Crystal Run-Montefiore Merger moves forward despite doctors’ lawsuits, mudslinging


Crystal Run Healthcare and Montefiore Health System finalized their partnership last week despite two recent lawsuits by Crystal Run doctors protesting the merger and one suit alleged self-dealing by “illegal payoff” to Gov. Andrew Cuomo by senior executives as well as “draconian” work environments.

Montefiore is a multi-billion dollar network that includes 11 hospitals, and dozens of other sites, with locations in New York City, Mount Vernon, New Rochelle, Nyack, Newburgh and White Plains. Crystal Run is a private doctor practice with 400 doctors based in Middletown and has 22 sites, including five in Rockland.

In 2016, Crystal Run opened a $32.8 million flagship outpatient center in West Nyack. As first reported by the Rockland County Times and later the focus of an Albany Times Union expose’, Crystal Run received $25.2 million in state grants to help build their Monroe and West Nyack locations. The grants came under scrutiny because Crystal Run was not a public institution, but a private doctor’s practice. Moreover, Crystal Run’s new facilities had nearly been completed when the money was bestowed upon them.

The doctors assert in the lawsuit that they were not consulted about the “hundreds of thousands of dollars” in campaign contributions to Gov. Cuomo who “made decisions favorable to Crystal Run.”  According to the lawsuit, when a senior executive at the company was asked to explain what appeared to be an “illegal pay-off,” the executive’s response in substance was “there are certain things that management needs to do and other physicians need not know about.”

The lawsuit also alleges the partners Crystal Run contracts are “draconian” in nature and relegate the doctors to the status of “indentured servants” due to a three-year waiting period after resignation, followed by a one-year non-compete clause within 15 miles of any Crystal Run or Montefiore practice, regardless of specialty practiced at the location.

The seven doctors suing Crystal Run were partners in the company. After the Montefiore merger, 133 former partners would all become employees and their holdings would be transferred to a new LLC holdings company. Both lawsuits protest the business practice of only referring patients within the Montefiore network, even if the doctor believes the patient could receive life-saving treatment outside of the Montefiore network.

Joshua Nemzoff, a Pennsylvania heath-care mergers and acquisitions consultant, said the agreement is structured more like a cash infusion for an ownership stake in Crystal Run than a merger. Montefiore has purchased a 33 percent interest in a Crystal Run holding company, according to the suits.

Nemzoff said the deal is clearly intended to steer Crystal Run patients to Montefiore. “There’s a list of reasons that’s a mile long I can think of for why Montefiore would want to be in a business relationship with 400 (Crystal Run) doctors, and it all has to do with increasing admissions to their facilities,” Nemzoff said.

Crystal Run issued a statement in response to the lawsuit this week. Spokeswoman Lynn Haskin said, “Unfortunately, we have been forced into a legal matter, as seven of our 133 partners have filed suit over Crystal Run’s transaction with Montefiore Health System. As a result of the legal action, a blatant misinformation campaign has been purposefully launched against Crystal Run. We have chosen not to engage and instead remain quiet, as this is a private matter against which we will rigorously defend ourselves in the court of law, and not through the media.

“However, we want to assure everyone that this legal matter has absolutely no impact on our services or ability to serve the people of the Hudson Valley. Our goal and mission with this partnership, and overall, is to expand and enhance services for the people we serve. Any suggestion that this will reduce services, care or options for our patients is utterly false and contrary to everything we believe in and work towards as medical professionals.

“We will not be commenting further on the outlandish and deeply irresponsible charges that have been put forth against us and we will see those who have brought these charges in court.”