the fiduciary duty."

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