Youngstown, Ohio-based Southwoods Health has sued two of its physician shareholders. The system alleges that a planned sale of their practice, Youngstown Orthopaedic Associates, to Cleveland Clinic breaches their ownership agreements, according to a lawsuit filed Oct. 1 in Mahoning County Common Pleas Court.
The lawsuit names David Weimer, MD, and James Jamison, MD, as defendants. Both are orthopedic surgeons, partners and officers of the practice. Southwoods is seeking a temporary restraining order and an injunction to block them from taking part in the deal or working for Cleveland Clinic, according to the complaint.
Southwoods operates the Surgical Hospital at Southwoods, a physician-owned hospital in which physicians hold 49% of the shares, the lawsuit said. When Dr. Weimer and Dr. Jamison bought shares, they agreed not to take employment with, or enter conflicting arrangements with, competing facilities within 30 miles of Southwoods. The restriction lasts two years after they leave. Southwoods draws about 90% to 92% of its patient volume from within that radius, according to the complaint.
The lawsuit says both physicians have benefited from their ownership. Dr. Weimer has received $1,291,792 in distributions since 2012, and Dr. Jamison has received $1,685,474. Each also earns an estimated $250,000 to $500,000 per year in professional fees from patients reached through the Southwoods network.
In a June 18 email, the physicians told Southwoods the practice had signed a nonbinding letter of intent to sell its assets to Cleveland Clinic. They said that the group would cease to operate if the sale happened and that “it is possible that we will become employees of CCF,” according to the complaint. They also said they hoped to keep their Southwoods ownership and keep bringing cases there.
Southwoods’ board voted unanimously Sept. 17 that the physicians’ involvement in the deal is a prohibited arrangement. The complaint said a closing is expected in October. Southwoods is seeking a declaratory judgment, damages for breach of contract and anticipatory breach of contract, and attorney fees.
Cleveland Clinic declined to comment on the lawsuit, according to a statement shared with Becker’s.
Becker’s also reached out to Southwood Surgery Center and will update this story if more information becomes available.
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