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After 30 hours of arguments and testimony, after a settlement that is expected to restore Eugene Emergency Physicians’ contract and after a federal judge accused defendants of trying to “deceive this court,” the effect of the new law began to come into focus.
Drs. Dan McGee and Brad Anderson walked down the steps of the Mark O. Hatfield United States Courthouse in Portland with their attorneys on Wednesday morning, May 6.
They hadn’t slept much.
“[A] long day of negotiations between PeaceHealth and Eugene Emergency Physicians,” McGee said. “We didn’t expect this outcome yesterday morning when we woke up.”
That outcome was the plan to renew the local physicians group’s 35 years of contracting to staff emergency departments in Cottage Grove and at Sacred Heart Medical Center at RiverBend in Springfield.
While PeaceHealth directly employs physicians at its Florence emergency department, the health care network contracts with the independent practice Eugene Emergency Physicians, or EEP, to staff its other two Lane County locations.
In February, Dr. Jim McGovern, chief hospital executive of PeaceHealth’s Oregon network, announced the hospital would not renew EEP’s contract but instead award it to Georgia-based ApolloMD.
In the weeks that followed, EEP doctors publicly came forward about conditions at RiverBend and said none of the group’s 41 medical professionals would work under ApolloMD for at least 90 days. Allegations also became public that the process to procure new emergency department services came after EEP doctors raised concerns that McGovern inappropriately tried to influence patient care.
Additional details emerged that ApolloMD was creating a new physician group, called Lane Emergency Physicians, which ultimately led to EEP filing a lawsuit arguing that the setup was in violation of Oregon’s new corporate medicine law. They asked a federal judge to issue a preliminary injunction to block the transition.
Over the last week, U.S. District Judge Mustafa Kasubhai presided over nearly 30 hours of testimony and arguments across four days. The proceedings were originally expected to take about half that time. The hearing continued Wednesday in Portland, where a different case awaited the judge.
Kasubhai, much like the broader community, has been trying to make sense of a complex corporate structure and a law so new it is still widely referred to as a Senate bill.
Kasubhai also considered the potential impact on Lane County residents who rely on RiverBend as the region’s go-to trauma center, which is expected to see about 80,000 emergency visits this year.
The case took another turn Wednesday as Kasubhai learned of a settlement reached between PeaceHealth and Eugene Emergency Physicians, some of it documented in a four-page written agreement drafted overnight.
He made clear he was not prepared to simply take the parties at their word and that this case now was bigger than the geographical boundaries of Lane County. The proceedings are now part of a legal record that could set precedent statewide for future cases under the new law, Kasubhai said.
“I am going to need to see this to the end,” he said. “I am involved whether anyone likes it or not.”
Revelations in real time
Over the four days of the hearing, attorneys brought witnesses to the stand including the EEP physicians McGee and Anderson, as well as other plaintiffs, including parent Karen Stapleton.
ApolloMD CEO Dr. Yogin Patel, Lane Emergency Physicians owner Dr. Johne Philip Chapman, and Chief Medical Officer for PeaceHealth’s Oregon network, Dr. Kim Ruscher, also testified.
Each hour came with a revelation, ranging from contentious relationships at the hospital to how leadership scored groups vying for the emergency department contract. But above all, Kasubhai focused on Senate Bill 951.
Signed into law last June, the statute is designed to close a loophole in Oregon’s corporate practice of medicine doctrine — a loophole that allowed businesses to disguise themselves as physicians groups.
ApolloMD is a management services organization, or MSO, meaning it provides administrative support but cannot deliver clinical care under Oregon law. That role is reserved for a professional medical entity, or PME — a physician-owned practice responsible for patient care. Eugene Emergency Physicians and Lane Emergency Physicians are PMEs.
Kasubhai pressed attorneys and witnesses on whether Lane Emergency Physicians is truly an independent physicians group or if it was operated by ApolloMD. He went on to describe the setup as a “shell game.”
Documents tied to the request-for-proposals process last year became evidence, and Kasubhai said Monday that information in those records conflicted with testimony from Patel and Chapman, adding that he believed the two men lied under oath.
On Wednesday, the fifth day of the hearing, Kasubhai met attorneys in Portland. He had planned to take oral arguments but instead heard of the settlement between PeaceHealth and EEP.
“The foundation for (this) resolution was developing in real time on the witness stand,” said Kasubhai, who clarified the agreement doesn’t resolve the larger case before him.
“I am not going to be satisfied with general discussion,” he said. “You dragged me into this. And now we are going through it together.”
Kasubhai said he plans to retain jurisdiction over the case until a final agreement with detailed terms is signed by all parties. He also asked whether any management services organization would be involved in the new arrangement. Plaintiffs’ attorney Todd Johnston said he did not believe that would be the case.
The judge read the agreement out loud, entering it into the public record. It does not include ApolloMD or Lane Emergency Physicians.
Kasubhai said his responsibility is twofold: preventing disruption to emergency care in Lane County, while also maintaining a clear legal record in what he described as the first major case argued under Oregon’s new corporate medicine law.
It is to be seen whether he issues a formal opinion.
“My findings orally on Monday are part of the record. They were not musings or hypotheses. They are real and concrete … that includes my credibility findings,” said Kasubhai, referencing what he called Patel and Chapman’s attempts at plausible deniability.
Throughout testimony, the two leaders frequently said they did not know details about ownership arrangements and operational setup, at times deferring questions to attorneys or others involved in the process who weren’t in the courtroom.
It would have been better for them to simply tell the truth.
U.S. District Judge Mustafa Kasubhai
On Wednesday, Kasubhai pointed to portions of the application materials referencing that Chapman’s employment with ApolloMD began in 2023, playing into the judge’s doubt that the doctor didn’t know the answers to many of his questions.
“It would have been better for them to simply tell the truth. It would have been better if they had read Senate Bill 951 before submitting (their application). There are ways to perform as an MSO in Oregon. They didn’t do that,” Kasubhai said.
“Dr. Chapman and Dr. Patel made a very conscious choice to try and deceive this court,” he said. “I don’t doubt Dr. Chapman wants to do good (in) the world. But the business model got in the way … Not necessarily universally, but in this instance (of SB 951) they lost sight of what mattered.”
Kashubai noted that Patel and Chapman risk potential perjury or contempt for their testimony under oath, though he said he was not formally escalating the matter at this time.
“I think it is a wide-reaching decision that Oregon took in adopting (SB 951) to protect patients and the medical profession from exactly what happened in this case,” Kasuhbai said.
He then adjourned the court to a small round of applause from doctors and nurses who came to listen to his final word.
‘Our hospital’
A group of health care workers stood outside the courthouse in Portland on Wednesday morning. The issues under consideration had shifted to where to go for breakfast before the drive back to Eugene.
“We are just so lucky and blessed to be able to serve the community that we’ve been fighting so hard for,” said Dr. Tanya Bucierka, who attended one of the hearing days in scrubs. “Our advocacy doesn’t stop here.”
Behind them, Johnston, the plaintiff’s attorney, rolled a bag stuffed with three-ringed binders.
“(Senate Bill 951) is a powerful tool that has teeth to it and can be used to accomplish what the Legislature hoped to accomplish, which was keeping physicians making independent decisions about our care, and our hope is that the Apollos of the world are paying attention and aren’t going to try and do this in Oregon again,” he said.
Franky Valenzuela was among a handful of PeaceHealth nurses who had attended the proceedings in Portland.
“It’s a true testament to this bill,” Valenzuela said.
“It’s a big win, not just for us, but for the community itself,” he said. “We are here to serve the community, and that’s what we’re fighting for.”
Valenzuela paused and pointed back to testimony from McGee earlier in the hearings. During the second day, an attorney for ApolloMD pressed McGee on his repeated use of the phrase “our hospital,” suggesting he implied financial or operational ownership.
McGee looked directly at her and explained he meant a different kind of ownership.
“We live and die in the same hospitals as everybody else,” he said. “When I talk about ‘our,’ I talk about ‘our’ hospital, and ‘our’ community.”
