Black-owned radiology practice sues University of Maryland, RadNet claiming unfair bidding process
A radiology practice has sued the University of Maryland and RadNet Inc., claiming the two conducted an unfair bidding process to cut the black-owned business out of the proceedings.
Radiologist Doriann Thomas, MD, first founded Capitol Radiology in Laurel, Maryland, in 2005. The black female radiologist had worked at an imaging center owned by RadNet predecessor Radiologix and pulled together the resources to buy the business and pursue her dreams.
Thomas and colleagues believe Capitol Radiology is the sole black-owned radiology facility in Prince George’s County, Maryland, and potentially the entire Eastern Seaboard. It has provided services on the University of Maryland’s campus for almost two decades. However, practice leaders allege the university recently inked a no-bid deal with RadNet to provide imaging services on the same campus, just 50 yards from Capitol Radiology’s outpatient center.
The practice contends that it should have had the chance to bid for this work but was shut out of the process.
“[University of Maryland Medical System] knew that locating an outpatient radiology facility on the Laurel campus would have a substantially adverse effect on the black- and female-owned Capitol Radiology,” attorneys wrote in the complaint, filed July 31 in the Civil Division of Circuit Court for Prince George’s County. “On information and belief, it excluded Capitol Radiology from bidding on the joint venture opportunity precisely because it was black- and female-owned, and therefore likely to prevail under state bidding rules. Creating a competing outpatient radiology center on the Laurel campus, and excluding Capitol Radiology from the bidding process, violated the applicable anti-discrimination laws.”
RadNet declined to comment Friday. The University of Maryland issued a brief statement to Radiology Business.
“While we cannot comment on pending litigation, the University of Maryland Capital Region Health is a mission-driven organization focused on providing high-quality, safe, and compassionate care to residents of Prince George’s County,” a spokesman said by email. “In general, expanding and enhancing access to care and increasing healthcare options for the community, giving individuals choice and flexibility, is part of our strategic approach and among our top priorities.”
The history
RadNet offered details about the joint venture in its 2022 second quarter earnings announcement. Established in June of that year, the Los Angeles-based company inked the partnership with Dimension Health, an affiliate of the University of Maryland (UMMS officially took over operations for Dimension in 2018). Together they planned to build two new outpatient facilities in the Laurel and Largo areas of Maryland. RadNet said at the time that it expected the centers to begin servicing patients sometime in the second or third quarter of 2023.
“The establishment of these new joint ventures are indicative of the interest we are experiencing from health systems to partner with us in ambulatory, community-based operations,” RadNet said in August 2022.
RadNet's Laurel center is not currently listed on its website, and there are no other mentions of it besides the 2022 Q2 earnings release. Altogether, RadNet operates 56 imaging centers in the Free State through brands including Advanced Radiology, Community Radiology Associates, and American Radiology Services. Capitol Radiology attorneys said Friday that they have asked the court for an emergency order to prevent the new Laurel imaging center from operating. They noted that construction on the facility appears to be complete, but it had not yet opened its doors as of Friday, Aug. 2.
UMMS officially announced the launch of a new state-of-the art medical center on the Laurel campus in June 2023. The campus includes 24/7 emergency care and surgery offerings. Previous news about the campus had discussed the inclusion of radiology services, but the official opening announcement from UMMS does not mention medical imaging.
Dr. Thomas and colleagues maintain that the University of Maryland never offered their company an opportunity to bid on the contract for providing outpatient radiology care at Laurel. This despite Capitol Radiology “providing such services at that exact location for nearly 20 years.”
“UMMS later admitted that it had purposely excluded Capitol Radiology from the bidding process, with the excuse that it did not have a preexisting relationship with UMMS,” the complaint alleged. “But state bidding law, as applied to UMMS, bars precisely this type of cronyism, since it perpetuates historic racism by putting small, black-owned establishments lacking this type of preexisting relationship out of business.”
Capitol Radiology contends that the university sought this agreement with RadNet with the promise of its new radiology partner referring patients to the hospital for other medical care. Forming this joint venture would serve the purpose of "eliminating a competitor and further monopolizing the market and benefiting UMMS by eliminating competition for physician services—both in violation of antitrust laws."
University of Maryland inked the JV deal with RadNet following a period of great controversy at the health system. A review of the organization’s finances released in 2020 found that it had paid $115 million to companies tied to 27 board members. In one now-infamous incident, former Baltimore Mayor Catherine Pugh signed a $500,000 children’s book deal with UMMS at a time when she also was a board member of the health system. She resigned from her seat in March 2019 and in 2020 was sentenced to three years in jail and ordered to pay $412,000 in restitution.
“The UMMS joint venture with RadNet was approved at the very time that the board’s self-dealing was coming to light, but before the corrupt board members were forced to resign,” the complaint stated.
What Capitol Radiology is seeking
After learning of the unexpected JV deal with RadNet, Capitol Radiology said it reached out to state and local officials seeking help. The complaint includes as one exhibit a letter from former Laurel Mayor Craig A. Moe to UMMS President and CEO Nathaniel Richardson Jr., dated April 2023. Moe criticized the decision to partner with RadNet and potentially push aside a local business. He noted that UMMS had previously promised to protect local business when it took over for Dimensions, which had incited controversy when it announced plans to close the struggling Laurel Regional Hospital, converting it to an ambulatory care center.
“Capitol Radiology was formed in 2005 and has long been a pillar in this community, meeting the needs of many,” Moe wrote. “This business, Capitol Radiology, continued to operate even as ‘Dimensions leadership’ tore the Laurel Regional Hospital apart and failed the community. Capitol Radiology is a small business, a local business, and the only black- and women-owned radiology business in the Mid-Atlantic. The University of Maryland Capital Region Health System has failed to protect and support this local minority-owned business, in fact, with no support … they may even begin to fail due to Capital Region Health taking business from them.”
The radiology group has served over 700,000 patients from Prince George’s, Montgomery, Howard and Anne Arundel counties during its existence. It has performed over 170,000 procedures for Medicare and Medicaid patients and sees 3,000-plus uninsured patients annually. It also claims to be the only nonhospital imaging facility in the area that is open seven days a week.
Leaders fear all of this will disappear if RadNet and UMMS are allowed to operate their joint venture. They claim, because of UMMS’ “discriminatory” actions, Capitol Radiology has suffered damages including but not limited to lost business opportunities and revenues. They’re seeking compensatory and punitive damages in an amount to be determined at trial, injunctive relief preventing the JV participants from opening the center in Laurel, attorney fees, and “further relief as the court deems just and proper.”
This is a developing story. Radiology Business will have further details.
Marty Stempniak has covered healthcare since 2012, with his byline appearing in the American Hospital Association's member magazine, Modern Healthcare and McKnight's. Prior to that, he wrote about village government and local business for his hometown newspaper in Oak Park, Illinois. He won a Peter Lisagor and Gold EXCEL awards in 2017 for his coverage of the opioid epidemic.