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A doctors group is asking a judge to block the transition of emergency care to Georgia-owned ApolloMD, contending it is an illegal business mode. The judge admonished attorneys, however, to stay focused on the question of law and not “vague platitudes about unfairness.”
Essential background
The legal case involving Eugene Emergency Physicians, PeaceHealth and ApolloMD is complicated. Here’s what to know before diving into the full story, as multiple days of testimony and arguments play out in the courtroom. If you already have the basics down, jump to Tuesday’s developments.
How did we get here?
PeaceHealth executives are working with Georgia-based ApolloMD to launch Lane Emergency Physicians, a new practice that will be owned by an Illinois physician, Dr. Johne Philip Chapman. The new physicians group is scheduled to start staffing doctors at PeaceHealth’s emergency department in Cottage Grove and Florence on June 1 and at Sacred Heart Medical Center at RiverBend in Springfield on July 1.
This switch ends a 35-year contracting relationship with the existing local doctors group, Eugene Emergency Physicians, which is asking a federal judge to temporarily block the transition, contending PeaceHealth and ApolloMD are creating an illegal business model.
What is the law in question?
Senate Bill 951, signed into law June 2025, closes a loophole in Oregon’s corporate practice of medicine doctrine that allowed private equity firms and corporations to appear compliant by naming physicians as practice owners while maintaining control behind the scenes. Where the 11-page law comes into play in the emergency department contract switch is how a management services organization, or MSO, works with a medical practice like PeaceHealth. The law defines an MSO as an entity that provides administrative or management services not clinical services.
What is the argument?
The plaintiffs in the case are parent Karen Stapleton, Lane County physician Dan McGee and Eugene Emergency Physicians. The defendants are PeaceHealth, ApolloMD and Lane Emergency Physicians.
Plaintiffs believe that ApolloMD has created Lane Emergency Physician as a falsified practice to disguise ApolloMD’s “de facto control” in clinical decision-making. Attorneys for PeaceHealth and ApolloMD want the lawsuit dismissed, arguing that the plaintiffs lack standing and the suit fails to state a claim.
After nearly eight hours of arguments and testimony Monday, attorneys and witnesses returned Tuesday, April 28, for their second day in a federal courtroom as a first-of-its-kind hearing resumed, testing Oregon’s new corporate medicine law.
Eugene Emergency Physicians is asking U.S. District Judge Mustafa Kasubhai to block a transition in the hospital’s three emergency departments in Lane County until PeaceHealth and incoming Georgia-based ApolloMD can prove they are in compliance with the law, Senate Bill 951.
The plaintiffs’ attorneys continued with a roster of witnesses, including Dr. Dan McGee, a plaintiff in the case and a member of Eugene Emergency Physicians, whose cross-examination from attorneys began late Monday afternoon.
Before he came to work in Eugene, McGee testified, he had worked at other facilities, where he experienced corporate models like those under ApolloMD. He described frequent turnover and “chaotic and scary” places to practice medicine. He testified that Eugene Emergency Physicians, known as EEP for short, would likely dissolve when its contract ends this summer.
We live and die in the same hospitals as everybody else.
Dr. Dan Mcgee
Pressed by ApolloMD and Lane Emergency Physicians attorney Mia Falzarano Tuesday about EEP’s relationship with PeaceHealth, McGee’s testimony veered from the professional to the personal.
“We are not just doctors, we are members of the community,” McGee said. “We live and die in the same hospitals as everybody else. My daughter was at RiverBend with a life-threatening emergency less than two weeks ago. If it wasn’t for the expert care of my partners, she would have died. I do not trust ApolloMD to care for my daughter the way that my partners did.”
The hearing Tuesday came back to legal paperwork — a topic argued Monday in opening statements — about whether the lack of a contract between ApolloMD and PeaceHealth creates ambiguity in favor of an illegal business model, as plaintiffs’ attorneys implied, or if it creates a lack of standing to argue a violation of SB 951.
“The contract hasn’t been signed yet but that doesn’t mean the agreement doesn’t exist,” McGee said to Falzarano.
“This agreement was made,” McGee said with a pause, then responded with a question. “Was it made or was it not made? You tell me.”
The defense kept details of their clients’ agreements and plans quiet Tuesday morning, but as ApolloMD CEO Yogin Patel took the stand, some information emerged, including that he plans to provide clinical services himself at local hospitals.
Additionally, Tuesday’s discussion dug deeper into management services organizations, or MSOs — even as conversations derailed amid misorganized exhibits and vague questioning.
MSO not inherently in violation of SB 951
SB 951 does not ban MSOs, but it limits what MSOs can do. Lawmakers intended the law to ensure that MSOs provide administrative services, not clinical control.
It’s a point that PeaceHealth’s defense already argued in its motion to dismiss EEP’s complaint, filed April 20. And it’s a point that Falzarano called out while McGee was on the stand.
Falzarano pushed questions about whether McGee believed MSOs were inherently illegal, and asked if EEP tried to work with an MSO themselves when they rebid for their contract last year with PeaceHealth.
“I have worked for MSOs that were not in violation in Senate Bill 951,” said McGee, who went on to testify he is a member of the American Academy of Emergency Medicine and that EEP sought a potential relationship with its MSO, the American Academy of Emergency Medicine Physicians Group.
The American Academy of Emergency Medicine Physicians is financing litigation for the plaintiffs.
“(American Academy of Emergency Medicine) comes with an outstanding record that is universally recognized in emergency medicine,” he said. “If we chose to work with an MSO at all, the only reason we chose to work with (American Academy of Emergency Medicine) was to make PeaceHealth happy.”
Both McGee and Dr. Brad Anderson, EEP president, testified that ApolloMD does not have such a reputation.
“The concern regarding this type of relationship with an MSO … on paper it is not clear how much the MSO is directing patient care,” Anderson said.
PeaceHealth attorney Misha Isaak pressed Anderson into whether he engaged in conversations about ApolloMD and what it was bringing to the local hospitals.
I don’t believe we were trying to create a crisis … We were trying to prevent one.
Dr. Brad Anderson
Isaak pulled up a document that shows all 41 members of the EEP practice pledging not to work for ApolloMD for 90 days, and pushed whether EEP was complicit in creating an emerging “crisis” with shortage of doctors.
“I don’t believe we were trying to create a crisis,” Anderson said. “We were trying to prevent one, meaning that because of the structure of the group and knowing they weren’t willing to work for an entity, most of them, maybe all, that was the point (of the signing),” Anderson said.
ApolloMD CEO takes stand
Patel, ApolloMD’s CEO, said it typically retains existing physicians when entering a new market, but since the 90-day pledge was signed, communication with Eugene Emergency Physicians has been limited.
Patel testified for nearly two hours, answering questions from both his own attorneys and plaintiffs’ counsel.
Kasubhai frequently interjected, including asking whether ApolloMD has worked with existing physician groups in new markets. Patel said it has, but estimated that model accounts for about 10% of its business. In the remaining cases, he said, ApolloMD operates as a management services organization while supporting the creation of a new physician group that handles clinical decision-making.
Patel said that in states without corporate medicine restrictions, ApolloMD may also be involved in clinical decisions.
And even though such restrictions exist in Oregon, he said he will provide clinical services himself and can do so through his employment with Independent Physician Resources, an affiliate of ApolloMD Business Services. The scope of those services was not detailed.
Patel said ApolloMD responded to a request-for-proposals process because it already partnered with PeaceHealth in Ketchikan, Alaska. He said he was not initially aware of Senate Bill 951, but company attorneys briefed him in January after the law took effect.
He also said Lane Emergency Physicians did not yet exist at the time of the request-for-proposals process, though Dr. Johne Chapman, owner of the new practice, was involved in the process.
Plaintiffs’ attorney Todd Johnston pressed Patel on the governance structure and stakeholders of Lane Emergency Physicians before Kasubhai interrupted.
Kasubhai turned toward Patel and explained he was dealing with a “fairly complex corporate structure that may work under statutory systems in different states.”
“I have to figure out if it meshes with the law in Oregon,” said Kasubhai. “What may be normal in Georgia or North Carolina may not fit in Oregon.”
Judge’s ire
Earlier Tuesday, Kasubhai admonished attorneys on both sides after what he described as questionable cross-examination approaches and unorganized exhibits.
At several points, attorneys paused to locate documents and confirm they and witnesses were reviewing the same materials. For a preliminary injunction, Kasubhai said, proceedings must move at an efficient pace and warned that if delays continue, he will “have to provide more structure.”
If this is about (a SB 951) violation, then prove it, then focus on the evidence.
As discussions at times drifted beyond the potential scope of the case — including discussion of years-long tensions between Eugene Emergency Physicians and PeaceHealth, and the administrative leave of Chief Hospital Executive Jim McGovern. But the judge reiterated that attorneys must stay focused or clearly tie issues to a potential violation of SB 951.
“You come to a federal court for that question (of SB 951). If you are trying to present an argument to why this is an important community issue, this is the wrong forum,” he said. “If this is about (a SB 951) violation, then prove it, then focus on the evidence. Don’t appeal to vague platitudes about unfairness.”
He asked PeaceHealth and ApolloMD whether they were considering filing counterclaims in the future. Isaak said the possibility had been discussed but nothing had been decided. Kasubhai said the case was not the appropriate place to create a foundation of evidence for future countersuits.
“I don’t appreciate being a host for a parasite,” Kasubhai said.
Isaak clarified after a recess that the defendants were not trying to elicit evidence for counterclaims. The case continues Wednesday.
