A physician staffing company is suing Santa Cruz Valley Regional Hospital to recover payments for what it says where unpaid services of more than $1.9 million.
The suit was filed in Pima County Superior Court on Dec. 18. by Global Hospitalist Solutions.
In July, the hospital in Green Valley emerged from 18 months in Chapter 11 bankruptcy and announced a new owner, Lateral Investment Management, and new leadership, the Utah-based ERH Healthcare.
It also acquired a new name. Santa Cruz Valley Regional Hospital was formerly Green Valley Hospital and is located at 4455 I-19 Frontage Road, about 30 miles south of Tucson. The hospital laid off about 60 employees shortly after emerging from bankruptcy.
The hospital entered into two contracts in 2018 with the physician group — one to staff the hospital and the other to staff its emergency department.
Global Hospitalist Solutions “bills weekly, but unfortunately, the hospital fell behind in payments last year ... and were falling further behind,” said the group’s attorney, Glenn Hotchkiss.
On Nov. 16, a representative from Global Hospitalist Solutions sent an email to hospital CEO Kelly Adams giving notice of the hospital’s overdue payment of nearly $607,000.
On Nov. 19, the hospital responded by terminating the two contracts “without cause,” according to the suit. According to the termination agreement, services would end Jan. 31.
“At no time has Defendant (Santa Cruz Valley Regional Hospital) raised any issues regarding the quality of the services GHS (Global Hospitalist Solutions) has provided,” according to the lawsuit.
The same day, a staffing company representative sent another request to the hospital for payment.
On Nov. 28, Global Hospitalist Solutions sent a follow-up demand letter to Adams, updating the past-due payments to over $1.1 million and requesting payment by Dec. 5. After that letter, the hospital paid about $370,000, about $700,000 short of what it owed.
By Dec. 6, Global Hospitalist sent another letter requesting the rest of the money and informing that it would file suit if the hospital didn’t pay by Dec. 13.
Santa Cruz Valley Regional Hospital exercised its right to terminate both contracts early, according to Hotchkiss, but as the hospital continued to fall behind, it hindered the staffing company’s ability to pay the doctors.
Still without payment, Global Hospitalist terminated services Dec. 31. “But they still have a significant unpaid debt owed,” Hotchkiss said.
Global Hospitalist tried to resolve the matter with the hospital without taking legal action, he said.
“It would be in their best interest if they thought they had a defense to nonpayment for services. I’d get it, but we didn’t hear anything like that,” Hotchkiss said about the hospital.
Global Hospitalist is asking for an award for past-due invoices of $725,534 and an award of damages for current invoices in the amount of $1,198,741. The company is also seeking compensation for additional invoices, interest and the cost of bringing suit.
Hotchkiss said that Global Hospitalist was not worried about being paid reliably before entering the contract, even though the hospital had just emerged from bankruptcy, because the hospital had a new owner.
Hospital CEO Adams said he could not comment on the lawsuit.
The full-service 49-bed hospital was built in 2015.
Green Valley Hospital announced the Chapter 11 bankruptcy filing in early 2017, saying the debt was the result of a number of factors, including “turmoil and financial mismanagement” in its early days.
Additionally, officials said a hospital assessment imposed when the state expanded its Medicaid program in 2014 had been a financial burden.