HEALTH SOURCE: IPA Charges MedPartners With Breach Of Contract

      Health Source Medical Group, a 300-member independent physician organization (IPA), filed suit late last month against MedPartners, accusing the physician practice management (PPM) company of failing "to abide by a management agreement." Modern Healthcare reports that the Los Angeles-based IPA filed for $100,000 from MedPartners and one of its subsidiaries, CHS Management, citing "nine causes of action, including fraud, breach of fiduciary duty and unfair business practices." In addition, Health Source alleges that "MedPartners failed to negotiate in good faith on its behalf with payers, withheld business records and delayed payments to doctors." While MedPartners did not comment on the suit, Health Source says it "entered a management agreement" with MedPartners in 1995 on the PPM's "assurance that its size and economic clout could win higher capitation rates for the doctors and that its national scope made it 'uniquely capable' of improving the IPA's financial performance." But Health Source says MedPartners did not follow through with promised management functions, "left CHS with only a 'skeletal staff,' and moved management operations to a 'distant location'" in California. Furthermore, Health Source alleges that MedPartners arranged managed care contracts for its own physician group, MedPartners Provider Network, at the expense of Health Source's business interests. An April letter from Health Source to CHS prompted a termination agreement, but MedPartners has refused to transfer operations until "the IPA waives liability claims regarding breach of contract and pays MedPartners a 'large sum of unsubstantiated debt.'" The $100,000 sum "is a minimum figure and is common among such lawsuits," but Modern Healthcare reports that the suit comes as MedPartners is "in the throes of restructuring its sprawling Southern California operations." Last week, the state Department of Corporations announced plans to audit the financial records of MedPartners' California operations (Jaklevic, 10/19 issue).