Spokane Journal of Business

North Side orthopedic practice sues Providence Health

Filing alleges bad faith during acquisition talks

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A Spokane orthopedic practice has brought a lawsuit against Providence Health & Services, Providence Holy Family Hospital, and Providence Medical Group, alleging unlawful and predatory practices.

Lukins & Annis PS, the Spokane law firm representing Orthopaedic Specialty Clinic of Spokane PLLC in the suit, alleges in a press release that Providence engaged in “duplicitous and sham negotiations” with the practice in order to obtain the practice’s proprietary information and then use that information to hire away its physicians and support staff.

Providence spokesman Joe Robb said in a prepared statement, “Providence does not publicly discuss specifics regarding ongoing legal actions. However, we do believe that this complaint has no merit and we plan to vigorously defend (ourselves against) these unfounded allegations as stipulated in the suit.”

Providence Health & Services, a Sisters of Providence-sponsored nonprofit ministry based in Western Washington, is among the largest health care systems in the country. It includes more than 30 hospitals, with Holy Family and Providence Sacred Heart Medical Center & Children’s Hospital being among them, as well as 350 physician clinics and many other health and educational services. The health system employs more than 64,000 people across five states. 

Providence Medical Group is the physician services organization within Spokane-based Providence Health Care, the entity that oversees Providence health care services here.

In the suit, filed in Spokane County Superior Court on Sept. 26, Orthopaedic Specialty Clinic of Spokane, which is located at 785 E. Holland, on Spokane’s North Side, said that in spring 2012, Dr. David Scott, the practice’s administrative member, negotiated with Providence for a new business association between the two. They already had a business relationship in that the practice uses Providence’s Holy Family Hospital for surgical and other hospital procedures. 

The filing says Scott viewed the negotiations as productive and promising and that he was optimistic about a deal being reached. 

In the spring of 2013, however, Drs. William Page and Bryan Mitchell, who were employees of Orthopaedic Specialty Clinic but not owners in the practice, gave notice that they were leaving to become employees of Providence, the filing says. That September, the complaint says, Dr. Craig Barrow, who had an ownership interest in the practice, announced that he would be joining Providence’s North Side practice as well. Providence then hired from the practice two occupational therapists, one physician assistant, and a radiographic X-ray technician, court documents say.

The complaint alleges, “Combined, these former OSC employees had brought in millions dollars of profit to OSC, which is now lost by OSC directly because of Providence’s unlawful and anti-competitive practices.” 

The practice also alleges that it suffered other related business losses. At Providence’s “insistence” during the 2012 negotiations, the filing says, the practice withdrew an employment offer to a spine surgeon who was expected to generate $400,000 in annual profit. In addition, the practice said it didn’t pursue expanding into a Post Falls ambulatory surgical center in Post Falls and decided not to open a Spokane Valley satellite operation after being dissuaded by Providence, the complaint says. 

Orthopaedic Specialty Clinic is seeking undisclosed damages in the suit. 

Linn  Parish
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Editor Linn Parish has worked for newspapers and magazines since 1996, with the bulk of that time being at the Journal. A Montana boy who has called Spokane home for some time now, Linn likes Northwest trails, Deep South foods, and lead changes in the ninth inning.

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