A Colorado judge on March 21 denied a radiology practice’s attempt to dismiss a lawsuit related to the company’s employee stock ownership plan purchasing the business.
The case dates to December 2017, when Envision Radiology became 100% owned by employees for an aggregate price of $177 million (or $1,770 per share). Technologist and former employee Robert Harrison and his attorneys later filed suit in 2021, charging that shareholders grossly overpaid, among other contentions.
Envision Radiology attempted to quash the proposed class action suit, but Judge Charlotte N. Sweeney rejected the appeal Thursday. She noted that requests for summary judgement are more appropriate after the discovery phase of a trial, which already commenced in January.
“The number of lengthy exhibits defendants append to their motion demonstrate the fact-intensive nature of the dispute,” Sweeney wrote March 21.
Colorado Springs-based Envision Radiology (no relation to the Nashville multispecialty group) submitted nearly 300 pages of documents in the original August 2023 dismissal request. In its filing, Envision shot down assertions in the original complaint that employees paid two different stock prices in the 2017 transaction. Harrison had 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. 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.
“In their original pleading, plaintiffs advanced a primary case theory that the ESOP had overpaid for the shares it acquired at $1,770 per share, based on a contention that the ESOP purportedly purchased another block of shares in the same transaction for $1,404 per share,” Envision attorneys wrote. “Defendants later produced transaction documents demonstrating plaintiffs’ primary theory to be unequivocally false. Despite having those key documents, plaintiffs filed a first amended complaint that continues to advance a demonstrably false theory, along with other conclusory allegations of wrongdoing.”
You can read our original 2021 coverage for more on the case. Law360 first reported news of the judge’s decision on Friday.
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.