A federal judge has dismissed Methodist LeBonheur Healthcare from a class-action lawsuit arguing that an association that oversaw operations at the former Crittenden Regional Hospital in West Memphis failed to pay employees' insurance premiums for 2014.
More than 170 plaintiffs filed suit against the Crittenden Hospital Association, Cigna Health and Life Insurance Co. and Methodist after the 150-bed hospital closed in September 2014, when hospital association CEO Gene Cashman said the hospital could not pay $30 million it owed.
U.S. District Judge D. Price Marshall ruled Thursday that, although Cashman sought advice from Methodist LeBonheur Healthcare about hospital business, Methodist could not be held liable under U.S. Department of Labor laws.
In his filing, Marshall called the issue a "knotty problem" but said Methodist was not considered a "party of interest" in plaintiff's filings, based upon the Employee Retirement Income Security Act of 1974, a federal law that sets minimum standards for most voluntarily established pension and health plans.
Marshall denied a similar request for dismissal filed by Cigna.
Daniel Ryan and Pete Pederson, both attorneys in Chicago who represent Cigna Health and Life Insurance, did not return telephone messages Thursday. Harry S. Hurst, a Jonesboro attorney who also represents Cigna, referred calls to Ryan and Pederson.
"We are pleased with the ruling," said John Edwards, a Memphis attorney who represents the plaintiffs. "This ruling has very little overall effect on the case for us.
"We claimed in the [lawsuit] that Methodist became an agent of overrunning the hospital. With Methodist out, it shows that Cigna and [the hospital association] are fully charged with the responsibility of the plan."
The West Memphis hospital closed briefly after a June 6, 2014, fire destroyed an unoccupied intensive-care room on the second floor and water from the hospital's sprinkler system damaged ceilings, floors and walls.
Crittenden County voters approved a 1 percent sales tax on June 24, 2014, to help fund the hospital, and it reopened that July 18. On Aug. 25, 2014, however, Cashman sent letters to employees saying it would close Sept. 7, 2014, because it could no longer afford to operate.
The hospital filed for bankruptcy.
Ryan said during a Dec. 12 hearing in Jonesboro that about $4 million in claims by hospital employees went unpaid last year.
Marshall set a trial date for February, but Edwards said that date may be moved to June.
State Desk on 11/13/2015