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Judge Orders HCA To Pay $434 Million To Health Care Foundation Of Greater Kansas City

Courtesy HCA Midwest Health

This story was updated at 8:41 p.m. to include HCA's response.

A Jackson County judge has awarded nearly $434 million to the Health Care Foundation of Greater Kansas City in its long-running lawsuit against HCA Midwest Health over whether HCA fulfilled the pledges it made when it bought several local hospitals in 2003 for more than $1 billion.

The award represents a sweeping victory for the foundation, which was created with proceeds from the sale of the hospitals and argued that HCA reneged on its commitments.

Circuit Judge John Torrence had previously found that HCA was liable to the foundation for failing to make capital and charitable contributions it undertook after its acquisition of the assets of nonprofit Health Midwest. Those assets included Menorah Medical Center, Overland Park Regional Medical Center and Research Medical Center.

Torrence had asked both parties to submit a proposed judgment payout but they differed on the amounts and submitted separate ones instead. Torrence adopted the foundation’s proposed order and rejected HCA’s argument that interest on the award should be calculated as simple rather than compound interest.

Torrence’s four-page order, which was handed down Wednesday afternoon, found that HCA is liable for $239.4 million over its failure to fund promised hospital improvements; $167.1 million in prejudgment interest; and more than $27 million in legal fees and expenses. 

Christine Hamele, a spokeswoman for HCA, said the company was disappointed in the ruling and plans to appeal.

"We expect the Missouri Court of Appeals to rule on the appeal by the end of 2016," she said in a statement. "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." 

The health care foundation's chairman, Kenneth E. Southwick, said in a statement that the foundation's goal in the lawsuit "was to determine whether or not HCA had fully complied with its obligations to the people of Greater Kansas City in connection with the Health Midwest purchase." 

"After today's final judgment, we are confident we have met that goal," he said. "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."

In regulatory filings, HCA had previously said it intends to appeal any judgment against it. The company disputes that it reneged on its commitments and also questions whether the foundation had standing to bring the lawsuit.

The foundation sued over what it said was HCA’s failure to expend $450 million over five years as part of an agreement with then-Missouri Attorney General Jay Nixon, now the state’s governor. Nixon got involved because the deal involved the purchase of non-profit Health Midwest by HCA, a for-profit company, and the attorney general oversees all charitable institutions in the state. The agreement Nixon negotiated was intended to ensure that the proceeds were used for a public benefit.

Editor’s note: The Health Care Foundation of Greater Kansas City provides funding for Heartland Health Monitor.

Dan Margolies, editor of the Heartland Health Monitor team, is based at KCUR. You can reach him on Twitter @DanMargolies.

Dan Margolies has been a reporter for the Kansas City Business Journal, The Kansas City Star, and KCUR Public Radio. He retired as a reporter in December 2022 after a 37-year journalism career.
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