Judge enters $433 million judgment against HCA in Health Care Foundation lawsuit

A $433 million judgment against HCA has been ordered in a lawsuit brought by the Health Care Foundation of Greater Kansas City over commitments made when the for-profit hospital system purchased Health Midwest in 2003.

The complex litigation was filed by the Health Care Foundation (HCF) in 2009 claiming that HCA failed to make agreed upon investments to improve existing Health Midwest hospitals at the time of the sale and also failed to meet commitments regarding charity care.

Nov. 18, 2002, public hearing on the sale of Health Midwest at the Linwood Multipurpose Center in Kansas City, Mo.

Nov. 18, 2002, public hearing on the sale of Health Midwest at the Linwood Multipurpose Center in Kansas City, Mo.

The Dec. 9 ruling, issued by Jackson County Circuit Court Judge John Torrence, covered prior judgments, attorney fees and accrued interest on the earlier judgments. Missouri law provides for 9% interest on judgments.

Torrence’s four-page order found HCA is liable for $239.4 million over its failure to fund promised hospital improvements; $167.1 million in prejudgment interest; and more than $27 million in legal fees and expenses. 

HCA plans to appeal and anticipates a ruling by the end of 2016, the company said in a written statement.

“We are disappointed that the (circuit) court has issued this judgment,” said Christine Hamele, HCA Midwest Health spokeswoman. “HCA remains committed to providing the people of Missouri and Kansas with high quality health care, including in the new state-of-the-art facilities we built in Lee’s Summit and Independence.”

HCF board chair Kenneth E. Southwick, in a written statement, said:

"When the HCF Board of Directors began this lawsuit, our goal was to determine whether or not HCA had complied with its obligations to the people of Greater Kansas City in connection with the Health Midwest purchase.

"After today's final judgment, we are confident we have met that goal. And while we won't receive any of these dollars until the appeals process is complete, the foundation remains dedicated to serving the vulnerable people in our service area."

LINC was deeply involved in the initial sale of the non-profit Health Midwest to HCA in 2002-03 by encouraging several formal public meetings to discuss the use of sale proceeds, which exceeded $1 billion.

The Missouri Attorney General, then Jay Nixon, and later the Kansas Attorney General, Carla Stovall, became involved. The attorney general oversees all charitable institutions in his or her state.

Cake served at a HCF event celebrating its first decade fashioned on the check amount first received in June 2004

Cake served at a HCF event celebrating its first decade fashioned on the check amount first received in June 2004

“Thanks to all those families and neighbors who stood up and spoke to the need for health care and the fair distribution of assets to benefit the whole community — not just part of it," said LINC President Gayle A. Hobbs about the Dec. 9 $433 million court order. "Thanks for your strength and patience through this 13 year journey. Additional thanks are due to the Health Care Foundation and its board. They were watchful to protect the agreements and commitments made to the community and stepped up to defend all of Kansas City."

Proceeds from the initial Health Midwest sale resulted in the creation of the Health Care Foundation of Greater Kansas City and the separate REACH Healthcare Foundation, both of which were formed in 2003. Assets from the sale were divided with 80% going to HCF and 20% to REACH.

Click the image to download the report

Click the image to download the report

The Health Care Foundation initially received $405 million in 2004. It began making grants in 2005 and has made over $200 million in grants to over 400 organizations in the past decade. HCF recently issued a formal report about its work.

REACH Healthcare Foundation did not participate in the lawsuit.

Starting in 2002, LINC provided extensive printed materials and documents on its website outlining options and considerations involved when a non-profit health care organization is sold to a for-profit entity.

LINC chairman Landon Rowland and others associated with LINC provided written testimony at the initial Missouri public hearing — the first of several held in Missouri and Kansas which ultimately led to creation of the two health care foundations.

"The proposed sale is a historic deal," Rowland said at the first Nov. 18, 2002, public hearing. "It is a major transaction by any business measure — sales price, employees, revenues, assets, etc. But it is unlike any business deal seen by the members of this community, because it truly can affect their health and well-being for decades to come."

Nurses who attended the Nov. 18, 2002, public hearing in Kansas City, Mo.

Nurses who attended the Nov. 18, 2002, public hearing in Kansas City, Mo.

LINC also advanced a set of principles which mostly were realized in the hospital sale and creation of the health care foundations. Those principles, shared at that initial Nov. 18 public hearing, were:

The Local Investment Commission (LINC) believes and will support efforts to insure the broadest possible community participation in this transaction.

LINC believes there are many community voices that have not been heard on this matter and that more public hearings are needed.

LINC supports a foundation that will continue “as close as possible” Health Midwest’s prior charitable purposes.

LINC believes that community needs, by necessity, need to be identified through an open and inclusive process.

LINC supports a new charitable foundation that is open (required to meet under the state’s public meeting law), fully includes the community and is accountable to community needs.

LINC believes that interested community partners need to convene and discuss in detail this transaction to review and discuss the public documents that Health Midwest and HCA will submit to the Missouri Attorney General.

Rowland and fellow LINC Commissioner David Ross were selected to serve on the initial HCF board.

LINC has periodically received grants from the Health Care Foundation for itself and partnering organizations for various health-related projects.

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