Wellmont Health System will pay $83 million to Highlands Physicians to settle allegations that the health system undermined the physician practice.
Wellmont Health System, which merged with Mountain States Health Alliance in 2018 to form Ballad Health, allegedly depressed reimbursement rates, diverted resources and sabotaged contracts for the 1,500 physicians across Tennessee and Virginia. A Tennessee jury awarded Highlands Physicians $58 million in 2018, which Ballad unsuccessfully appealed.
Sullivan County Chancellor E.G. Moody approved the $83 million class-action settlement in August and it became effective on Tuesday—$76 million of which will be paid in cash to Highlands Physicians and class members and $6.7 million will be used to form a new regional health network—to account for "the risk to the class members of continued litigation." Wellmont previously paid $67.1 million, which essentially covered the original jury award and interest accrued.
"Ballad Health has taken no action related to the litigation other than to be stewards of the assets which travelled with Wellmont," according to a joint statement released by Ballad Health and Highlands Physicians.
The suit, filed in 2016, alleged that Wellmont breached the physician hospital organization contract signed in 1993 by Highlands Physicians and Bristol Hospital, Wellmont's predecessor in the relationship. Wellmont would allegedly try to lure insurers out of their existing contracts with Highlands Physicians.
The health system lost its appeal in 2020; the Tennessee Supreme Court declined to take up the case.
CORRECTION: This story has been updated to identify that Wellmont will be paying the settlement, which became effective Sept. 21.