It's Scripps vs. Scripps in San Diego.
Last week a group of nearly 300 physicians formerly affiliated with prestigious ScrippsHealth sued the system in a California state court, charging it with engaging in fraudulent activities and interfering in the physicians' business practices.
The doctors' suit, filed Feb. 17 in San Diego County Superior Court, seeks
$60 million in damages. No hearing date has been set.
The main characters in this unfolding drama are ScrippsHealth, which operates six hospitals in the San Diego area, and a for-profit company controlled by Scripps Clinic called SC Physicians Investment Co.
In February 1996 Scripps Clinic spun itself off from ScrippsHealth into a separate not-for-profit corporation. The clinic still leases nine outpatient centers from the system that are staffed by the clinic's doctors.
The physicians then formed SC Physicians to enter business deals in which the not-for-profit couldn't participate under California law. For example, SC Physicians wants to create a physician practice management company. SC Physicians already has attracted money from six venture capital firms interested in investing in the company, which intends to go public.
Thomas Waltz, M.D., spokesman for SC Physicians, said the suit was the culmination of tensions over "Project Scripps," a plan unveiled by ScrippsHealth in February 1997 to better organize its physicians and boost managed-care revenues.
Part of the plan calls for organizing some of the 2,000 or so physicians with admitting privileges at ScrippsHealth hospitals into another affiliated clinic called ScrippsHealth Physicians, which would compete with the old Scripps Clinic and any of its business ventures.
According to Waltz, Project Scripps violates a noncompete agreement Scripps-Health had with the original clinic doctors. "They've been actively working to build their own physician network, of which Project Scripps is the cornerstone," he said.
Stanley Pappelbaum, M.D., Scripps-Health's chief operating officer, denied Waltz's assertions about Project Scripps. But he did acknowledge that SC Physicians' for-profit motives clash with those of not-for-profit ScrippsHealth, putting a strain on its relationship with its old clinic physicians.
"Scripps has nothing against any independent group going public. We do business with some of the largest publicly traded firms in the world," said Pappelbaum, who heads Project Scripps. "Yet there is a problem in the notion about the Scripps name being about goodness and community-based medicine and being aligned in any way with a for-profit venture. We should never be a part of that; it's part of our core values."