South Broward Hospital District, Hollywood, Fla., filed a class-action lawsuit alleging fraud by the nation's largest medical-transcription services agency, MedQuist of Mount Laurel, N.J., and four of the company's current and former officers. Former MedQuist Chief Financial Officer Brian Kerns and Chief Legal Officer John Suender, both defendants in the suit, resigned in June after outside audits showed the company may have inflated bills to hospitals and other clients. MedQuist referred questions to New York public relations firm Ruder Finn. At deadline, Ruder Finn officials had not returned calls.
The 34-page lawsuit was filed in U.S. District Court in Los Angeles on behalf of an estimated 3,000 hospitals by law firm Greenberg Traurig. It alleges that the company intentionally misrepresented contract terms. In June Nasdaq delisted MedQuist for failure to file appropriate forms. Meanwhile, MedQuist said it will cooperate with a Securities and Exchange Commission investigation of the company. MedQuist earned $44.9 million on revenue of $486.2 million in 2002. Atlanta hospital executive Timothy Stack left his position as chief executive officer at Piedmont Medical Center to join MedQuist in the fall of 2003 but returned to Piedmont in less than three months, saying the move was allowed by changes in his personal and professional life. -- by Mark Taylor