EVERETT — The Everett Clinic paid more than $33 million to a group of its former physicians in a dispute over the sale to DaVita Healthcare.
Thirty-one doctors contended that The Everett Clinic owed them payment after the Denver-based DaVita purchased the independent medical group last year.
The two sides agreed to binding arbitration, which came back in favor of the physicians, according to documents filed in King County Superior Court.
“The biggest issue is The Everett Clinic tried to characterize this as a merger instead of a sale, but as everybody, including the arbitrator agrees, that if it walks like a duck, talks like a duck, it’s a duck,” said Caitlein Ryan, who agreed to serve as a spokeswoman for the physicians.
The Everett Clinic declined to comment on the judgment, saying through a spokeswoman that the clinic doesn’t speak on legal matters.
The physicians received $30 million in principal judgment, $2.65 million in interest and $991,000 in attorney fees, according to the court paperwork.
The arbitrator heard the case in December and came back with a decision in March. A King County Superior Court judge signed off on the award in April.
Some of the doctors had worked for The Everett Clinic years ago while some had been working at the clinic until just weeks before the sale was completed, Ryan said.
“In our family, we sort of felt our story was unique and then we started talking with other folks and discovered our story wasn’t unique,” said Ryan, who is the wife of one of the doctors. “There have been quite a few physicians who were treated poorly by the clinic. The frequency of those stories increased the closer the clinic got to that buyout.”
DaVita, which runs more than 2,000 kidney dialysis centers in the U.S., bought The Everett Clinic last year for $405 million. DaVita operates the medical group as a subsidiary under The Everett Clinic name.
The goal of the sale was to allow The Everett Clinic to double in size by 2020. The clinic, which has more than 2,000 employees and more than 318,000 patients, has opened new offices in Shoreline, Edmonds and Mill Creek.
Before the sale, The Everett Clinic was owned and run by doctors who doubled as shareholders. Current and former doctors were entitled to a share from the sale of the clinic to DaVita, Ryan said.
The Everett Clinic sent past doctors a letter offering a substantially lesser amount or, if they refused to take that amount, no money at all, Ryan said.
“There was a letter that went out that sounded fairly ominous,” Ryan said. “We received one ourselves — you either take this money or we’re done with this negotiation.”
The clinic was offering $350,000 or $175,000 depending on how many shares the doctors previously owned, said Chris Price, a cardiologist who worked at The Everett Clinic until 2012 and now works at EvergreenHealth in Kirkland.
He said the letter told him and the other doctors that the business deal was a merger and not a sale and they weren’t owed any money.
“It just seemed odd to want to pay someone money if they didn’t need to do it,” Price said. “It raised a red flag.”
He also said he knew doctors who had previously worked at The Everett Clinic who weren’t contacted at all. He encouraged them to reach out to the clinic.
Family practitioner Len DuPree, who worked for The Everett Clinic from 2003 until retiring in 2013, said about 60 to 70 doctors talked about the letter through email. Those doctors reached out to at least 10 lawyers who unanimously felt the physicians deserved the full payout. Still, DuPree said it was a risk to take the issue to an arbitrator.
“This was a situation where they (The Everett Clinic) were going to try to intimidate us,” DuPree said. “The 31 of us weren’t going to let them get away with that.”
Those physicians decided to fight the matter in court. Another 110 doctors who formerly worked at the clinic accepted the lesser amounts and now are considering taking the issue up in court as well, Ryan said.
There are lingering concerns about how DaVita will operate The Everett Clinic, Ryan said.
She pointed to political commentator and comedian John Oliver who spent his show “Last Week Tonight” on Sunday featuring DaVita. The show raised concerns about DaVita such as how the company in the past three years had paid nearly $900 million on lawsuits over defrauding the federal Medicare program and a criminal and civil anti-kickback investigation.
Ryan, Price and DuPree acknowledge that The Everett Clinic has a strong reputation in the community. Ryan and DuPree said they will continue going to The Everett Clinic. Price said he would go to The Everett Clinic, but it’s out of network for his insurance.
“There are fantastic providers at The Everett Clinic,” Ryan said. “I myself take my children to physicians at The Everett Clinic. There are lovely physicians, fantastic nurses and great mid-level providers. We’re talking more about administration.”
Jim Davis: 425-339-3097; firstname.lastname@example.org; Twitter: @HBJnews.