The Suburbanite
  • Verdict upheld in Mercy vs. Aultman case

  • An appeals court has upheld a jury’s 2010 verdict against Aultman Health Foundation in the corrupt activity lawsuit brought by cross-town competitor Mercy Medical Center.

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  • An appeals court has upheld a 2010 verdict against Aultman Health Foundation and its subsidiaries in the corrupt-activity lawsuit brought by cross-town competitor Mercy Medical Center.
    The 5th District Court Appeals decision, filed Monday, affirmed the jury’s $6.1 million verdict and a judge’s award of $4 million in fees to Mercy’s attorneys.
    The court, however, overturned Stark County Common Pleas Judge Frank Forchione’s order that Aultman pay $266,400 to local governments.
    Mercy’s legal team welcomed the ruling, while Aultman’s camp expressed disappointment, saying it plans to appeal to the Ohio Supreme Court.
    “The unanimous decision vindicates the courage of Mercy in bringing this action which benefited the community,” and confirms the right of consumers to know if secret payments are influencing decisions about health insurance, said Mercy attorney Lee Plakas.
    “We are not a corrupt organization. Period,” said Aultman attorney Allen Schulman.
    The lawsuit, filed in late 2007 and culminating more than two years later in an eight-week trial, pitted the community’s most prominent not-for-profit medical institutions against one another.
    The crux of the case was Aultman’s secret payments to a select group of independent brokers who switched clients to health-insurance services provided by AultCare and McKinley Life.
    Mercy made several legal claims over the payments, but prevailed on just one: The broker payments constituted a pattern of corrupt activity that enriched Aultman at Mercy’s expense.
    Aultman defended the broker payments as consistent with its mission of providing quality, low-cost medical care. It also notes that federal and state regulators have taken no action over the payment program.
    In a 34-page opinion, the appeals court said the jury had enough evidence to reach a verdict against Aultman and upheld the award of damages and attorney fees.
    But the three-judge panel said Forchione couldn’t make Aultman pay $190,800 to Stark County and $75,600 to North Canton. Those amounts reflected money Aultman paid a broker for switching the governmental entities to AultCare.
    Aultman’s payment of the damage award and fees has been on hold during the appeal.
    The state’s highest court doesn’t have to accept Aultman’s appeal.
    Schulman said the case is one the justices should hear.
    The trial and appeals courts have applied the corrupt activities law so broadly to broker payments that it “would indict an entire industry,” Schulman said.
    Plakas disagreed.
    Cases involving over-arching legal questions are more likely to be heard by the Supreme Court; this case is driven by the facts of Aultman’s broker payments, and the claim that those payments weren’t out of the ordinary has already been rejected, Plakas said.

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