Radiologists countersue former colleague over delayed $2M payout in sale to private equity
Radiologists recently countersued a former colleague, claiming their fellow physician has held up a $2 million payout tied to their practice selling its imaging centers to private equity.
Orchard Park, New York-based Southtowns Radiology Associates and eight of its doctors filed the suit against Gregory R. Ball, MD, PhD, on April 3 in the state Supreme Court. Their action comes after a judge in December dismissed most of Dr. Ball’s original claims against the nearly 70-year-old practice.
The Buffalo-area radiologist had claimed he was shortchanged in Southtowns’ 2023 sale of its centers to private equity-backed Rezolut for $20 million. However, Judge Emilio Cotaiacovo recently dismissed pivotal claims relating to fraud and malpractice last year.
In the new lawsuit, attorney R. Anthony Rupp III contends radiologists he represents have incurred “substantial damages” to defend against what they see as a frivolous lawsuit.
“The whole case is a shakedown, and as far as I'm concerned, he's a scumbag. You can quote me on that,” Rupp, with Rupp Pfalzgraf LLC in Buffalo, New York, told Radiology Business Wednesday. “He's trying to shake the tree and he's messing with the wrong doctors. These radiologists have a lot of resolve, and they know they did nothing wrong.”
Attorneys with Buffalo-based Gross Shuman PC, which represented Ball in the original claim, did not immediately respond to a Radiology Business request for comment Wednesday. However, his legal representatives told Buffalo Business First they believe the countersuit is meritless, with plans to appeal the December ruling.
More on the original lawsuit
Ball first joined Southtowns Radiology Associates in 2017 and became a shareholder in 2020. In the original complaint, he estimated that members of the organization started exploring a sale around 2021 or 2022. However, when final terms of the deal with the buyer, private equity platform 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.
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 argued he was owed $2 million and sought a jury trial to sort out the details. Ball left the company in late 2023 but is independently employed, still practicing medicine and accepting new patients, according to the Bufalo-based Catholic Health system.
The countersuit
As part of the proposed transaction with Rezolut, physician owners of Southtowns Radiology were to remain working with the practice for five years. All radiologists agreed to these terms, except for Dr. Ball, according to the countersuit. Instead, he sought to exit the practice and receive payment for his 10% ownership interest, “rather than continue working for the practice following the sale.”
As part of his exit, Southtowns negotiated a separate buy-out transaction where Ball could redeem his ownership interests in the practice. Ball signed that agreement in Oct. 31, 2023. According to the lawsuit terms, $2 million of the purchase price was placed into a “holdback” account for a set period following the close.
This contingency fee was established to secure potential indemnification obligations and attorney fees tied to finalizing the transaction. The money was slated to be released to radiologist shareholders after the holdback period ended. However, Ball filed his lawsuit about 11 weeks before then, seeking to stop the last payout, according to the suit.
In an interview, plaintiff attorney Tony Rupp contended that his radiologist clients treated Dr. Ball “unbelievably fairly” in their original settlement. He believes Ball and his attorneys thought they could bully their way through court to extract more money and didn’t expect former colleagues would fight back.
“These doctors are absolutely in the right here to tell this guy to go pound salt. And more than that, they want their money back,” Rupp told Radiology Business. “I think the legal action we have commenced has real legs,” he added.
In the lawsuit, radiologists note that the holdback amount has now been diminished by fees and litigation expenses from fighting Ball’s claims. They claim the former colleague has breached his redemption agreements to exit the practice by commencing a lawsuit to pursue claims that were “expressly released and waived” when he left the practice.
The lawsuit seeks a jury trial to determine the amount owed. Other plaintiff radiologists include Charles J. Chung, MD, Ayman Ghoniem, MD, Gerald J. Joyce, MD, Keith C. Kaplan, MD, Travis A. Mastroianni, DO, Zeeshan M. Qureshi, DO, Mahmoud Zahra, MD, and Asha Ziembiec, MD.
Rezolut recently sold the Southtowns assets and the rest of its imaging portfolio to Envision Radiology 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.