EDMONDS — Stevens Hospital has agreed to pay $1.35 million to a Lynnwood pathology lab, part of an out-of-court settlement that ends a two-year legal dispute over the lab’s contract.
The agreement with Cytolab Pathology Services Inc. was approved Wednesday by the taxpayer-supported hospital’s five commissioners without comment.
“I think the whole thing is a tragedy, basically,” said Dr. Donald Nakonechny, one of three Cytolab partners. “I’m sorry that the whole thing came out the way it did. I would have thought there would be a better way to solve those kinds of issues.”
The dispute dates back to 2006, when the hospital terminated its annual contract with Cytolab Pathology Services. The business had managed the hospital’s pathology lab and provided pathology services for the hospital since 1972.
The lab processed about 750,000 medical tests a year for the hospital and other area medical clinics. In 2005, the last full year of the contract, Stevens Hospital paid the lab nearly $258,000.
Cytolab Pathology Services filed a lawsuit in August 2006 in King County Superior Court, alleging Stevens had breached its contract with the lab, resulting in lost business.
The hospital decided to approve the out-of-court settlement in part because of the legal costs involved in the lawsuit, said Jack Kirkman, hospital spokesman.
A mediator helped hammer out the agreement between the hospital and Cytolab, he said.
The money to pay for the settlement will come from the hospital’s 2007 budget.
Although year-end accounting is not yet final, the hospital is expecting to carry over $2 million in its budget once the settlement is paid, said Gary Wangsmo, Steven’s chief financial officer.
The overall operating budget for the hospital and its affiliated businesses last year was $141 million.
Reporter Sharon Salyer: 425-339-3486 or salyer@heraldnet.com.
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