New litigation has intensified the feud between Friendly Hills Healthcare Network founder Albert E. Barnett, M.D., and MedPartners, the company that acquired the network in September.
The two sides have struggled over control of the esteemed Southern California network, which has been a leader in capitated care.
Under Barnett's direction, the network's assets were transferred to a not-for-profit foundation and later sold to Caremark International, which MedPartners bought Sept. 5.
MedPartners fired Barnett, along with former Friendly Hills President Gloria Mayer, on Nov. 21. The company sued Barnett, Mayer and Mayer's husband, Thomas Mayer, M.D., for allegedly undermining its efforts to build an integrated network in Southern California (Dec. 2, p. 8).
Barnett filed counterclaims against MedPartners, charging he was wrongfully terminated from a $350,000-a-year position as a senior vice president. He also alleged that MedPartners violated a state law against the corporate practice of medicine by transferring his stock in Southern California Medical Corp., a professional medical corporation, to another physician.
Barnett was the president and sole shareholder in SCMC, which holds the facility licenses of the Friendly Hills network, including that of Friendly Hills Regional Medical Center in La Habra, Calif.
In the suit, Barnett claimed the stock was his personal property and that it was valued at more than $100 million.
Mark Wagar, MedPartners Western regional president, denied all charges in the suit. He said Barnett signed agreements with Caremark that relinquished his perpetual control of the stock.
Last week, the feud erupted into a war of words from both sides.
"He's looking for every excuse to re-inject himself into a system to which he's been disloyal," Wagar said of Barnett.
And Barnett said Friendly Hills never agreed to have its management services contract with Caremark transferred to MedPartners.
"We're questioning the right of MedPartners to even be involved with Friendly Hills," Barnett said.
Barnett said MedPartners violated the management services agreement by usurping his total control of contracts, budgets and management for Friendly Hills. Wagar said the management services agreement assigns those decisions to an executive committee of physicians and managers, which Barnett never once convened.
"Apparently, Dr. Barnett believed that all of these actions were, and forever would be, his sole discretion," Wagar said.
Barnett's 43-page complaint, filed Dec. 5 in Orange County (Calif.) Superior Court, also alleged that MedPartners discriminated against him on the basis of his age (65), his Jewish faith and a physical disability stemming from recent heart surgery. Barnett also claims the charges in MedPartners' suit amounted to defamation.
MedPartners, one of the most successful and fastest-growing physician practice management companies in the country, downplayed the suit. Officials at the Birmingham, Ala.-based company called it a local matter.
Larry House, MedPartners' chief executive officer, called it a "glitch" in a Dec. 3 interview with MODERN HEALTHCARE.
"We consider it something that's behind us," House said. "We had it, we've dealt with it, and we're moving on."
But the issue seems far from settled for Barnett and the Mayers.
"I think we've just started," Barnett said.
Barnett called MedPartners' handling of the terminations "reprehensible." He said he and Mayer were notified they were fired in front of numerous people as they exited a seminar at the Ritz-Carlton hotel in San Francisco and were locked out of their offices.
"We have never had this kind of treatment of healthcare professionals that I know of in this country before," Barnett said.
Gloria Mayer said last week she and her husband would file their own counterclaims against MedPartners by Jan. 2. She said the charges against her are false. "I was getting to work at 5 and 6 a.m. and leaving at 7 p.m. I was working very hard. I was committed to MedPartners," she said. "I'm just shocked at what they did."
Mayer, a registered nurse, served as MedPartners' group vice president in Western operations. She and Barnett signed two-year employment agreements with MedPartners in August that provided salaries of $300,000 and $350,000 respectively plus stock options, bonuses and other benefits. Barnett also received a $3 million payment to settle outstanding contracts with Caremark, Wagar said.
Thomas Mayer, a former director at Friendly Hills, is described by MedPartners in court papers as an unauthorized consultant.
In an amended complaint, MedPartners declared the employment agreements to be void and requested that the defendants return all benefits received. MedPartners also wants unspecified damages and injunctive relief prohibiting the defendants' "wrongful conduct."
Friendly Hills has 45 medical clinics, one hospital and ancillary facilities.