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October 14, 2019Cart

Business

by Westchester County Business Journal
by WCBJ

Six Crystal Run Healthcare doctors sue partnership over Montefiore merger

Six doctors have filed a lawsuit against Crystal Run Healthcare claiming that management is coercing them into signing agreements that would end their partnership group in a merger with Montefiore Medical Center.

Crystal Run Healthcare in Middletown and Montefiore, based in the Bronx, are creating a business entity that is scheduled to take effect on Jan. 1. But the new entity, the doctors said, will transform them from partners into employees and give them unfavorable economic terms. If they don’t agree to the deal, they claim, Crystal Run could sue them.

“Essentially,” the complaint filed on Dec. 19 in Westchester Supreme Court states, they “would become indentured servants.”

Crystal Run won’t respond publicly to the allegations because it has a policy of not commenting on active litigation, said Lynn Haskin, marketing manager.

Dr. Hal Teitelbaum

Dr. Hal Teitelbaum, the CEO and managing partner, founded Crystal Run Healthcare in 1996. It has grown to a dominant position in the Hudson Valley and lower Catskills, with 22 offices in Orange, Rockland, Sullivan and Ulster counties and New York City.

It employs more than 400 doctors in nearly 50 medical specialties, including 133 physicians who are partners.

Five orthopedists and a dermatologist filed the lawsuit: Samir Sodha of Central Valley, Howard Yeon of Bronxville, V. Christopher Inzerillo of Ridgewood, New Jersey, Rocco Bassora of Franklin Lakes, New Jersey, Andrew Beharrie of Harriman, and Hanna Kim of  Bronxville. The doctors are represented by Steven J. Shore of Ganfer & Shore LLP of Manhattan.

Shore also represents Lissette Giraud, a partner who filed a similar lawsuit against Crystal Run Healthcare in Supreme Court in Goshen on Dec. 5.

The lawsuit doesn’t specify if any other partners object to the merger.

Under their partnership agreement, doctors who leave must give a 180-day notice and may not compete for one year within 15 miles of a Crystal Run facility.

Under the proposed agreement, the complaint states, they would have to give three years notice before resigning. Then, for two years, they could not practice within 15 miles of any Montefiore facility, even in locations that do not include the doctor’s specialty. With Montefiore’s 150 locations statewide, including in Westchester County, the Bronx and Manhattan, plus the Crystal Run offices, the noncompete clause would effectively bar departing doctors from practicing in a vast territory.

The new agreement requires partners to transfer their assets – the capital they have contributed to Crystal Run Healthcare – ultimately to a new entity in which Montefiore would have a 33 percent interest.

They would cease to be partners and they would have no voice in management. Montefiore could require them to relocate their residences to any of its locations in the state.

They would have to refer patients within the Montefiore system, they claim, even if they believe doing so is not in a patient’s best interests.

Crystal Run has already steered patients away from making appointments with them, the doctors claim. In one instance, according to the complaint, a patient was told that she could no longer see one of the doctors who is suing. The patient and the doctors protested, “but this new practice was not changed.”

Sodha emailed Teitelbaum on behalf of the group on Dec. 15, according to the lawsuit, stating that the terms were not acceptable and asking if there were any provisions for partners who did not want to join the merger.

Teitelbaum, who is also a lawyer and holds an MBA degree, responded in a manner that the doctors interpreted as inflammatory and threatening.

Regardless of whether they signed the documents, he wrote, all partners are bound by the new agreement. Not signing the agreement could cause the deal to abort, costing the other partners tens of millions of dollars. Management would then have to consider “legal redress” for the damages caused by the nonsigning partners.

“This would be a horrible result and could put the whole business at risk,” he wrote.

That response, the doctors said, means they have “absolutely no choice but to be bound by a transaction they believe is not in their best interest.”

The doctors are asking the court to declare that Crystal Run has terminated their employment and liquidated the partnership, entitling them to the capital they put into the business and to other payments. They want the court to declare that they have no liability or financial obligations if they leave Crystal Run after the merger and to rule that the noncompete provisions are invalid and unenforceable.