Four Monday afternoons ago, just six days before the company was set to start a big trial, TeamHealth Chief Counsel Carol Owen sent a text message to her boss, general counsel Phil McSween: “Changing counsel. No problem. All handled.”
Simultaneously, Owen was on the phone with Houston trial lawyer John Zavitsanos, saying she wanted to hire him as the lead trial lawyer in a complex, multimillion-dollar medical contract dispute case set to start before an Arkansas jury the next week.
Tennessee-based TeamHealth, a private equity-owned employer of thousands of emergency room doctors and nurses across the U.S., sued insurance behemoth Centene Corp. for paying a dime on the dollar in violation of their contract.
Less than a week before trial, Centene bulked up its defense team by hiring lawyers from litigation powerhouse Williams & Connolly and blitzing the plaintiffs with dozens of motions, demands for more documents and requests to postpone the trial.
“Centene started filing motions in this case and other cases across the country seeking in-person hearings and last-minute depositions,” McSween told The Texas Lawbook in an exclusive interview. “It was overwhelming, which was their intent.”
“We had great lawyers, but we needed great trial lawyers,” McSween said. “We needed a gladiator. The rates [Centene] are paying are not sustainable.
The immediate focus was on Little Rock, where TeamHealth and the 150 emergency room physicians and nurses it employs in Arkansas were set to go trial Aug. 3.
“We witnessed an increasing amount of bad behavior [by Centene] and we decided to fight it,” said Owen, who practiced complex commercial litigation for 17 years before going in-house at TeamHealth. “We are an infantry, and we are looking at a tank battalion.”
Owen learned about Zavitsanos and Ahmad, Zavitsanos, Anaipakos, Alavi & Mensing, a Houston litigation boutique, from an expert witness who was part of a mock trial. Owen and McSween were impressed.
“I had to break the news to the team that they were not going to be the lead trial lawyers six days before trial, and they were extremely professional and remained a critical component in this victory,” Owen said.
Within 24 hours, the AZA lawyers were on their way to Little Rock, where Owen had rented about a dozen hotel rooms at a Marriott three blocks from the federal courthouse.
For five days, the new trial team and lawyers at Little Rock’s Wright Lindsey Jennings, who had been litigating the case for three years, spent morning, noon and night pouring through documents and evidence in a hotel conference room turned litigation war room. They read thousands of pages of contracts and interviewed potential witnesses by Zoom.
“Our team may have slept a total of five hours during those six days – we were going 20-plus hours each day,” Zavitsanos said. “It was the shortest amount of time to get ready for any case in my life. We were going on adrenaline.”
Zavitsanos said the lawyers working on the case for so long – Judy Henry, Baxter Drennon and Michael Thompson – did an amazing job helping bring his trial team up to speed. Collin Kennedy, a partner at Frisco-based Hanshaw Kennedy Hafen, also played a critically important role.
“There was no time to consider motions to compel,” Zavitsanos said. “Decisions that normally take a few days to research and consider were made five to 10 minutes.”
The legal team faced COVID-19-related issues, too. The restaurants around the hotel were closed.
“We had to go to Walmart for food and beverages to keep our war room open 24/7,” Owen said.
Then, on the eve of the trial, the TeamHealth lawyers made a major decision.
“We did a major U-turn on the entire strategy we took at the trial,” Zavitsanos said.
For three years, TeamHealth lawyers had prepared the case as a traditional breach of contract dispute: What did the contract say and was it followed.
“We decided to try the case as a concealed fraud case,” he said. “The documents we relied on at trial were not the same documents that counsel had used to question Centene witnesses during depositions. We caught them completely off guard.”
U.S. District Judge Brian S. Miller, in the first in-person federal civil jury trial since the COVID-19 pandemic started, selected six jurors to hear the civil dispute. The trial went seven days. Six witnesses were called.
Zavitsanos argued that Arkansas Health & Wellness Health Plan, Celtic Insurance and Novasys Health, all companies controlled by St. Louis-headquartered Centene, paid TeamHealth ER doctors 10% of the regular commercial insurance billing rates – not the 75% they agreed to by contract.
In addition, he argued that Centene officials tried to obfuscate their ownership of the companies and the entities responsible for paying the doctors.
A key document, Zavitsanos said, was a 2016 email exchange that started with someone from TeamHealth asking Centene for a copy of the contract they had with Centene. In response, a Centene executive told its representatives to decline and to end all communications with the client.
“John is very driven by facts,” Owen said of Zavitsanos. “Every allegation we made was directly tied to specific documents and contracts. John has stunning charisma.”
The jury deliberated for nearly four hours Tuesday before returning a verdict favoring TeamHealth and awarding $9.4 million in damages. Zavitsanos said they will ask the judge to add nearly $4 million in lawyers’ fees and interest to the jury award.
“I am a believer in the jury system,” Owen said. “I believed the jury would get it right, and the jury did get it right.”
Lawyers for Centene did not respond to The Texas Lawbook’s request for an interview. NovaSys issued a written statement denying that the company breached its contract with TeamHealth and said it plans to appeal the verdict.
Zavitsanos was scheduled to represent TeamHealth in a similar trial in September, but the Texas Court of Appeals has issued a stay in the case.