Dinn, Hochman & Potter, LLC

Lawsuit alleges breach of contract by Ohio hospital

The Cleveland Clinic, which holds the lease for a 100-year-old hospital in Lakewood, Ohio, announced that it wanted to close the facility in 2016, 10 years before the end of its lease in 2026. The city and several council members have signed on as plaintiffs in a lawsuit against the clinic and several other defendants, alleging breach of contract and breach of fiduciary duty, among other charges.

The lawsuit contends that the clinic has already begun to cut services at its Lakewood Hospital and send patients to other facilities it operates, a practice the plaintiffs' attorney refers to as "gross mismanagement." The suit demands $400 million damages and for the hospital to remain open until the end of its current lease in 2026.

The clinic says it needs to close the hospital because it is bleeding red ink due to a smaller number of inpatient admissions in recent years. It plans to replace the hospital with a family medical facility and an emergency room. A different medical group plans to open a new hospital in the city at the end of 2016.

Even before the contract dispute erupted into litigation, the hospital closure was the subject of impassioned discussions at city council meetings. The city council must approve the early termination of the lease.

The plaintiffs' attorney stated that the defendants have been "crippling" the hospital by diminishing services to fraudulently improve their bargaining position in negotiating the termination of their lease. In the lawsuit, plaintiffs raise the issue of administrative fees charged to the hospital by defendants, which may be excessively high and may have contributed to the hospital’s red ink.

When contract disputes arise, tempers easily become frayed. The assistance of an experienced attorney can calm the waters and help bring about a satisfactory resolution.

Source: Cleveland.com, "Taxpayer lawsuit seeks to keep Lakewood Hospital open, $400 million in damages," May 28, 2015, by Bruce Geiselman

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