Hospital urges dismissal of consultant’s lawsuit

U.S. District Judge Glen Conrad seemed reluctant this week to pull the plug on a lawsuit alleging Rockingham Memorial Hospital is reneging on a deal to share revenue from a consultant’s secret idea to boost Medicare reimbursement.

At a hearing in Harrisonburg, RMH lawyer Daniel Fitch argued the consultant’s proposal was nothing more than the application of Medicare laws, "dressed up in trade secret language."  Conrad said the argument seemed better suited for a summary judgment motion than a motion to dismiss on the pleadings.

"It seems to me some discovery needs to be done before the concept of novelty is applied in this case," Conrad said.

In a unique case under Virginia law, the hospital contends the secret idea offered by McKay Consulting Inc. is not "novel" and therefore cannot support the hospital’s alleged promise to pay McKay 20 percent of its increased revenues if it uses the proposal.  VLW reported on McKay’s lawsuit and the hospital’s response here .

Matt Nelson, lawyer for McKay, said there is more to McKay’s proposal than just application of the law.  "There is some art involved here," he told Conrad.

The proposal, which remains a secret, is contained in a 116-page binder filed under seal with the federal court.  Conrad said Tuesday he would announce his decision on the hospital’s motion to dismiss in the near future.

By Peter Vieth