Forest Park Medical Center at Southlake, part of a troubled chain of doctor-owned, luxury hospitals, is being sued in federal court for defaulting on a $9.4 million loan for medical equipment.
Commerce Bank in St. Louis, Missouri, filed the lawsuit last week in Dallas against the medical center and some of its officers claiming they defaulted on a loan in August, according to court documents.
The bank claims the hospital defaulted because it failed to keep and provide complete financial records and maintain the minimum net worth as required by the loan. Documents state that the bank is owed an outstanding balance of $3.4 million.
Charles Nasem, CEO of Forest Park Medical Center at Southlake, said in a statement Monday that he doesn’t expect the pending lawsuit to impact operations.
“We were actually surprised by the lawsuit because we are current with our payments on the loan,” Nasem said. “There is a certain level of profitability required by the loan that caused the default, but we feel the most important part is that we have been making timely payments.
“We do not expect this to affect operations at Forest Park Southlake and we will continue to deliver the top 1 percent patient experience in the nation to our patients,” he said.
Buffey Klein, the attorney representing Commerce Bank, did not return calls from the Star-Telegram seeking comment.
The lawsuit against the Southlake hospital, located along Texas 114, is the latest in a string of setbacks for the string of luxury hospitals, including the shutdown of Forest Park Medical Centers in Dallas and San Antonio.
The Southlake facility is part of a chain owned by Forest Park Medical Center based in Dallas. The company also operates a facility in Fort Worth on the Edwards Ranch property and has other facilities in Dallas, Frisco and San Antonio.
The Southlake hospital opened in 2013 with 12 operating rooms, 6 intensive care unit beds and 54 private inpatient rooms. The Fort Worth hospital opened in 2014.
Forest Park Medical Center has an unusual business model in that it promises its patients more pleasant surroundings — natural light, interior decor with mood lighting and waterfalls, for example — as well as more individualized attention with better outcomes.
“Designed for warmth. Designed for comfort. Forest Park Medical Center is that rare hospital that puts patients first,” the company’s website states.
With its eye on more upscale patients, another unusual part of its business plan is that it only accepts patients with private insurance. Doctor-owned facilities are barred from qualifying for Medicare because the government views them as encouraging doctors to do costly procedures.
But the Forest Park Medical Center chain has struggled. The Dallas hospital suddenly shut its doors earlier this month, according to the Dallas Morning News. According to warnings filed with the Texas Workforce Commission, 196 people were laid off.
In October, the San Antonio hospital closed its doors because it had “run out of cash” and stopped paying its rent, the San Antonio Express-News reported. According to state records, 139 layoff notices were issued.
And in September, the Frisco hospital filed for Chapter 11 bankruptcy reorganization. In court documents, the hospital said it owed at least $8.5 million on a line of credit and for equipment.
Todd Furniss, chairman of GlennTodd Capital, the managing company for Forest Park Central, told the Express-News that he blamed some of the specialized hospital’s financial woes on insurance companies that would not enter into network contracts.
The “out-of-network” model, which relies on higher reimbursement rates, also hurt the Frisco facility, which determined it would be “unable to sustain the revenue needed to operate,” court documents show. In court records, the hospital said it was taking in $3.4 million in revenue a month, but had expenses of about $4.3 million.
Adding to the company’s woes is the indictment of one of the company’s co-founders, Dr. Richard Toussaint, a licensed anesthesiologist, by a Dallas federal grand jury in May on 17 counts of health care fraud. The indictment accuses him of running a scheme from 2009 to 2010 to defraud Blue Cross Blue Shield and other insurance companies by submitting $5 million that are believed to be fraudulent.
Toussaint is accused of saying he was present for anesthesia services when he was actually either under anesthesia himself and undergoing surgery, flying on his private jet or in another state or another hospital miles away.
This report includes material from the Star-Telegram archives.