Jackson County judge orders HCA Midwest to pay $434 million to Health Care Foundation of Greater Kansas City

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HCA Midwest Health must offer up a whopping $434 million to the Health Care Foundation of Greater Kansas City for not living up to commitments to fund hospital improvements, a Jackson County Circuit Court judge ruled on Wednesday.

An order filed late Wednesday is the latest saga, but probably not the last, in an ongoing dispute between HCA and the Health Care Foundation.

HCA, a local division of a larger corporate medical concern, had agreed to set aside funds to make hospital improvements when it purchased several area hospitals in 2003. In a deal brokered by then-Missouri Attorney General Jay Nixon, HCA was supposed to spend $450 million in the five years that followed its purchase of former Health Midwest facilities, including Overland Park Regional Medical Center, Research Medical Center and Menorah Medical Center. HCA, a for-profit institution, paid about $1.3 billion to buy the hospitals from the nonprofit Health Midwest group. The transaction led to the creation of the Health Care Foundation.

When the Health Care Foundation sued HCA in 2009, it argued that HCA spent money building new facilities rather than investing in the ones it had purchased. HCA questioned that interpretation of its obligations.

Wednesday’s order awarded the Heath Care Foundation $239.4 million, which represents what HCA owed under the 2003 asset purchase agreement. The order tacked on another $167.1 million in interest, which the judge determined should be calculated on an annually compounded basis (which is what the Health Care Foundation wanted) rather than simple interest (which is what HCA would have preferred). Add another $27 million worth of attorneys’ fees, expenses and interest on those amounts, Wednesday’s order adds up to just shy of a staggering $434 million.

“When the HCF Board of Directors began this lawsuit, our goal was to determine whether or not HCA had complied with its obligations to the people of Greater Kansas City in connection with the Health Midwest purchase,” said HCF board chairman Kenneth Southwick in a written statement. “After today’s final judgment, we are confident we have met that goal. And while we won’t receive any of these dollars until the appeals process is complete, the Foundation remains dedicated to serving the vulnerable people in our service area.”

An HCA spokeswoman was preparing a statement on Thursday morning, which we will add to this story when it arrives. HCA has signaled previously that it would likely appeal any Circuit Court award.

HCA spokeswoman Christine Hamele says the company plans to appeal.

“We are disappointed that the court has issued this judgment,” Hamele says in a written statement. “The company intends to appeal. We expect the Missouri Court of Appeals to rule on that appeal by the end of 2016. HCA remains committed to providing the people of Missouri and Kansas with high quality health care, including in the new state-of-the-art facilities we built in Lee’s Summit and Independence, Missouri.” 

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