Envision Radiology reaches settlement in class-action lawsuit over controversial $164M practice sale
Envision Radiology has reached a settlement agreement—days before the matter was set to go to trial—in a class-action lawsuit over the practice’s sale.
The dispute dates to December 2017 when Colorado Springs-based Envision became 100% owned by employees for an aggregate price of about $164 million. Technologist and former employee Robert Harrison and his attorneys filed suit in January 2021, claiming shareholders grossly overpaid, among other contentions.
Envision Radiology and its board have now agreed to settle the 1,000-person class-action challenge, averting a planned 10-day trial, Bloomberg and Law360 both reported Monday. Both sides officially announced the deal on Oct. 23, three days before the trial was set to commence in a Colorado U.S. District Court.
Judge Charlotte N. Sweeney has now ordered attorneys to submit details of the settlement agreement for court approval by Dec. 4, according to Bloomberg.
“The parties have agreed to the material terms in a final signed term sheet and are in the process of preparing the settlement agreement and preliminary approval papers,” the court document states. “Further, in light of the settlement, the parties request that the court adjourn the trial scheduled to begin on October 26, 2026, and stay all deadlines in this matter pending preliminary approval of the settlement,” they added later.
Law firm Cohen Milstein also announced the settlement agreement on Monday via social media, pointing readers to the Bloomberg Law story.
More on the dispute
As reported by Radiology Business previously, Envision Radiology (no relation to the Nashville multispecialty group) had previously considered selling to the Center for Diagnostic Imaging (now Rayus Radiology) for about $150 million. However, the practice’s owners at the time—Darrel Creps III, Paul Sherwood, and Jeff Jones—were not ready to relinquish control of the company, attorneys claim. They devised a deal where Envision’s employee stock ownership plan (ESOP) would buy the company, according to court documents.
But the stock plan did not have enough money to buy Envision. Instead, the ESOP borrowed more than $103 million from the sellers and nearly $51 million from the company. Following the transaction, any retirement contributions Envision made to employee participants’ accounts were used, first, to pay interest owed on this debt.
Harrison further claimed employees were not given a chance to negotiate the stock pricing. The final deal “inexplicably” had the plan paying two different share prices for the same Envision stock, plaintiff attorneys charge. About 64,000 shares went for $1,770 apiece while the remaining 36,000 went for $1,404. Participants allegedly later learned that the stock could be worth as little as $349 per share. Harrison and colleagues contend that the practice owners “handpicked” the trustee overseeing the sale, who purportedly did not have employees’ best interests in mind.
For its part, Envision has submitted hundreds of pages of documents seeking a dismissal of the suit. Envision has shot down assertions that employees paid two different stock prices in the 2017 transaction. Last year, the practice sought to have the suit tossed, claiming the plaintiffs “failed to assert any plausible claims of wrongdoing.” But Judge Charlotte N. Sweeney on Jan. 24, 2025, certified the lawsuit’s class-action status, allowing the matter to move forward.
Founded in 2000, Envision Radiology operates approximately 100 freestanding imaging centers after recently acquiring Rezolut in January.
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.