George Washington University is suing King of Prussia, Pa.-based Universal Health Services in District of Columbia Superior Court, alleging UHS is keeping profits that should be invested in the university's medical school and network of physicians, according to The Washington Post.
UHS owns 80 percent of Washington, D.C.-based George Washington University Hospital under a 22-year-old agreement with the university. Over the past four years, the hospital partnership's average operating margin has been above 13 percent. However, the medical school and physician network affiliated with the hospital are "struggling financially," according to The Washington Post, which cited the university's complaint.
"Instead of investing sufficient hospital revenue in the university's research and teaching missions … UHS has paid itself these funds in the form of outsized dividends from artificially inflated, excess profits," the complaint states.
The university alleges UHS has improperly diverted more than $100 million from George Washington University Hospital.
UHS denied the allegations in a statement to The Washington Post.
"This lawsuit is nothing more than an attempt by the new leadership of the university to renegotiate — via litigation — agreements it entered into over 20 years ago," the statement from an attorney for UHS reads. "UHS regrets that GWU's new leadership has elected to file an unfounded lawsuit, to the substantial expense and distraction of all involved, rather than attempt to resolve its business concerns through good faith discussions."
More articles on legal and regulatory issues:
HCA fights CNN's subpoena in defamation suit
7 physicians sue Drexel over contract terminations
Hospital groups sue HHS to block price transparency rule