A Marion County judge on Friday ordered a physician practice to pay what could amount to over $1 million to an Indianapolis neurosurgeon who opposed a merger between the practice and another physician group. The decision could have broad implications for health-care mergers in Indiana, making them more difficult at a time when they are growing increasingly popular due to massive changes in the practice of medicine.
The ruling in favor of David C. Hall, M.D., stems from a lawsuit he filed against his former practice, the Indianapolis Neurosurgical Group, which fired him in 2009 after he opposed a merger with University Neurological Associates due to concerns about a non-compete agreement and other factors. Nevertheless, most of the group agreed with the merger, and a month before it took effect, Dr. Hall submitted his resignation. But the group fired him instead, saying he violated a provision of his contract that required him to give one-year notice before resigning.
On Friday, Marion Superior Court Judge Heather Welch ruled that Dr. Hall was entitled to dissenter’s rights, which allows shareholders to resign without penalty to receive fair value for their shares. According to Welch’s order, Indianapolis Neurosurgical Group failed to notify Hall of those rights. She therefore ruled that the physician group owes Hall severance pay, fair value for his shares, attorney’s fees and interest.
Meanwhile, Hall’s attorney, Robert MacGill, said a jury trial has been set for February 26, 2013 to determine damages. According to the Judge’s order, this is the first time an Indiana court has specifically addressed a case regarding the question of whether dissenter’s rights apply to professional medical corporations in Indiana.
Indianapolis attorney, Kent Smith, whose law firm specializes in healthcare law, told the Indianapolis Star that the answer to that question could mean millions of dollars to physicians who oppose mergers supported by the rest of their partners.
“It’s a significant decision,” Smith said. He added that the Hall case could give practices pause before jumping into a merger.
But MacGill, the attorney representing Hall, told the Indianapolis Star that the ruling provides important protections for doctors who might otherwise be pushed out of the way during a merger.
“The judgment entered by Judge Welch documents in precise detail important shareholder rights,” he said. “Those rights can be enforced by declaratory judgment and an award of attorney’s fees.”