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Cooper Clinic Accuses Mercy Entities Of Unfair Practices

The recruitment practices of Mercy Clinic of Fort Smith are described as “deceptive” and “unconscionable” in a lawsuit Cooper Clinic filed in Sebastian County Circuit Court.

Mercy Clinic Fort Smith Communities, Mercy Health Fort Smith Communities, St. Louis-based Sisters of Mercy Health System, Dr. Jennifer Burks, Dr. Robert Nowlin, Dr. Donald Shows and Dr. John Werner are all named defendants in the Aug. 2 complaint.

The doctors — who were all formerly under contract with Cooper — left Cooper for Mercy entities between Dec. 20 and Aug. 1 in violation of their contracts with Cooper, according to the complaint.

Cooper entered into amended employment contracts with Burks, Nowlin, Shows and Werner between October 2011 and December 2011 that included an agreement by each doctor they wouldn’t leave Cooper to take a position with any Mercy entity before Oct. 1, 2014, according to the complaint.

“At the time the amendment to supplemental contract of employment was entered into … Cooper had determined that Mercy entities were attempting to recruit Cooper physicians who were under contract; that said recruitment of Cooper’s physicians created problems with serving patients in primary care, specialities and sub specialties and caused harm to Cooper’s financial condition,” according to the complaint.

Fifteen physicians under contract with Cooper left for employment with Mercy between Oct. 31, 2010, and Aug. 1, according to the complaint.

Mercy denied any wrongdoing in a written statement provided by Laura Keep, media relations with Mercy Fort Smith: “Mercy has been served with a summons and a complaint filed against it by Cooper Clinic. Those documents have been referred to our counsel for an evaluation and a response. It is our belief that Mercy has done nothing wrong or illegal and will defend itself vigorously against the allegations made by Cooper Clinic in the complaint.”

Exhibits attached to the lawsuit include two letters from Doug Babb, Cooper Clinic CEO, to then-St. Edward Mercy Medical Center CEO Jeff Johnston, dated Dec. 8, 2010, and Jan. 21, 2011.

St. Edward became Mercy Fort Smith in April 2012.

In the Dec. 8, 2010, letter Babb asked that St. Edward stop recruiting physicians under contract with Cooper, after two Cooper physicians left for St. Edward in October and November 2010 and another gave notice Dec. 3, 2010, that he was leaving for St. Edward on Jan. 3, 2011.

Babb said the actions were causing economic harm to Cooper and disrupting care for Cooper patients.

In the Jan. 21, 2011, letter, Babb told Johnston he’d learned St. Edward continued to recruit at least six physicians under contract with Cooper. He accused St. Edward of trying to shut down the Cooper Clinic in Ozark by recruiting all three physicians at that facility.

Babb further accused St. Edward of continuing to recruit Cooper physicians to “weaken our ability to compete with your new Mercy Clinic.”

Additional exhibits attached to the complaint include a July 25, 2012, letter to Cooper signed by former Mercy Central Communities President Kim Day, Mercy Hospital Fort Smith President Ryan Gehrig and Mercy Clinic Fort Smith President Cole Goodman, and Babb’s July 30, 2012, response.

The July 25, 2012, letter asked Cooper to negotiate exclusively with Mercy on an agreement to integrate Cooper and Mercy in exchange for Mercy’s not recruiting any more Cooper physicians until Sept. 30, 2012, with the exception of Cooper cardiologists and in its pursuit of a chief medical officer.

If Cooper failed to agree to those terms by July 30, 2012, Mercy would assume “Cooper Clinic does not desire to pursue exclusive discussions with Mercy at this time and all prior oral or unsigned agreements and understandings between the parties are no longer in effect, although Mercy welcomes the opportunity to continue discussions with Cooper Clinic at any time in the future,” according to the letter.

In his response, Babb described the letter as a “threat and ultimatum.”

He accused Day of attempting to interfere with Cooper’s relationship with Sparks Regional Medical Center — where he said 37 Cooper physicians have privileges — and restrain competition in the local health market.

“If you feel it necessary for your organization to have integrated doctors, why would you not use your resources to recruit them to build the medical community of Fort Smith instead of attempting to dismantle a 92-year-old physician-owned institution like Cooper Clinic to fill your physician slots?” Babb wrote.

In addition to accusing the named physicians in the suit of breach of contract, Cooper accused “Mercy entities” of interfering with contractual relationships and business expectations, violations of the Arkansas Deceptive Trade Practices Act, unjust enrichment and civil conspiracy.

Cooper seeks unspecified compensatory damages, punitive damages and attorney fees.

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