Attorney General's News Release

December 5, 2002

Nixon asks court to dissolve Health Midwest

Jefferson City, Mo. — Attorney General Jay Nixon today sought to dissolve the Health Midwest not-for-profit corporation and to oust its entire board of directors. Nixon's action was taken as part of his response to Health Midwest's lawsuit in Cole County Circuit Court suing the Attorney General and asking the court to approve the sale of Health Midwest's hospital system to a for-profit corporation.

"Health Midwest existed for the purpose of running hospitals in the Kansas City area," said Nixon. "The board of directors has made a decision to abandon the very thing for which the corporation exists, so Health Midwest must be dissolved and its directors replaced."

Article V of Health Midwest's Articles of Incorporation says Health Midwest exists to "establish, operate and maintain health care centers, hospitals, clinics [and] laboratories" and specifically lists eight hospital corporations it controls:

• Research Medical Center
• Health Midwest Development Group
• Baptist Medical Center
• Trinity Lutheran Hospital
• Menorah Medical Center
• Medical Center of Independence Inc.
• Lee's Summit Hospital
• Rehabilitation Institute

But, Nixon said, Health Midwest has entered into an agreement with HCA of Nashville, Tenn., that would have Health Midwest sell its hospitals in the Kansas City area. The agreement also specifically prohibits Health Midwest from owning or operating any other hospital or health care facility in the area Health Midwest is supposed to serve. This agreement, says Nixon's lawsuit, means that Health Midwest can no longer carry out its purposes.

On Wednesday (Dec. 4), Nixon sent a letter to attorneys for Health Midwest, asking them to remove the lawsuit against the Attorney General from Cole County and have the case heard in Jackson County Circuit Court. Nixon said he believes having the case heard in that court — which also has jurisdiction in the matter — would provide the interested public with greater access to the court proceedings.

The Attorney General currently is reviewing the proposed sale of Health Midwest to HCA. As with all sales of not-for-profit assets, Nixon must review the proposed transaction to ensure that the process is fair and free of conflicts of interest and self dealing; that the price being paid is fair from the perspective of the public; and that the proceeds from the sale must be used to further the non-profit mission of Health Midwest and it constituent organizations. Under Missouri law, assets accumulated for a charitable purpose must be used for that purpose in perpetuity.

Inquiries from consumers should be directed to consumer@ago.mo.gov or 1-800-392-8222 (from within Missouri) or 573-751-3321 (outside Missouri).

All media inquiries should be directed to Press Secretary John Fougere.

E-mail      Phone: 573-751-8844         Fax: 573-751-5818