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Ferguson files antitrust lawsuit

Thursday, January 19, 2006

SIKESTON -- Ferguson Medical Group has bumped up its lawsuit against former partners and Missouri Delta Medical Center by filing federal antitrust claims against the hospital.

The claims fall under the Sherman Antitrust Act of 1890 which was passed to address improper, predatory, harmful competitive practices, according to Jay A. Summerville, FMG's attorney.

Eight counts were filed Wednesday in the Southeast Division of the U.S. District Court alleging a history of intentional actions by MDMC designed to restrain competition for medical and diagnostic services in an effort to control the market and limit patient choice to only MDMC.

"We do know they have filed a lawsuit in federal court but we don't know specifics," said Sharon Urhahn, director of marketing for MDMC.

In addition to the hospital, Charles Ancell, MDMC's president and CEO, and Robert Scott Matthews, who was chairman of the MDMC's board of directors at relevant times, are also named as defendants.

"Ferguson Medical Group has a long history of leadership in putting community and patient health care first and of working closely with the hospital," said Dr. Jim Heath, a family practice physician and managing partner at FMG. "We want to be very clear that the suit pertains to hospital management issues and is not intended to reflect poorly on the staff in any way. We very much respect and value the care they provide to our patients."

FMG, an independent multi-specialty medical practice, and the hospital had for many years enjoyed a close working relationship.

"In fact, it's hard to imagine what the hospital or Sikeston would be like without our group," said Dr. John Askew, a recently-retired physician who was with FMG for over 31 years. "In particular, it is clear historically that we have always been supportive participants in the mission of our local hospital. After all, we contributed $100,000 to help build its pediatric wing addition, so we have true equity in its business as well as our own."

That relationship significantly changed on July 1, 2002, when five doctors from FMG resigned from the group to work for MDMC.

In September 2002, FMG filed a lawsuit at the state level which alleged its former partner physicians Loring R. Helfrich, Anthony C. Poole, Kevin P. Rankin and Fred K. Uthoff failed to honor components of their partner agreements by resigning to work for the hospital. Dr. Fred Thornton was added to the suit a few weeks later.

FMG's partner contracts include a restrictive covenant by which partner physicians agree that those who withdraw from the group will not practice medicine within a 40-mile radius of FMG's main location at 1012 North Main Street for two years.

FMG officials noted the contracts include a buyout option by which departing partners can continue to practice locally if they pay the group an amount equal to their last year's salary.

The buyout clause is designed to prevent a physician from walking off and leaving the remaining physician partners with the departing partner's share of the group's debt, Summerville explained.

Kelley J. Rushing, chief executive officer of Ferguson Medical Group in Sikeston, said the outstanding collective debt left by Thornton, Rankin, Poole, Uthoff and Helfrich to be absorbed by the remaining partners exceeds $1 million.

As part of the lawsuit against the former partners, FMG sought a preliminary injunction preventing the departed doctors from working in this area and the hospital from employing them.

On March 11, 2004, a judge ruled that the physicians named in the lawsuit by the FMG could continue to practice medicine here.

The part of the lawsuit at the state level which seeks damages against the doctors and hospital is still pending and will now be decided by the federal court, along with the antitrust claims, where damages are tripled.

Summerville said the purpose of the Sherman Act is to protect competition. "We claim the hospital deliberately and intentionally engaged in predatory conduct that was harmful to competition in general and specifically harmful to Ferguson Medical Group in particular," Summerville said.

FMG's partners "believe that competition improves quality, lowers cost and offers patients more choice," according to Askew. "For example, MDMC attempted - but failed - to prevent FMG from bringing a freestanding MRI to our community. Only after that failure did MDMC decide to replace the 20-

year-old mobile unit it was having brought to town three times per week. MDMC has not only violated the spirit of free enterprise and community service but is attempting to restrict competition in a manner that harms our business."

Elements of the suit include allegations that MDMC put up barriers to new competition, locked up services through exclusive contracting and interfered with FMG's retention and recruitment of expert staff among other predatory and anti-competitive acts. The antitrust charges also allege Ancell and Matthews conspired to put FMG out of business.

"As we work to settle these legal management issues we know that our professional relationship with the hospital and the fulfillment of expert patient care will continue," said Dr. Kevin Blanton of FMG's pediatric department. "We are confident that once we are able to stop the predatory behaviors and, once again, provide a level playing field for all doctors in this community, that a good working relationship will be restored. ... FMG certainly has no problem with fair competition - we welcome it. It is the abuse of MDMC's dominant position that prevents competition."