SIOUX CITY | A group of doctors and a physicians group have struck back at a rival surgical center, filing a counter lawsuit that the competing center wrongfully terminated operating agreements with physicians and has interfered with potential business relationships involving the development of a new outpatient surgery center.
Drs. Adam Smith, William Samuelson, Kevin Liudahl, Joseph Morris, Terry Monk and Duane Nelson all claim that Pierce Street Same Day Surgery violated terms of their agreements when terminating those agreements.
The doctors, as well as Tri-State Specialists and its CEO Lee Hilka, also filed claims of misappropriation of trade secrets, slander and civil conspiracy against Pierce Street, claiming the surgery center used trade secrets obtained from former Tri-State member Dr. Matthew Steele to make "false and malicious" statements in a "... campaign against Tri-State, its physicians and the (Riverview Surgical Center) development project ..."
Separate claims of misappropriation of trade secrets, breach of contract, slander/libel and conspiracy were levied against Steele in the counterclaim, filed Tuesday in Woodbury County District Court. They claim that Steele, who left Tri-State in June, provided the group's trade secrets to Pierce Street and has made false oral and written statements interfering with Tri-State's development of Riverview.
The claims were part of their response to a lawsuit filed by Pierce Street, which claims that the alleged involvement of Tri-State, Smith, Samuelson, Liudahl and Morris in the Riverview development violated non-compete agreements the doctors had with Pierce Street.
Pierce Street is seeking an injunction to enforce those non-compete agreements and prevent the doctors from owning, operating, investing in, managing, promoting or being employed by the Riverview Surgical Center, which is under construction along the Missouri River in South Sioux City. The injunction also seeks to prevent Monk and Nelson, both former Pierce Street members, as well as Tri-State and Hilka, from cooperating with those four physicians in the development and promotion of Riverview.
District Judge Duane Hoffmeyer is expected to rule on the injunction request soon.
Stan Thompson, a lawyer for Tri-State and the doctors, said at a Jan. 11 hearing that the physicians have not invested in the South Sioux City project and do not plan to have ownership, management or employment roles in it. Thompson claimed that their non-compete agreements apply only toward involvement in existing surgery centers, not the creation of a new one.
A Pierce Street lawyer has said that since plans for the two-story, 50,000-square-foot Riverview Surgical Center along the Missouri riverfront in South Sioux City became public last year, Tri-State has promoted its ownership and involvement in the development. Samuelson, Liudahl and Morris all are members and owners of Tri-State, attorney Bridget Penick said, and Pierce Street contends they have been involved in planning and designing the center as early as 2015, when all six physicians named in the lawsuit had signed operating agreements containing the non-compete provisions in place with Pierce Street. She further alleged Smith has personally recruited other doctors to invest in the project.
Ground was broken for the $37 million Riverview Surgical Center next to the Delta Hotels by Marriot at 385 E. Fourth St. in November. The center, expected to open in 2019, will contain operating rooms, medical offices and patient suites. Patients and families will have the option of staying in the adjacent hotel. The center will offer many of the same surgical services as Pierce Street.
Pierce Street claims that the doctors' non-compete provisions in individual operating agreements they signed with Pierce Street prohibit them from being involved with a competing hospital or surgery center within 30 miles of Pierce Street while they hold an interest in Pierce Street and for one year after leaving the company. Located at 2730 Pierce St., across the street from UnityPoint Health -- St. Luke's, Pierce Street is less than four miles from the Riverview site.
In their countersuit, Smith, Samuelson, Liudahl and Morris deny violating their operating agreements, saying that Pierce Street wrongfully terminated their agreements in December based on the mistaken assumption that they owned an interest in Riverview. In turn, Pierce Street repurchased the doctors' membership in the group at 75 percent of the shares' fair market value. Monk and Nelson both claim Pierce Street wrongfully terminated their agreements in 2015.