Kansas City Health Care Foundation, HCA Settle Litigation For $160 Million

Jan 31, 2017

The Health Care Foundation of Greater Kansas City has settled its long-running case against hospital giant HCA for $160 million.

The settlement comes after a state appeals court earlier this month reduced a trial court judgment in favor of the foundation from $434 million to $188 million.

Coupled with an earlier settlement in the case that netted the foundation $13.5 million, the foundation will end up getting about $173.5 million from HCA – bringing the foundation’s total assets to about $700 million.

“The money certainly makes it so we can do our mission even better because we now have more assets dedicated to it,” says foundation president and CEO Bridget McCandless, referring to the settlement.

McCandless, a physician, says the foundation distributes about $20 million a year in grants, and that won’t change right away because of the settlement.

But since the foundation gets about three times as many requests as it has dollars to give, she says, “over time this will make more money available for us to do our grant making.”

This year the foundation plans to focus its grants on healthy eating, active living, tobacco prevention, oral health, mental health and safety net health care.

“It still takes an entire community to solve the enormity of health care issues,” McCandless says. “But those additional dollars we have will help us do our part.”

The settlement brings to an end litigation launched in 2009 by the foundation. The foundation alleged HCA had not met charitable and capital improvements commitments it undertook following its 2003 purchase of Health Midwest’s assets.

HCA paid $1.3 billion to acquire Menorah Medical Center, Research Medical Center, Overland Park Regional Medical Center and other non-profit health care facilities from Health Midwest. Some the proceeds were used to create the Health Care Foundation of Greater Kansas City in Missouri and the REACH Healthcare Foundation in Kansas.

REACH opted not to join the Health Care Foundation’s lawsuit against HCA.

Two years ago, HCA agreed to pay the Health Care Foundation $15 million to settle the charitable prong of the litigation. But it continued to dispute that it had not met its capital improvements commitment, arguing it did so by building new hospitals in Lee’s Summit and Independence. The foundation countered that HCA was obliged to spend the money on existing hospitals.

In December 2015, Jackson County Circuit Judge John Torrence agreed with the foundation’s interpretation and found HCA liable for $239.4 million over its failure to fund promised hospital improvements; $167.1 million in prejudgment interest; and more than $27 million in legal fees and expenses.

Two weeks ago, however, the Missouri Court of Appeals ruled that HCA had met its capital improvements commitment by building the new hospitals. But it also found that HCA had failed to make the expenditures within five years of the Health Midwest sale, as required, and let stand $165.7 million of Torrence’s award as well as legal fees of $22.3 million.

In a statement Tuesday, HCA said it was pleased the appeals court found it complied with the agreement. It said that while it disagreed with the rest of the court's ruling, "we believe that it is in the best interest of the Kansas City community to resolve this issue. It allows us to focus on serving this community."

The statement went on to say that HCA has invested over $1 billion in the last 14 years "to meet the Kansas City area's growing healthcare needs."

HCA, which is based in Nashville, Tennessee and is the largest for-profit hospital chain in the country, reported $920 million in profits, up 58 percent, on revenue of $10.6 billion in the fourth quarter of 2016. 

Editor’s note: The Health Care Foundation of Greater Kansas City provides funding for KCUR’s health reporting.

Dan Margolies is KCUR’s health editor. You can reach him on Twitter @DanMargolies.