Hospital Corp. of America, the largest for-profit hospital chain in the United States, has been ordered to pay a charitable foundation $162 million for failing to spend enough money on capital improvements at the Kansas City area nonprofit hospitals acquired by HCA nearly a decade ago.
Jackson County Circuit Judge John M. Torrence’s ruling followed a three-week bench trial in 2011. He said HCA must pay the Health Care Foundation of Greater Kansas City, which sued the hospital chain in 2009.
The foundation contended HCA had not spent the required amount on improvements to the Health Midwest hospitals that the chain bought in 2003 for about $1.1 billion. As part of the sale – among the largest transfers of nonprofit assets to a for-profit business in the United States – HCA agreed to make $450 million in capital improvements to the nonprofit Health Midwest hospitals.
The Missouri attorney general’s office established the foundation to take a large share of the proceeds from the Health Midwest sale to fund nonprofit and government organizations that seek to improve health care in the Kansas City area.
Torrence also said in his ruling that it was unclear how far HCA had progressed toward meeting its obligation of spending about $65 million a year to treat indigent patients.
“HCA presented no documentary evidence, or fact or expert witness testimony, showing that it actually provided charity, indigent, and uncompensated care at the levels required by the” purchase agreement, the judge wrote.
He appointed an auditor to review HCA accountings of its indigent care contributions for the court, but it’s unclear when the court will rule on that aspect of the lawsuit.
HCA spokeswoman Susan Kaufmann said in an emailed statement Friday that the hospital chain believes it has met the terms of the purchase agreement and “exceeded our promises.” She said the company would appeal Torrence’s ruling.
“Rather than simply put money into the repair of old facilities, we built two new hospitals, spending hundreds of millions of dollars to ensure this community has high quality care,” Kaufmann said.
Kansas City lawyer Michael Blumenthal said the foundation, which he represents, helps fund organizations that serve an estimated 900,000 area residents who don’t have health insurance or who are underinsured.
“I think that the board members of the foundation were brave to take this challenge on and are just thrilled that they could get through this case and hopefully continue to further their mission of serving the uninsured and underserved in the medical community,” Blumenthal said Friday.
Spokeswoman Jennifer Sykes said the foundation took on the lawsuit because it was “part of our responsibility to as the voice for that population to make sure they did what they were supposed to do.”
The foundation has given out about $160 million in grants to area organizations since 2005, she said.