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Radiologists Sue Partners Over ‘Squeeze-Out’

August 12, 2013
Written by: , Filed in: Practice Management
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Five physicians who are shareholders in Radiology Imaging Consultants SC of suburban Chicago have sued the practice, saying its chief executive officer and president are trying to improperly eliminate some shareholders in advance of a possible sale of the practice.

The physician-owned practice has 73 doctors, 43 of whom are shareholders. It provides 24-hour radiology services, including remote reading, to 18 hospitals in Illinois, Kentucky, Indiana, and Georgia. Crain’s Chicago Business reported last week on the complaint, which was filed July 30 in Cook County Circuit Court in Illinois.

According to Crain’s, the complaint says that in January, or possibly earlier, an investment bank contacted CEO Abraham Bronner, MD, about a possible sale to Radiology Partners Inc. of Manhattan Beach, California. To increase the value of their own shares in preparation for a sale, the complaint says, a group of “senior shareholders” began scheming to eliminate some shareholders. Christopher Griesmeyer, a lawyer for the plaintiffs, told Crain’s:

That’s a squeeze-out.

The complaint says each shareholder has 200 shares of common stock. The shareholder agreement contains an unusual provision allowing the board to terminate without cause shareholders with less than five years’ employment, the complaint says. Crain’s talked to a lawyer specializing in health care who is not involved in the case, Steven Harris of the Chicago office of McDonald Hopkins LLP. “It would be unusual for someone to sign that,” Harris said.

We’re not lawyers, but we think it also would be unwise.

Anyway, one shareholder with less than five years’ experience and three shareholders who work overnight shifts—another group allegedly targeted for the “squeeze-out”—are among the plaintiffs. The fifth plaintiff apparently was not targeted for elimination but objected to the plan anyway.

Griesmeyer said objections by some shareholders delayed a scheduled June 3 vote on a plan to remove the overnight radiologists.

Lawyer Steven Thompson represents Dr. Bronner, President Perry Gilbert, MD, and the board. He said in a statement that his clients “strongly believe the allegations in the complaint are baseless and intend to vigorously defend the lawsuit.”

He added, “In the meantime, the parties are working together to resolve their differences and hope to do so very soon.”

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