left to right: Mark Vucorovich, attorney; Dr. Jesse Cole; Rick Anderson, attorney

Tom McMahon, attorney


CONTACT: DR. JESSE A. COLE, (406) 723-2132, or deeprock7@yahoo.com

OR RICK ANDERSON, ATTORNEY, (406) 494-3700 or randersonlaw@qwestoffice.net

Butte, MT: On Oct. 15, Butte radiologist Dr. Jesse A. Cole accepted a $4 million settlement in his lawsuit against St. James Healthcare and its parent corporation, the Sisters of Charity of Leavenworth Health Systems, Inc., a Kansas not-for-profit corporation (not to be confused with the Sisters of Charity of Leavenworth religious community, a separate entity).  The community of Butte will be a partial beneficiary in time, according to Cole, who is searching for ways to say thank-you – possibly through a new foundation – for the support he has received over the years during a long and difficult battle.  He is particularly grateful to “the courageous minority of the medical staff at the hospital who spoke out,  to the hospital employees who understood what was happening and voiced their concerns at no small risk to themselves, and to my many patients who expressed their support throughout this ordeal.”

The settlement marks a not-perfect, but acceptable resolution to Cole’s long-running battle to retain his medical privileges at St. James Hospital, restore his good name, and protect the right of the hospital’s medical staff (and by extension, medical staffs around the state) to be self-governing and free from the undue influence of business interests – in this case, the out-of-state parent corporation of St. James, the Sisters of Charity of Leavenworth Health Systems, Inc., in Kansas. In a 2007 court decision granting an injunction against the hospital, District Judge Brad Newman wrote, “Certainly, corporations and unlicensed persons such as lay hospital administrators or hospital directors, are legally and ethically prohibited from controlling or interfering with a physician’s practice of medicine.” 1 The ruling referred to then-CEO James Kiser and to Sharon Hecker, president of the board of directors at the time, who were instrumental in leading the attack against Dr. Cole.

The problems started back in 2006, when, after having hospital privileges for many years in good standing at St. James Hospital, three radiologists – Drs. Jesse Cole, Dennis Wright and Michael Driscoll – were given barely more than three hours’ notice to clear out their hospital offices.  The hospital had entered into an exclusive provider agreement for the provision of radiology services, bringing in radiologists from Boston as hired members of the medical staff in what the hospital itself described as a business decision, not a medical decision.  In addition, St. James was already seeking an injunction against Dr. Cole, who was outspoken in his protests, claiming he was “interfering with the hospital’s search for radiology candidates.”  (Montana Standard, 2008).

The problem, Cole says, is that “when you start working for the hospital, the hospital can tell the doctors how to practice medicine.  Then it becomes corporate medicine.  The AMA (American Medical Association) realized years ago that you can’t work for the hospital as well as for the patient – you can’t serve two masters.”

The 2007 court decision — later upheld by the Montana Supreme Court — held that the medical staff bylaws, rules and regulations constituted a contract between the doctors on the medical staff and the hospital, and that it appeared the hospital breached that contract when it reduced Cole’s privileges.  The hospital’s “business decision” meant that it was booting out one of only a handful of physicians in the entire country with triple board certifications in Neuroradiology, Diagnostic Radiology, and Vascular and Interventional Radiology, whose skills were and are still in great demand throughout Butte and the surrounding communities.

“We were prepared to prove that the initial allegations against Dr. Cole were false,” said Cole’s lead attorneys, Rick Anderson, of Anderson Law, P.L.L.C., and Mark A. Vucurovich, of Henningson, Richardson & Vucurovich, P.C., both of Butte. “Back when this lawsuit was first filed, we told the press we’d like to get all the facts out – and now we can,” The settlement did not include a confidentiality agreement – and Anderson, Vucurovich, and attorney Thomas P. McMahan of Denver, Colo., who assisted on the case, are as relieved as Cole to be able to tell the story.

“We were prepared to show that the hospital and the Kansas corporation that controls it put our community’s health care at risk in order to promote the financial success of its for-profit joint ventures,” Anderson continued,  “and that Dr. Cole was attacked for being what the hospital management referred to as a ‘non-aligned physician,’ because he criticized and refused to be a financial partner in the hospital’s for-profit joint ventures; and because he worked for a competing joint venture imaging center, Big Sky Diagnostic Imaging. Our theory, of which we were confident, was that the hospital publicized false allegations against Dr. Cole and attacked him on various fronts in hopes of ruining his reputation and driving him from the community, thereby causing the hospital’s competitor, Big Sky Diagnostic Imaging, to lose its primary radiologist,” he said.

At the time, those joint ventures included the new medical building, the Intermountain Imaging center and the surgery center, all of which were for-profit entities.  The three ventures did compete with the hospital for business just as Big Sky Diagnostic Imaging does, but the hospital receives a share of the proceeds from each of its own ventures, and so allowed it.  However, Intermountain Imaging (formerly Southwest Montana Radiology) was a financial failure.  The hospital wrote off a multi-million dollar loan made to the joint venture, paid a fine to the federal government over how it operated the center, and has now taken back the facility as part of the hospital.

It’s not as if the hospital and the Kansas corporation[1] cannot afford the $4 million settlement, Anderson notes.  Sisters of Charity of Leavenworth Health Systems, Inc. has to file a Form 990 with the IRS each year in order to maintain its non-profit status, and figures from recent years are revealing.  The last 990 filed for the year ending 5/31/08 shows the parent corporation of St. James has a net worth over $240 million; that St. James itself paid over $4 million in management fees, equity transfers, and interest to the Kansas corporation; and the Kansas corporation’s Annual Financial Reporting Information for Fiscal Year ended December 31, 2009 stated that it had $246 million in earnings before interest, depreciation and amortization, which nearly doubled the $131 million earned in FY 2008. 

With finances like that behind it, Anderson, Vucurovich and Cole feel it’s “interesting that St. James goes to our local community asking for money to keep going; lays off long-time employees claiming lack of funds; and touts its non-profit status without ever revealing that it is in reality owned and run by a wealthy out-of-state corporation and is, or was, in partnership with three for-profit medical centers in town.”

In October, 2010, the hospital announced that it was hiring its emergency room physicians, thus once again asking doctors to serve two masters, their patients and their administrative bosses at the hospital.

Meantime, Dr. Cole continues his radiology practice at Big Sky Diagnostic Imaging in Butte, and, because he is not allowed to practice radiology at St. James, has developed a limited practice at the hospital in Anaconda, working with his former Butte colleague Dr. Peter Sorini.  He is working on the process of setting up a foundation so that a substantial portion of the settlement may be funneled back to the community of Butte and its various causes, as a way of saying thank-you.  Cole estimates that an initial $250,000 will be made available, with an equal amount coming in later years.

[1]The CEO, CFO, of the hospital’s management team are actually hired and paid by the Kansas corporation, not St James Healthcare.