Doctor's answer to suit claims clinic lost $500,000 in first four months of operation
From The Mountain Sun, Kerrville, TX, July 2, 1997
Sandra LaFon, M.D. will be allowed to practice in Kerr County after an out-of-court settlement was reached with Guadalupe Physicians Group June 25.
"We have a confidential settlement, and the case has been amicably resolved," said Rob Kelly, LaFon's attorney.
LaFon was being sued by GPG for breaking a contract that prohibited her from opening up a practice in Kerrville within one year of resigining or being terminated from the group.
LaFon is free to move into offices with Dr. Dale Mohar, another ex-GPG physician.
LaFon's original answer and counterclaim asserts that the contract is "unenforceable because of the misrepresentations made by representatives of the Clinic to induce Dr. LaFon to execute andenter into such agreement."
According to the counterclaim, Mohar said that when GPG opened, the 14 physician shareholders borrowed about $1.2 million to start the clinic.
Both Mohar and LaFon were asked to join the clinic after it opened and were told they would not be responsible for that $1.2 million debt.
The countersuit also said there had been "numerous accounting and billing problems" at GPG which resulted in low collection rates and "the overall inability to produce any meaningful accounting information regarding the individual collections and expenses attributable to each physician in the Clinic."
In March or April of 1997, the document states both doctors found out in a review of their expenses they were paying for the initial $1.2 million startup costs of the clinic. To compensate for the startup expense, they were allegedly agreed with accountant Dale Cooper and then-administrator Mark Rowe that their overhead expenses could be based on a national average for their practice areas, which was about 50 percent of gross revenues.
The average Kerrville-area overhead is about 40 percent, according to the document. And despite earlier representations that their anticipated overhead would be about 30 percent. Mohar and LaFon agreed to accept the national overhead expenses, the document states, to assist the clinic with its "severe financial crisis."
The counterclaim states GPG lost about $500,000 in 1996 and was losing money through the first and second quarters of 1997.
The counterclaim goes on to state when Alan Himmelstein took over as GPG's administrator about three months ago, he threw out the agreement and insisted that Mohar and LaFon pay their overhead based from the beginning of their employment.
When Mohar and LaFon objected to doing that, the original answer states, Himmelstein demanded LaFon reimburse all of her compensation for the seven and a half months she worked there and pay an additional $13,672.79.
To make up for the losses, the document claims, Himmelstein "suggested the physicians consider utilizing more laboratory tests and X-rays as well as spending significantly less time with patients to increase Clinic revenues."
Himmelstein said he could not comment on any of the allegations of the countersuit because he had not seen it and referred all questions to GPG's attorney, Preston Douglass.
Messages were left at Douglass's office Monday afternoon and Tuesday morning. Someone who answered the phone at his home Monday afternoon said he was at work. On Tuesday morning before deadline, his voice mail said he would be in court all morning.
