Atrium Health Amends Countersuit to Mednax Due to Continued False Fear-based Ad Campaign

Struggling Florida-based Mednax using falsehoods as last-ditch effort to remain relevant in North Carolina

News provided by

May 07, 2018, 04:50 ET

CHARLOTTE, N.C., May 7, 2018 /PRNewswire/ -- Atrium Health has filed an Amended Answer and Counterclaims against Mednax (NYSE: MD), the Florida-based corporation that bought the physician-owned Southeast Anesthesiology Consultants practice for $200 million in 2010.

Atrium Health has filed its amended counterclaims because Mednax has increased the intensity of its false and misleading fear-based ad campaign, and at the same time information has been revealed about Mednax's apparent corporate difficulties. Atrium Health has made clear that it will not enter into a new agreement with Mednax. Nonetheless, Mednax continues, through its fear-based campaign, to try to harm Atrium Health in hopes that by doing so, it can coerce Atrium Health back to the negotiating table. Simultaneously, Mednax's campaign also seeks to disrupt the smooth transition of Scope Anesthesia, the new anesthesia services group that will replace Mednax on July 1.

Atrium Health continues to reiterate that going back to the negotiating table with Mednax is not an option, since this would not be in the best interest of Atrium Health patients and the communities it serves. These communities deserve to know the truth and understand the facts, and Atrium Health has confidence they'll see through the dishonest fear-based campaign that Mednax is running. Atrium Health has been very successful in attracting highly esteemed and experienced anesthesiologists who are already meeting with our world-class surgery teams in preparation for a smooth transition to our new anesthesia services partner on July 1.

Mednax's attempt to force Atrium Health into a new contract has recently intensified as published reports of Mednax's corporate difficulties have increased, as detailed in the amended counterclaims:

"On April 26, 2018, financial news outlet CNBC ran a televised segment and accompanying website article reporting that short-seller Jim Chanos had taken a formidable short position in Mednax stock. Chanos, who is a "research intensive short-seller," is known for his accurate forecast of Enron's collapse. …Chanos explained that Mednax's business model of acquiring physician practices then hiring physicians back at below market compensation could not last beyond a short-term post-acquisition agreement with physicians."
"…having closely examined information concerning Mednax, including facts revealed in Mednax's litigation in [the North Carolina Business] Court, Chanos said his firm was "betting these companies [Mednax and Envision Healthcare] might be worth nothing. Mednax stock plummeted more than 11% that same day, capping one of the worst-performing periods for any healthcare stock in this country."
"Reeling from the precipitous drop in its share price, on May 1, 2018, Mednax was forced to hold an investor call a week earlier than planned. During that call, Mednax and its CEO, Roger Medel, continued to put forward misleading statements about the facts of this case ostensibly to obscure the reality that Mednax's flawed business model had been exposed and to mislead investors to believe that Mednax's situation was not as desperate as it actually is."
"…Medel repeated the falsehoods contained in Mednax's smear campaign against Atrium Health, falsely portraying to investors what it has falsely portrayed to this community, that the primary reason Mednax affiliate SAC did not enter a new agreement with Atrium Health was that Atrium Health "planned to adopt new staffing patterns that would reduce the number of physicians providing services, and in some cases have facilities with no physician anesthesiologist presence." As detailed in the Counterclaims…, Atrium Health has not "planned to adopt new staffing patterns" at all, let alone as Mednax has described. These statements by Mednax are misrepresentations intended to foster fear, poison the public mindset and pressure Atrium Health to the bargaining table."
"Mednax's public, misleading statements and its smear campaign against Atrium Health are unprecedented in the healthcare industry. Although it is supposed to be a healthcare entity providing physician services, and proclaims it is "Led by Physicians," Mednax has been unconstrained by medical ethics and standards of conduct and has shown it will do or say virtually anything, no matter how untrue, detestable, or contrary to sworn commitments of medical providers, to try to force a business deal with Atrium Health that it lost in fair competition with others."
"Mednax's new attacks also target doctors who are joining Scope. Notwithstanding the ethical rules of the North Carolina Medical Board, the American Medical Association, and the American College of Anesthesia that prohibit such conduct, Mednax's ads overtly attempt, without any basis in fact, to sow doubts in Atrium Health's patients' minds about the capabilities and experience of Scope physicians. A recent Mednax ad expressly directed patients to reconsider having procedures done at Atrium Health because "new doctors" will be in the operating room, which might lead to something "go[ing] wrong." These actions are desperate, deplorable, and unbecoming of professionals who are supposed to be committed to the greater good of our communities."

For months, Atrium Health has questioned Mednax's ultimate intention. Atrium Health now believes this fear-based campaign is a desperate last-ditch attempt to force Atrium Health to continue a relationship that is harmful to the interests of the community that Atrium Health serves. Mednax has positioned its fear-based campaign as "protecting" Charlotte residents, but in reality, Mednax is trying to protect itself from the backlash from stockholders for losing this significant contract. Atrium Health condemns Mednax's unethical and troublesome behavior and will continue to stand up against these malicious and unfounded attacks in court and in our community.

When making business decisions, such as changing anesthesia services partners, Atrium Health's commitment to patients, employees and the community is unwavering. Atrium Health's new partner, Scope Anesthesia is bringing highly qualified anesthesiologists to Atrium Health with decades of experience from highly regarded institutions such as Johns Hopkins, Mayo Clinic, Cleveland Clinic and Duke Health. These physicians are already meeting with Atrium Health's certified registered nurse anesthetists (CRNAs) and the rest of the surgery teams to ensure a smooth transition on July 1. Atrium Health has never compromised on quality and safety, and never will. Atrium Health continues to be committed to delivering the best care for all.

About Atrium Health
Atrium Health, previously Carolinas HealthCare System, one of the nation's leading and most innovative healthcare organizations, provides a full spectrum of healthcare and wellness programs throughout North and South Carolina. Its diverse network of care locations includes academic medical centers, hospitals, freestanding emergency departments, physician practices, surgical and rehabilitation centers, home health agencies, nursing homes and behavioral health centers, as well as hospice and palliative care services. Carolinas HealthCare System works to enhance the overall health and wellbeing of its communities through high quality patient care, education and research programs, and numerous collaborative partnerships and initiatives.

SOURCE Atrium Health