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HCA Appeals $434M Judgment In Favor Of Health Care Foundation

HCA Midwest Health
Kansas City's Research Medical Center is one of several local hospitals acquired by HCA in 2003.

As expected, hospital giant HCA is challenging a court judgment last month ordering it to pay the Health Care Foundation of Greater Kansas City nearly $434 million.

The company filed a formal notice a few days ago that it plans to appeal the judgment to the Missouri Court of Appeals in Kansas City.

In December, Jackson County Circuit Judge John Torrence found that HCA had breached capital and charitable contribution commitments it made when it bought several local hospitals in 2003 for more than $1 billion.

HCA listed five grounds for its appeal. Among its arguments:  

  • The Health Care Foundation did not have legal standing to sue.
  • HCA fulfilled its agreement to make $450 million in capital expenditures by building new hospitals in Independence and Lee’s Summit.
  • The Health Care Foundation was not entitled to a $239 million shortfall found by Torrence because the Health Care Foundation did not establish “that HCA’s alleged breach caused it (or anyone else) any harm whatsoever.”

Mike Blumenthal, a lawyer for the Health Care Foundation, said his client was hopeful the appeals court would view Torrence’s ruling as “being entirely correct.”
Lawyers for HCA could not be reached for comment.

The long-running case was brought by the Health Care Foundation in 2009 and was tried before the judge rather than to a jury. In earlier rulings, Torrence had found in favor of the Health Care Foundation, but the case’s resolution was delayed pending final assessments of damages by accountants retained by the parties.

HCA is the largest for-profit hospital chain in the United States. In 2003, it purchased 12 hospitals and clinics from non-profit Health Midwest for $1.125 billion. The hospitals included Menorah Medical Center, Research Medical Center and Overland Park Regional Medical Center.

Because Health Midwest was a non-profit institution, proceeds from the sale were used to set up two foundations – the Health Care Foundation of Greater Kansas City on the Missouri side and the REACH Foundation on the Kansas side. The former got 80 percent of the proceeds, the latter 20 percent.

Both foundations fund organizations that provide health care for the uninsured and underinsured.

The Health Care Foundation sued after concluding HCA had failed to honor its pledges to spend $450 million over five years on hospital improvements and another $500 million on charitable, indigent and uncompensated care. HCA denied the allegations and made clear it intended to appeal any final judgment against it.

Along with its appeal, HCA has filed a $527 million appeal bond. The amount represents the judgment plus anticipated interest on the judgment over what is expected to be a two-year-long appeal process.

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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