Radiologist claims he was shorted in $20M imaging center sale to private equity platform

A Buffalo-area radiologist has sued his former practice, believing he was shortchanged when the company sold assets to a private equity platform for $20 million in 2023. 

Gregory R. Ball, MD, of Orchard Park, New York, and his attorneys filed the complaint against Southtowns Radiology Associates et al. on Feb. 24. Founded in 1959, the practice unloaded its imaging centers to Rezolut two years ago, generating cash while easing some of the burden of running the business. 

Ball joined the practice in 2017 and became a shareholder in 2020. He noted that members of the organization started exploring a sale around 2021 or 2022. However, when final terms of the deal with Rezolut were presented to decision-makers around October 2023, Ball purportedly voiced his opposition, concerned the process was rushed. He held a 10% voting interest in SRA at the time, and bylaws required a 70% supermajority for approval. 

“In response to Dr. Ball’s vote against the sale as proposed, the partners undertook a campaign of intimidation, coercion and fraud to procure his ownership interests in the companies and to exclude him in sharing in the proceeds of the sale,” the complaint, filed in the State Supreme Court for Erie County, claims. 

Ball contends that members of the practice discouraged him from seeking separate counsel and “threatened and pressured” him to approve the sale. “Your life will be a world of pain if you mess this up,” one radiologist allegedly said. 

Practice partners purportedly coerced Ball into signing “redemption agreements” with the threat that he would “get nothing” if he didn’t take the offer. These agreements required Southtowns Radiology Associates and the related Pinnacle Imaging to pay Ball a total of $313,000 at least two days prior to the closing, which occurred Nov. 8, 2023.

Ball claims the practice partners “fraudulently” induced him to sell his ownership interest for $313,000 just days before finalizing the sale to Rezolut for $20 million. He believes he is owed “no less than” $2 million and is seeking a jury trial to sort out the details. Ball also claims the practice failed to properly vest and transfer his 401K, “shorting him” of another $100,000. He left the company in late 2023 but continues to practice medicine in the area. 

“The wrongful threats by the partners, together with the partners’ campaign to prevent Dr. Ball from engaging his own legal counsel … deprived Dr. Ball of his free will with respect to the execution of the redemption agreements,” the lawsuit claims. 

Atlanta-based Rezolut—which was founded in 2018 and is backed by SRM Equity Partners—declined to comment Thursday. The imaging group has executed a dozen deals since inking the initial PE partnership, now operating across 40-plus locations. Southtowns Radiology, meanwhile, is based in Orchard Park, New York, and provides diagnostic and interventional services to four Catholic Health hospitals in Erie County. 

Under terms of the 2023 deal, the physician owners who sold the business continue running Southtowns’ three outpatient sites in Hamburg, Orchard Park and West Seneca.  

“The benefits and challenges of running an imaging center really caused our doctors to take a step back,” Dan Strauch, director of operations at Southtowns, said last year in explaining the reason for pursuing the sale. “The other part is there is a lot of activity from private equity groups like Rezolut out there. You don’t want to miss an opportunity if there’s someone who is interested.”

Buffalo Business First initially reported news of the lawsuit on Thursday. Along with Southtowns Radiology, the suit also names eight radiologist shareholders, Rezolut, and law firm Epstein Becker & Green PC (which advised SRA on the sale) as defendants. EGB declined to comment on the complaint Thursday.