Phoenix is slated to assume responsibility of ER operations Dec. 28. The hospital is canceling its contract with Haywood Emergency Physicians, a local group of doctors who have run the ER for two decades.
When asked how many doctors Phoenix had confirmed for Haywood, Lutes said it “couldn’t be better.”
“We are confirming more and more every day. We will have the number of doctors we need to have confirmed when we start,” Lutes said. When asked for a specific number lined up as of now, Lutes said he had eight doctors already lined up.
Lutes said he has courted some doctors with Haywood Emergency Physicians to stay on under Phoenix and that some have agreed. It is not known how many of the current doctors are willing to work under Phoenix. Some doctors are gun shy of the company after learning about the lawsuit-checkered past of the company’s founder and principle, Steven Scott, according to Dr. Mark Jaben, spokesman for the current group of ER doctors.
Scott has run several physician management corporations over the past three decades. At his peak, more than 550 hospitals had contracts with Scott to staff them with doctors. Things came crashing down, however, when the financial institution that was propping up his company went bankrupt, taking Scott’s company with it. Scott was accused in more than one lawsuit of raiding his companies’ assets to enrich himself while filing bankruptcy to avoid debts. Here’s a timeline:
• 1977: Scott starts Coastal Emergency Services, a physician staffing agency.
• 1991: Coastal goes public and stock soars, but it doesn’t last long. The company starts bleeding.
• 1997: Coastal has lost $150 million by now. Scott partners with National Century Financial Enterprises for financial backing and help staying afloat. Scott is later accused in lawsuits of purposely deflating the company’s assets so they he could acquire them cheap through another company, bring them up to their real value, and make money.
• 1998: Coastal stock was delisted on the stock exchange.
• 1999: Despite continued losses, Scott acquires a rival physician staffing corporation for $69 million and changes the name from Coastal to PhyAmerica.
• 2000: Shareholders sue Scott and National Century. Scott is accused of being in cahoots with National Century to defraud the company of assets. According to the suit, Scott looked the other way while National Century took big cuts of the PhyAmerica’s earnings, in exchange for giving Scott millions of dollars to enrich himself.
• 2002: National Century goes bankrupt and pulls the plug on PhyAmerica. Scott files bankruptcy for PhyAmerica, but continues getting a $2 million salary and had two private jets and three houses worth $10 million.
• 2003: Scott resigns from PhyAmerica, taking $600,000 in bonuses on his way out. He promptly starts Phoenix, a new physician staffing agency.
• 2004: Scott uses Phoenix to compete with PhyAmerica despite court-orders not to. Scott was told by the court not to compete with PhyAmerica, thereby interfering with its ability to make money and pay off the debt it was left with. But Scott wins hospital contracts away from PhyAmerica, then signs on PhyAmerica’s doctors to fill those contracts, despite a court injunction prohibiting him from having any contact with PhyAmerica employees.
Lutes said Scott is only an investor in the company. On Phoenix’s annual incorporation filing with the N.C. Secretary of State, Scott signed the paperwork as the company’s manager. Scott is listed as the president and CEO of Phoenix on a Web site maintained by the Emergency Department Practice Management Association that lists the primary contact person for more than 30 emergency physician staffing agencies. Scott also listed Phoenix as his employer on his numerous campaign contributions to the Republican Party.
Lutes said Scott was a victim of disgruntled shareholders. He said PhyAmerica’s troubles were all due to the bankruptcy of their financial institution, National Century.
“This financial institution went belly up and some 65 companies over the course of the next few months were forced to file for bankruptcy,” Lutes said.