Content area
Full Text
Unity Health System's decision this week not to pursue a plan to use the Genesee Hospital for outpatient services could put ViaHealth and its directors one step closer to being- sued by the hospital's lender.
Genesee Hospital mortgage holder Patriarch Partners LLC intends to recoup as much of the -$22 million owed it-and it is ready to go to court, said an attorney for the lender.
In any such action, there is "no question" Patriarch would go after ViaHealth and it would strongly consider pursuing third parties, said James Lytle of Kalkines, Arky, Zall & Bernstein LLP.
He declined to specify what other parties Patriarch might sue. In shareholder or creditor actions targeting corporate defendants, plaintiffs frequently name company officers and directors along with the organization.
While recent stock market slides have prompted scores of such actions against public companies, including Xerox Corp. and Bausch & Lomb Inc., creditor suits against- non-profit corporations, officers and directors are rarer.
That is partly because the so-called 501(c)3 provisions authorizing non-profit corporations specifically protect directors, often volunteers. But other sections of corporation law allow for such suits, albeit with high standards of proof, legal experts say.
To succeed in an action against nonprofit directors or officers, plaintiffs must prove fraud or self-dealing. Alternately, they can charge gross negligence.
Poor decisions are not necessarily negligent in legal terms. A plaintiff would have to show that...