The American Arbitration Association issued a final ruling in a billing dispute between Franklin, Tenn.-based Community Health Systems and Brentwood, Tenn.-based Quorum Health.
Here are five things to know:
1. The feud between the two companies centered on two agreements they signed in connection with Quorum's spinoff from CHS in April 2016. The agreements — called the Shared Service Centers Transition Service Agreement and the Computer and Data Processing Transition Service Agreement — define services to be provided by CHS to Quorum, including those related to information technology, payroll processing, collections and certain human resources functions.
2. In August 2017, CHS sent Quorum a demand for arbitration seeking payment of certain amounts allegedly withheld by Quorum under the agreements. While CHS claimed Quorum owed approximately $9.3 million under the two transition services agreements, Quorum argued CHS issued the bills improperly. Quorum also made counterclaims against CHS.
3. In March 2018, Quorum received notice that CHS was seeking early termination of the two agreements. Quorum argued that CHS' attempt to end the agreements was invalid. In June, the arbitration ruled that both agreements would remain in place unless the parties agreed otherwise.
4. In a final ruling issued Jan. 3, the arbitration panel agreed with Quorum's argument that CHS was improperly billing Quorum under the Shared Service Centers agreement. As a result, Quorum will not be required to pay the $9.3 million CHS requested, and CHS will pay Quorum roughly $2.1 million in disputed payments made by Quorum since the arbitration ruling in June.
5. The arbitration panel denied Quorum's claim that it was improperly billed by CHS under the Computer and Data Processing agreement. The panel ordered Quorum to pay CHS about $1.5 million it withheld from CHS prior to the June 2018 arbitration ruling.
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