Ill. practice sale has doctors fighting

A battle among radiologists has broken out over the possible sale of a 73-doctor, Chicago-area practice to a Southern California firm on an acquisition binge.

Five physician-shareholders in Harvey, Ill.-based Radiology Imaging Consultants S.C. allege that Dr. Abraham Bronner, the CEO, and Dr. Perry Gilbert, the president, are trying to improperly eliminate certain shareholders in order to boost the value of the remaining stakes when the practice is sold, according to a complaint filed July 30 in Cook County Circuit Court.

“That's a squeeze-out,” said Christopher Griesmeyer of Chicago law firm Greiman Rome & Griesmeyer LLC, which represents the plaintiffs.

The prospective buyer is Manhattan Beach, Calif.,-based Radiology Partners Inc., the complaint says. The company is looking to buy up doctors' practices after receiving a $55 million investment from private-equity firm New Enterprise Associates Inc.

The attempt to eliminate some shareholders apparently has brought out into the open long-standing tensions at the practice, which has 43 shareholders.

Drs. Bronner and Gilbert have created a “culture of condescension, contempt and secrecy that the board has fostered,” the complaint says.

The doctors and the board members “strongly believe the allegations in the complaint are baseless and intend to vigorously defend the lawsuit,” said Steven Thompson, a Chicago-based partner at Ungaretti & Harris LLP, who represents them.

“In the meantime, the parties are working together to resolve their differences and hope to do so very soon,” he said, according to a statement.

The practice provides around-the-clock services to hospitals in three states, including Illinois. The dispute highlights a specialty that patients have only limited direct contact with. Radiologists spend much of their time interpreting medical images such as X-rays and magnetic resonance imaging scans. The field also includes experts in minimally invasive procedures, such as angioplasty, or the widening of obstructed arteries.

In January, if not earlier, Dr. Bronner was contacted by an investment bank about a possible sale to Radiology Partners, the complaint says.

Each shareholder in the practice has the same ownership interest of 200 shares of common stock, the complaint says. To boost the value of their stakes if the practice was sold, the so-called senior shareholders hatched a plan to eliminate some shareholders, the complaint says.

One group on the “hit list” is radiologists who work overnight shifts, such as plaintiffs Joel Benveniste, Daniel Koscielski and Myrosia Mitchell, the complaint says. Another group on the list is shareholders who have worked at the practice for less than five years, such as Tejvir Nanda, who is also a plaintiff, the complaint says.

The practice's shareholder agreement contains a rare provision allows for the board to terminate without cause shareholders with less than five years' employment, the suit says.

“It would be unusual for someone to sign that,” said Steven Harris, a Chicago-based healthcare lawyer at McDonald Hopkins LLP, who is not involved in the case.

A fifth plaintiff, Dr. Elizabeth Holland, apparently was not targeted for elimination, but the complaint says she raised questions about the plan. She is joining in allegations that Dr. Bronner and the other board members have improperly received hundreds of thousands of dollars from the practice.

Mr. Griesmeyer, the plaintiffs' lawyer, said shareholders were scheduled to consider the plan to remove the overnight radiologist at a June 3 meeting, but the vote was suspended after some shareholders objected to the proposal. He confirmed that Radiology Partners was the company noted in the complaint that expressed interest in the company.

In an email, Rudy Radasevich, a Chicago-based partner at law firm Neal Gerber & Eisenberg LLP, which represents the practice, said, "All parties agree that this matter involves issues that are internal . . . and will not affect patient care in any respect."

No acquisition has been completed.

Richard Whitney, CEO of Radiology Partners, did not return a call for comment. He is also a venture adviser of New Enterprise Associates, which has an office in Menlo Park, Calif., and $13 billion in capital commitments.

"Practice sale has doctors fighting" oirginally appeared in Crain's Chicago Business.