HCA med-mal coverage may be exaggerated
By Paul J. Nyden
Hospital Corporation of America Inc., the nationâ€™s biggest hospital company, apparently overstated the amount of insurance coverage it had to cover malpractice lawsuits while it was negotiating last year to sell lawsuit-plagued Putnam General Hospital.
Amid the negotiations to sell Putnam General and three other West Virginia hospitals, Nashville, Tenn.-based HCA told state officials and prospective buyers that it had at least $1.05 billion in insurance for 105 pending malpractice suits filed against it.
But on Feb. 1, HCA stated in a legal filing that its total medical-malpractice insurance was only $325 million. The admission came in a document filed in Putnam County Circuit Court by George A. Shannon Jr., a Houston-based lawyer who represents HCA and its subsidiaries.
HCA and Putnam General each received medical-malpractice insurance through Health Care Indemnity Inc., an HCA subsidiary. Aside from insurance coverage, HCA itself has billions of dollars in assets.
Putnam General is a defendant in 105 medical-malpractice cases filed by patients against John A. King stemming from surgeries performed during his seven months at the hospital beginning in December 2002.
Last year, HCA officials filed documents with the West Virginia Health Care Authority and state Supreme Court of Appeals stating it had â€œ$10 million in primary insurance available for each case,â€? according to a legal document filed in Putnam County Circuit Court earlier this month by Curry and Tolliver PLLC, a Charleston law firm.
That firm represents 70 of Kingâ€™s former patients who are suing King, Putnam General and HCA.
On May 5, Shannon filed a memorandum in Putnam County Circuit Court stating that Teays Valley Health Services, the HCA subsidiary that operated Putnam General, â€œhas $10 million in primary insurance available for each case without limit. This means that if 105 cases were resolved for $10 million each, this primary layer of insurance would provide full coverage for $1.05 billion.â€?
Shannon also stated that Health Care Indemnity â€œhas more than $2.4 billion in net admitted assets.â€?
HCA lawyers also assured LifePoint Hospitals Inc., a bidder on the four West Virginia hospitals for sale, that it had insurance coverage of at least $1.05 billion before LifePoint tentatively agreed to buy the hospitals.
LifePoint filed a legal petition in the state Supreme Court in November 2005 opposing legal efforts to block HCA from selling its West Virginia hospitals. That petition made the same point.
â€œBased on information and belief, it has been disclosed to LifePoint that Teays Valley Health Services … [has] $10 million in primary insurance per claim, with aggregate limit, to cover allegations against Putnam General Hospital related to the Dr. King malpractice claims,â€? wrote Thomas G. Casto, a Charleston lawyer who represented LifePoint.
In addition, Teays Valley Health Services had â€œexcess insurance of up to $315 millionâ€? if any court settlement or verdict exceeded $10 million, Casto wrote.
In March 2006, the West Virginia Health Care Authority approved the tentative sale of four HCA hospitals in a proposed $330 million deal, including Putnam General, St. Francis Hospital in Charleston, St. Josephâ€™s Hospital in Parkersburg and Raleigh General Hospital in Beckley.
In a deal concluded on June 30, HCA sold three of those four hospitals, as well as Clinch Valley Medical Center in Richlands, Va., to LifePoint.
LifePoint later sold St. Francis to Thomas Memorial Hospital, based in South Charleston.
But after that June 30 deal, HCA still owned Putnam General.
In August, CAMC agreed to buy Putnam General in a $15.4 million deal that exempted CAMC from any liabilities for existing lawsuits against Putnam General.
Putnam General had suspended King back on June 5, 2003, after Dr. Edward G. Dawson completed a peer-review report for the hospital, calling King â€œa snake-oil salesmanâ€? and a â€œcriminal.â€?
King then left town and later surrendered his license to the West Virginia Board of Osteopathy.
Last March, King changed his name to Christopher Wallace Martin, telling a Dothan, Ala., probate judge that he had been a victim of identity theft.
Last fall, Martin began working in two American Family Care clinics near Birmingham, Ala., and quickly generated two new medical-malpractice lawsuits from patients he treated. American Family Care fired him in November.