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Jury awards $1.6M in damages to Sioux City surgery center that sued after competing center opened
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Jury awards $1.6M in damages to Sioux City surgery center that sued after competing center opened

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Riverview Surgical Center open house

The Riverview Surgical Center in South Sioux City opened in September. A Woodbury County jury on Wednesday awarded Pierce Street Same Day Surgery, a competing surgery center, $1.6 million in damages against Riverview's CEO and other doctors who were involved in its development. The jury also found that Pierce Street must pay damages to five doctors for breaching its operating agreement with them.

SIOUX CITY -- A jury has awarded $1.6 million in damages to a Sioux City surgery center after finding that its former CEO and two doctors violated their contracts by participating in the development of a competing medical facility.

The jury also found that former Pierce Street Same Day Surgery CEO Lee Hilka, who is currently CEO of Tri-State Specialists in Sioux City and the newly opened Riverview Surgical Center, conspired with Tri-State to intentionally interfere with the doctors' contracts with Pierce Street.

However, jurors also determined that Pierce Street breached its operating agreements with five physicians when it terminated their membership interests, awarding the doctors a total of $231,808 in damages.

The verdict was returned late Wednesday afternoon at the conclusion of a two-week trial in Woodbury County District Court.

"Pierce Street is pleased that the jury unanimously found Tri-State Specialists to be liable on all counts asserted against it – intentional interference with the PSSDS Operating Agreement and civil conspiracy, and that Tri-State Specialists engaged in willful and wanton disregard for the rights of Pierce Street Same Day Surgery – and that the jury awarded compensatory and punitive damages as a result. Pierce Street is likewise pleased that the jury unanimously found in Pierce Street’s favor regarding certain claims against Dr. Samuelson, Dr. Smith and Lee Hilka," Nicole Moen, a Minneapolis attorney who represented Pierce Street, said in an emailed statement.

Pierce Street had sued the doctors and Tri-State in December 2017, saying that the doctors' non-compete provisions in individual operating agreements they signed with Pierce Street prohibited them from being involved with a competing hospital or surgery center within 30 miles of Pierce Street while they held an interest in Pierce Street and for one year after leaving the company. Located at 2730 Pierce St., Pierce Street is less than four miles from Riverview's South Sioux City site across the Missouri River from downtown Sioux City.

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Samaritan Hospital
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Hospital at 28th and Jennings streets
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St. Joseph Hospital
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St. Joseph's
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St. John's Hospital

The doctors, Hilka and Tri-State filed a counter lawsuit, claiming that Pierce Street wrongfully terminated operating agreements with the physicians and interfered with potential business relationships involving the development of Riverview, a $32 million, 48,000-square-foot, physician-owned and directed surgical center that opened in September.

The jury awarded Pierce Street $250,000 in compensatory damages and $12,500 in punitive damages from Hilka and $750,000 in compensatory damages and $75,000 in punitive damages from Tri-State. Hilka was the Pierce Street CEO from March 2008-April 2015.

Jurors found that Drs. Adam Smith and William Samuelson violated the non-compete clauses in their contracts while they worked for Pierce Street. The jury awarded Pierce Street $250,000 in compensatory damages and $12,500 in punitive damages from Smith, who as a Pierce Street board member also was found to be involved in the conspiracy to violate the contracts, and $250,000 in compensatory damages from Samuelson.

The jury found that Drs. Kevin Liudahl and Joseph Morris did not violate their agreements with Pierce Street. Liudahl, Samuelson and Smith are partners at Tri-State, a multi-specialty medical clinic located in the same office building as Pierce Street Same Day Surgery. Morris is employed by Tri-State.

In finding that Pierce Street breached its operating agreement with five of its doctors, the jury awarded damages of $78,000 each to Liudahl and Samuelson, $36,900 to Smith, $28,500 to Dr. Terry Monk and $10,408 to Morris.

"Pierce Street requested over $15 million in actual damages and $8 million in punitive damages against all defendants. The jury found Pierce Street breached the operating agreement and awarded damages to Drs. Liudahl, Samuelson, Smith, Morris and Monk. The doctors feel vindicated as former members of Pierce Street," Des Moines attorney Stanley Thompson, who represented the doctors and Tri-State, said in an emailed statement.

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First courthouse
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Courthouse construction
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Courthouse construction
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Courthouse drawing
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Courthouse dome

All parties have 15 days to file post-trial motions and 30 days to appeal the verdict or the jury award.

Hilka's attorney did not immediately return messages seeking comment Thursday.

Doctors' role in South Sioux City surgery center development disputed in court
Tri-State Specialists to build $37M surgical center in South Sioux City
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