A federal District Court judge has ordered Lifespan hospital group to pay $14.2 million to Tufts Medical Center in Boston for Lifespan's misconduct dating back to 2002, according to a Providence Journal report.
Providence, R.I.-based Lifespan merged with Tufts, then known as Tufts New England Medical Center, in 1997 and the two parted in 2002. According to a May 24 ruling by Judge Joseph N. Laplante, Lifespan pushed Tufts into a risky financial agreement without disclosing its then-CFO had a close, longstanding relationship with the Morgan Stanley broker who handled the transaction.
The judge's ruling stated the professional relationship between former Lifespan CFO David Lantto and Jeff Seubel, the Morgan Stanley broker, "developed into a friendship because of their mutual affinity for wine," according to the report. Mr. Lantto pressured Tufts into buying an interest-rate swap — considered a financially risky product, according to the ruling — in hopes to enter a wine partnership with Mr. Seubal.
The $14.2 million is a small portion of the $135 million Tufts originally sought. The Boston hospital sued Lifespan after the ruling for $11.2 million in interest, costs and fees, but the court rejected it, saying it would be wasteful to litigate that issue in such a neck-and-neck case. "Overall, neither side has a significantly stronger claim to the title of the prevailing party," said Judge Laplante, according to the report.
Read the Providence Journal report on Tufts Medical Center and Lifespan.
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Providence, R.I.-based Lifespan merged with Tufts, then known as Tufts New England Medical Center, in 1997 and the two parted in 2002. According to a May 24 ruling by Judge Joseph N. Laplante, Lifespan pushed Tufts into a risky financial agreement without disclosing its then-CFO had a close, longstanding relationship with the Morgan Stanley broker who handled the transaction.
The judge's ruling stated the professional relationship between former Lifespan CFO David Lantto and Jeff Seubel, the Morgan Stanley broker, "developed into a friendship because of their mutual affinity for wine," according to the report. Mr. Lantto pressured Tufts into buying an interest-rate swap — considered a financially risky product, according to the ruling — in hopes to enter a wine partnership with Mr. Seubal.
The $14.2 million is a small portion of the $135 million Tufts originally sought. The Boston hospital sued Lifespan after the ruling for $11.2 million in interest, costs and fees, but the court rejected it, saying it would be wasteful to litigate that issue in such a neck-and-neck case. "Overall, neither side has a significantly stronger claim to the title of the prevailing party," said Judge Laplante, according to the report.
Read the Providence Journal report on Tufts Medical Center and Lifespan.
Related Articles on Tufts:
Tufts Medical Center Seeks $11.2M from Lifespan for Misconduct in Investing
Nurses at Tufts Medical Center Scheduled to Vote on Strike
Boston's Tufts Medical Center CEO Ellen Zane Retires