RENO, Nev. (KRNV & MyNews4.com) - Five million dollars: That's how much Renown Medical Center is paying out in a recent court settlement.
That lawsuit, the money spent to settle it, and a fine handed down by the Federal Trade Commission are raising questions about how our area's largest hospital is being run.
The settlement came about after Renown President and CEO Jim Miller spent an entire day on the witness stand during the middle of a bitter court battle.
Sierra Nevada Cardiology sued Renown claiming the hospital cheated them by changing the terms of the doctors contracts and cutting their pay, after an agreement was in place.
Reno cardiologist Dr. Kosta Arger was one of the doctors who sued. He's also a former Renown board member.
"It was clear the administration decided at some point to change the contract without informing us," Arger said.
The hospital's board of directors won't tell News 4 why they decided to settle the case in the middle of a four week trial. But it's clear Judge Brent Adams was frustrated with the sworn testimony provided by the Renown president and CEO. First, questioning him about what the judge called a phony letter from a high ranking Renown administrator.
"You ( Referring to Miller ) don't know who created it, you don't know who gave the authority for it, you don't know why it was prepared, you don't know to whom it was sent. What's going on ?" Judge Adams asked Miller. The judge then commented on Miller's evasiveness on the stand at another point , saying: "Mr. Miller, not every decision in a hospital is someone else's decision. Some decisions, somewhere, must be made by you," The judge told Miller.
Several Renown Board members were in the courtroom watching it unfold.
"My view of it was the Renown defense had hoped Mr. Miller would clarify and clinch things for them. And as it turned out it was an embarrassment for them. And that point they realized they had to throw in the towel," Dr. Arger said.
Sources tell the Fact Finder Team that just two days after Miller's testimony, Renown's board of directors held an emergency meeting on Superbowl Sunday. And 24-hours after that a settlement was in place, with Renown agreeing to pay the Sierra Nevada Cardiology Group five million dollars. That's money the doctors say Renown guaranteed them when the hospital acquired their practice, but never paid.
But that five million dollars is just the tip of the iceberg in money spent. The Federal Trade Commission conducted a thorough investigation in conjuction with the Nevada Attorney General's office and found those deals gave Renown 88-percent of the cardiologists in the market. A monopoly, in violation of the law.
"We did have competition concerns about this deal, which ultimately can harm consumers," said Senior Deputy Attorney General Brian Armstrong.
Following that investigation, Renown reached a settlement with the Nevada Attorney General's Office and agreed to reimburse them for more than $550,000 legal fees.
Multiple sources close to the deal also tell News 4 that Renown, a not-for-profit hospital, paid at least seven million dollars to acquire the area's two cardiology groups, creating an illegal monopoly. Those actions raised such concern with the F-T-C that it now requires any proposed acquisition, merger or consolidation of Renown Health to be reported to the F-T-C 30 days prior to a deal being struck. And that order is in place through the year 2022. Renown is also required to provide the same notification to the Nevada Attorney General's Office through 2016.
And while Renown will not confirm it, our sources tell us the hospital likely paid out at least another three million dollars in legal fees for all of this: one million to fight F-T-C case, and another two million to fend off charges by the cardiologists.
Add in the court settlement and you're talking 15 million dollars all told. All of that spent after Renown insiders say the Federal Trade Commission warned Renown's president and C-E-O not to move forward with the deal in the first place. "It was recommended to them that they not do that as there could be potential implications with the F-T-C, monopolization of cardiology care in this community," said Dr. Arger.
So, where does that 15 million dollars come from?
The hospital administration would not answer that question. And they wouldn't tell us if it would be passed on to you the consumer, or if employees would be impacted.
What we do know is it will now be up to the hospital's board of directors to decide If that 15 million dollar bill, and the C-E-O's actions are acceptable, and what if any changes will be made as Renown looks to heal following a painful and expensive legal battle.
News 4 tried to reach Renown President and C-E-O Jim Miller to get his side of the story. We were told he is on vacation and not available to comment.
Coming-up next Wednesday on News 4 at Five: I'll look deeper into Renown's acquisition of the cardiology groups, and how patients are directly impacted by the hospital's moves.