A physician group sued a not-for-profit Waterloo hospital, alleging the hospital, its chief executive and Catholic parent company conspired to compete unfairly, violate state trademark laws and drive the physicians out of business. Cedar Valley Medical Specialists, a 53-physician multispecialty practice, filed suit in Black Hawk County (Iowa) District Court against 281-bed Covenant Medical Center, part of three-hospital Covenant Health System; its president and chief executive officer, Jack Dusenberry; and its parent company, 13-hospital Wheaton (Ill.) Franciscan Services. Covenant Vice President of Business Development Chris Hyers declined comment on the suit, saying the system's policy is to not discuss pending litigation. The 10-year-old physician group alleged that in July Covenant illegally named its 19-acre planned medical development Greater Cedar Valley Medical Center, infringing on the physician group's trademark, confusing consumers and trading on its reputation. The physicians allege that Covenant has withheld staff privileges, terminated call coverage and upcoded charges as part of its scheme to drive them out of business.
Cedar Valley CEO Gil Irey said the group practice asked Covenant not to use the name. "They would not back down on that, and we felt our only recourse was through the legal system." Irey added that "timing of the suit is totally unrelated and separate from the federal investigation," in which HHS' inspector general delivered subpoenas to two Iowa insurers in August seeking information about whether Covenant paid some employed physicians -- two of whom earned more than $2 million annually -- in excess of fair market value. In September, Hyers said the physicians' high earnings reflected regional shortages of specialists and long hours worked. -- by Mark Taylor