Iowa suit accuses system of name infringement
■ Physicians say the name that Covenant Health System chose for its new clinic is causing confusion for patients and vendors.
By Mike Norbut — Posted Dec. 12, 2005
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An Iowa multispecialty group is suing a local hospital system, accusing it of infringing on the group's trade name and using other tactics to try to drive the physicians out of business.
In a lawsuit filed in November, Waterloo-based Cedar Valley Medical Specialists P.C. is asking the court to stop Covenant Health System Inc., which operates three hospitals in the area, from naming a new clinic the Greater Cedar Valley Medical Center. The 50-physician group said the name for the yet-to-be opened clinic is too similar to trade names they have already registered with the Iowa secretary of state.
Cedar Valley Medical Specialists CEO Gil Irey said the group heard about Covenant's naming plans and asked the system not to use the name. The physician group also registered the name "Cedar Valley Medical Center" with the state on July 1, just days before Covenant registered "Greater Cedar Valley Medical Center."
"We feel it's been confusing for our patients and our vendors," Irey said. "We are not seeking monetary damages. We want them to quit using our name." Irey declined to comment on the financial impact Covenant's alleged actions have had on the group, although the lawsuit claims if a court allows the actions to continue, it could lead to "irreparable harm."
Covenant spokesman Chris Hyers declined to comment on the lawsuit, citing corporate policy not to discuss pending litigation.
The physician group's lawsuit alleges the hospital system also used other tactics to try to drive the practice out of business, including altering call schedules, paying excessive salaries to some Covenant-employed physicians, upcoding charges for services and withholding some admitting privileges for Cedar Valley specialists.
The lawsuit alleges that in 2002 Covenant paid an orthopedic surgeon and a gastroenterologist more than $2 million each, much higher than median salaries for those specialties. The high salaries are not consistent with the hospital system's nonprofit status, the lawsuit states. Irey said Cedar Valley's lawsuit was not related to a federal investigation into Covenant's salaries for some of its doctors.
Glenn Baly, a spokesman for the U.S. Dept. of Health and Human Services' Office of Inspector General, confirmed federal subpoenas were issued in September to two Iowa health insurers seeking information about Covenant's payment practices.
Hyers said the hospital system has not been contacted by federal officials regarding the issue.