A Medical Provider’s Journey from Catastrophe to Private Equity Exit

A startup medical provider engaged Shields Legal as outside general counsel to shepherd their business through numerous challenges until they could attract institutional private equity capital for their next stage in growth. The client and its management team persevered through embezzlement, third-party liability claims, and corporate restructuring before the core, restructured business was purchased by private equity. Shields Legal’s litigation, insurance, and corporate attorneys advised the management team through each challenge and opportunity, with a focus on treating stakeholders fairly and transparently, implementing best practices, and preparing for a “first exit” to private equity.

Introduction

Our medical provider client historically served both acute and chronic patients, providing patients with access to cutting-edge therapies at prices and upon terms that facilitated various avenues of repayment. The provider’s commitment to care and service was evident in the high level of repeat patients and patient referrals. A sophisticated management team brought insight, experience, and planning to the provider’s business goals. The management team recognized that by focusing early on both high-quality patient care and the likely requirements for an exit transaction, the provider would be well positioned to drive value to patients and the organization.

Problem

Like many businesses, this provider’s operations caused challenges for the management team. However, the challenges this provider faced within a relatively short time frame were complex and extraordinary. One former off-duty employee caused a horrific accident while driving a company car under the influence, resulting in the death of an innocent bystander. Another rogue employee embezzled funds from the company, private insurance payors, and the federal government. These catastrophic events with both civil and criminal implications threatened the provider’s corporate existence and risked MMs of dollars of ownership investment, future patient care, and the livelihoods of the provider’s employees.

Many law firms would question whether to take on a client facing such overwhelming and pressing business, financial, and legal problems. Shields Legal knew that our team had the depth of business and legal know-how and resourcefulness to guide the client’s management team to accomplish their objectives and vision for the future of the company.

Solution

Shields Legal sprang into action by overseeing internal investigations into the separate catastrophic events and coordinating with law enforcement, insurance companies, and the U.S. Attorney’s office. With Shields Legal handling the internal and external criminal and civil investigations, including evidence gathering, the management team was able to focus on patient care and the operational needs of the business.

Achieving resolution of the catastrophic events our client faced was a rocky process that took substantial time, patience, and resilience. Shields Legal stood by the client each step of the way. Ultimately, both of the client’s former employees were sent to jail for their respective crimes, restitution was ordered, and the victim’s family received financial compensation.

The catastrophic events highlighted the client’s need for a corporate restructuring, which Shields Legal implemented to enhance the client’s compliance, operational efficiencies, and risk management.

Conclusion

As a result of Shields Legal’s successful outside general counsel collaboration with our client’s management team, our healthcare provider client resolved its catastrophic problems, continued to provide high quality patient care, and attracted a sophisticated private equity purchaser. Our client’s business is better than ever.