Health Care

HCA appeals order that it pay $434 million to KC foundation

HCA, based in Nashville, Tenn., is challenging a court order that it pay the Health Care Foundation of Greater Kansas City $434 million.
HCA, based in Nashville, Tenn., is challenging a court order that it pay the Health Care Foundation of Greater Kansas City $434 million. Bloomberg News

Health care giant HCA is contesting a Missouri court judgment that it must pay the Health Care Foundation of Greater Kansas City $434 million.

In papers filed this week with the Missouri Court of Appeals in Kansas City, HCA said the foundation lacks legal standing in its long-running dispute.

HCA also posted a bond for $527 million covering the legal judgment as well as interest and attorney fees expected to accrue over the anticipated 12-month appeals process.

If the ruling stands after HCA’s appeal, it will virtually double the size of the foundation’s endowment, turning it into a billion-dollar institution funding local safety net health care clinics, social service organizations and health advocacy groups.

The legal wrangling between HCA and the foundation has gone on about six years. It focuses on whether HCA, a large national for-profit hospital chain, fulfilled commitments it made a dozen years ago when it bought the assets of struggling nonprofit Health Midwest, at one time the region’s largest hospital system.

The Health Care Foundation was born out of the sale of those hospitals to HCA and stands to gain if the courts rule that HCA didn’t meet its obligations.

In last month’s ruling, the Jackson County Circuit Court said HCA owes the foundation $434 million. The money is due, the court said, because HCA didn’t come close to making $450 million in promised capital improvements to the aging hospitals it purchased for $1.13 billion from Health Midwest in 2003.

HCA’s filing said it will raise several issues during its appeal. Among them:

▪ The foundation wasn’t directly affected by HCA’s actions, so it didn’t have standing to sue.

▪ The Community Health Group, an organization formed out of Health Midwest, should have been a party to the litigation but was not.

▪ HCA should have been allowed to count its construction of hospitals in Lee’s Summit and Independence toward its $450 million capital improvement commitment. The Circuit Court did not allow that.

“The foundation is confident the Court of Appeals will find that the Circuit Court’s rulings were entirely correct,” the foundation’s general counsel, Mark Flaherty, said Thursday.

HCA did not respond to a request for comment.

The Court of Appeals ruling could be appealed to the Missouri Supreme Court, which may accept the case or let the appeals court ruling stand.

A Supreme Court appeal would also take about a year and would add about $80 million to $100 million to the amount HCA potentially would owe to the foundation.

Alan Bavley: 816-234-4858, @AlanBavley

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