Law firm settles with hospital after expansion scandal

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(Host) A Burlington law firm will pay Fletcher Allen Health Care $2 million to settle legal issues arising from its role in the hospital’s expansion project. Both the hospital and the law firm say the settlement was reached amicably and that they continue to work together.

VPR’s John Dillon reports:

(Dillon) In the years that Fletcher Allen Health Care battled with regulators over its huge expansion project, it received legal advice from Downs Rachlin Martin, one of the state’s largest and most experienced law firms. But officials at the state’s largest hospital misled regulators about the size and scope of the expansion. The project will eventually cost about $364 million, more than three times the original estimate.

Last October, Fletcher Allen settled a criminal case with state and federal prosecutors. CEO Dr. Melinda Estes says the settlement with the law firm allows the hospital to recover some of the costs associated with the new Renaissance project.

(Estes) “Well I think, you know, both Downs Rachlin and Fletcher Allen recognized that reaching an agreement would help both of us avoid expensive litigation and clearly that might ultimately be passed on to consumers. And certainly the money that’s coming here to Fletcher Allen will allow us to invest in the organization.”

(Dillon) But Estes says that a confidentiality agreement prevents her from describing the potential legal claim that led the law firm and its insurance company to agree to the $2 million payment. John Marshall, the CEO of the law firm, also would not discuss the legal issues. But Marshall said there was no lawsuit between the two parties.

(Marshall) “We are admitting no liability but we simply decided that it was good to reach this agreement and put this matter behind us so we can continue a long-standing and valued relationship.”

(Dillon) The law firm continues to work for the hospital on labor and employment issues and on software licensing.

And this settlement may not be the end of the legal issues stemming from the Fletcher Allen expansion. The state in November imposed a number of new conditions on the hospital, including a requirement that it try to recover damages from the people who misled regulators. Dr. Estes says she could not talk about any pending legal claims.

For Vermont Public Radio, I’m John Dillon in Montpelier.

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