QuickTake:

A federal judge will weigh whether PeaceHealth’s plan to replace Eugene Emergency Physicians with ApolloMD violates Oregon’s corporate practice of medicine law. The case comes amid public outcry, a contested contracting process and questions about staffing and credentialing ahead of the transition. 

Nearly 7,000 people, including health care workers and community members, signed a petition calling on PeaceHealth to keep its contract with local doctors at Eugene Emergency Physicians.

Nurses delivered the petition to executives Wednesday, April 22, in the latest display of widespread criticism over PeaceHealth’s decision to hire Georgia-based ApolloMD to manage and staff its emergency departments in Springfield, Cottage Grove and Florence.

Since Jim McGovern, chief hospital executive for PeaceHealth’s Oregon network, announced the switch in February, public outcry has been loud and clear — through on-the-ground advocacy, social media and letters to Lookout Eugene-Springfield: People do not want the 41 clinicians with Eugene Emergency Physicians, or EEP, to go.

While the court of public opinion has largely sided with EEP, the court of law will weigh the dispute under Oregon’s corporate practice of medicine doctrine.

Over two days, April 27 and 28, Judge Mustafa T. Kasubhai will hear a case brought by EEP in the Eugene Division of the U.S. District Court. The group is asking him to temporarily block the transition, claiming PeaceHealth and ApolloMD are creating an illegal business model. 

PeaceHealth executives are working with ApolloMD to launch Lane Emergency Physicians, a new practice that will be owned by an Illinois physician, Dr. Johne Philip Chapman. 

Members of PeaceHealth’s Medical Executive Committee — a peer-nominated group of doctors who meet with executive leadership on behalf of the broader staff — say the process that led to the hospital selecting Atlanta-based ApolloMD in February is “irreconcilably compromised.” 

In March, the committee received more than 300 pages of emails allegedly showing McGovern trying to actively manage how patients were treated. The paper trail shows EEP raised concerns about that intervention — which they say violates his administrative license — with top leadership at PeaceHealth. Instead of action, doctors said, the hospital launched a procurement process for a new emergency physician contract.

It remains unclear whether the allegations against McGovern, or the broader public concerns, will factor into a legal case set to be decided on soon. But McGovern, doctors and other health care professionals are expected to testify. 

Here’s what to know about the law, EEP’s complaint and why PeaceHealth says the case should be dismissed.

About Oregon’s corporate medicine law 

Senate Bill 951 isn’t even a year old. 

Also known as the Corporate Practice of Medicine law, SB 951 builds on Oregon’s doctrine, established in 1947, to ensure medical decisions are made by licensed professionals.

The law closes a loophole that allowed private equity firms and corporations to appear compliant by naming physicians as practice owners — sometimes with little or no authority — while maintaining control behind the scenes. 

SB 951 stems in part from fallout in primary care in Eugene and Springfield following the 2020 corporate acquisition of Oregon Medical Group by Optum, a national health care company and division of UnitedHealth Group.

“This bill is about preventing the kind of takeover that happened at the Oregon Medical Group in Eugene,” Rep. Lisa Fragala said in a statement after Gov. Tina Kotek signed SB 951 into law in June. “The Oregon Legislature took steps to address this crisis of cost, access, and quality of care.” 

Where the 11-page law comes into play in the ER contract switch is how a management services organization, or MSO, may contract with a medical practice.

The law defines an MSO as an entity that provides administrative or management services to a professional medical entity, and it bars MSOs from exerting “de facto control” over the entity’s clinical decision-making.

Under the law, de facto control includes hiring and firing, setting work schedules, setting clinical staffing levels and standards, making diagnostic decisions, and advertising a professional medical entity’s services under the name of an entity that is not a professional medical entity.

EEP’s complaint

EEP argues that ApolloMD has already violated the law by advertising jobs and working with recruiting agencies. 

Additionally, they argue the defendants’ actions follow the very model that Senate Bill ​951 was designed to prevent. ​They note that Lane Emergency Physicians shares the same principal place of business as ApolloMD, and that Chapman, the sole owner of the new group, has worked for ApolloMD locations in other parts of the country.

SB 951 restricts the use of a management services organization, or MSO, structure, which is outlined in a figure included in EEP’s lawsuit.
Another figure shows how plaintiffs allege the defendants fit into the MSO structure that SB 951 prohibits.

EEP filed the complaint April 8 alongside two other plaintiffs: parent Karen Stapleton, whose child may use local emergency rooms in the near future, and a Lane County doctor, Dan McGee, concerned about disruptions to his own practice and patients. 

Plaintiffs are asking for the court to: 

  • Preserve the status quo with Eugene Emergency Physicians until PeaceHealth “will be able to legally provide adequate emergency medical services to the community and will not put the community at risk.”
  • Prohibit ApolloMD from violating Oregon Senate Bill 951, a law passed last year that sets strict limits on corporate control of medical practices.
  • Dissolve Lane Emergency Physicians, the emerging practice at PeaceHealth that ApolloMD is supporting.

EEP President Brad Anderson wrote in a declaration:

“Because of the timeline for vetting, hiring, and credentialing qualified emergency physicians, there is significant urgency to the issuance of a preliminary injunction to maintain the status quo … if action is not taken, not only will defendants have no likelihood of adequately staffing emergency rooms with full-time resident physicians, but those who are currently working have, and will continue to, make a plan to leave.” 

PeaceHealth and ApolloMD’s response 

Attorneys for PeaceHealth and ApolloMD moved April 20 to dismiss the lawsuit, arguing the plaintiffs lack standing and that the suit fails to state a claim.

They also say the law does not ban the MSO business model outright and argue EEP’s claims are speculative.

The motion reads in part: 

“EEP does not allege that Defendants are currently exercising ‘de facto control’ or ‘ultimate decision-making authority’ over clinical decision-making or any clinical function. Instead, EEP argues the CPM (Corporate Practice of Medicine) statute is implicated because PeaceHealth’s future emergency medical service provider might adopt a ‘business model’ that allegedly violates the statute.”

Attorneys describe EEP as a “disappointed bidder who finished last place in a competitive selection process.” 

The request for proposals scorecard is included as an exhibit in the case but remains sealed. In their opposition to the preliminary injunction, PeaceHealth attorneys wrote that six bidders participated and were evaluated on criteria including “platform sophistication,” “financial stability,” and a “transition plan.” 

In a sworn declaration filed with PeaceHealth’s motions, Chief Medical Officer Kim Ruscher said the transition is about “ensuring the community will continue to receive high-quality emergency services.” She said EEP has “refused to engage in meaningful dialogue” and “has hampered the planning for an efficient transition.”

Attorneys also said that as of April 20, Lane Emergency Physicians had secured “approximately 51 executed contracts with physicians and advanced practice clinicians,” with 13 additional contracts awaiting signatures. 

Next steps

Lookout Eugene-Springfield will be at the court hearing Monday and Tuesday and will provide updates.

Meanwhile, the hospital continues working toward the emergency department transition, with Heather Wall, vice president of patient care operations and chief nursing officer, serving as interim chief executive for the Oregon region.

That transition includes hospital credentialing. Executed contracts are not the same as state licensing or hospital credentialing.

PeaceHealth confirmed with with Lookout Eugene-Springfield that no new doctors have been credentialed at RiverBend or Cottage Grove, while Florence has added five newly credentialed physicians alongside five already in place.

Ashli Blow brings 12 years of experience in journalism and science writing, focusing on the intersection of issues that impact everyone connected to the land — whether private or public, developed or forested.