The Health Care Foundation of Greater Kansas City said Tuesday that it will receive about $160 million from settling a long-running lawsuit against the Hospital Corporation of America and its affiliate, HM Acquisition LLC.
The lawsuit, filed seven years ago, alleged that HCA had failed to meet contract terms when it purchased the former Health Midwest hospitals in the Kansas City area.
The settlement ends legal proceedings over whether HCA fulfilled a capital improvement commitment to the hospitals. It joins a 2015 settlement concerning a charitable, or uncompensated care, agreement, which resulted in a $15 million award to the foundation.
The new settlement ends a dispute that worked its way to the Missouri Court of Appeals. The settlement is for less than the $433 million amount awarded in an earlier trial court proceeding, but the foundation said it was content with the result.
Christine Hamele, a public relations officer for HCA, said HCA had agreed in 2003 to make $450 million in capital expenditures in the Kansas City area, and it was pleased that an appellate court last year ruled that it had complied with the agreement, in part, by spending money on construction of the Centerpoint and Lee’s Summit medical centers.
The appellate court in January reduced the amount HCA owed the foundation to about $205 million. Both sides weighed the possibility of further appeals but decided to settle the case.
“While we disagree with the remainder of the court’s ruling, we believe that it is in the best interest of the Kansas City community to resolve this issue,” Hamele said. “It allows us to focus on serving this community. For the last 14 years, we have invested over $1 billion to meet the Kansas City area’s growing health care needs.”
The lawsuit stemmed from the $1.13 billion asset purchase of the nonprofit Health Midwest hospitals by the for-profit HCA. The net proceeds from the sale were used to create two new nonprofit foundations, The Health Care Foundation of Greater Kansas City and the REACH Healthcare Foundation, which are designed to disperse money to continue nonprofit health-related missions in the Kansas City area.
The Kansas City foundation sued HCA in 2009, alleging that HCA should have spent more money on improving the former Health Midwest hospitals, including Research, Menorah and Overland Park medical centers. The REACH foundation chose not to participate in the litigation.
The Kansas City foundation will use the settlements, totaling $175 million, to “continue our work to eliminate barriers and promote quality health for the uninsured and underserved,” said Wayne Powell, chairman of the foundation’s board of directors.
HCA also agreed to reimburse the foundation’s legal fees in addition to the $160 million settlement.
Foundation officials said the settlement will not represent an immediate expansion of grant-making resources. Rather, the infusion will “generate income over time to augment the foundation’s current grant-making resources.”
The foundation this year expects to award more than $20 million in health-related grants in the six-county metropolitan area.
Foundation president and CEO Bridget McCandless said foundation officials will take the coming months to “review our region’s health needs and engage community partners to discuss how the resources of the foundation can continue to positively impact the underserved and uninsured.”
McCandless said the lawsuit “was never about the money. It was about ensuring HCA fulfilled its obligations to the community. We feel we’ve reached our objective in holding them accountable.”
Hamele said HCA looks forward to providing “the best possible care” in the Kansas City area.