A federal judge ordered Lifespan Hospital Group to pay a $14.2 million settlement to Tufts Medical Center (formerly New England Medical Center) for failing to disclose potential conflicts of interests, reports The Providence Journal.
The judge ruled that former Lifespan CFO David Lantto, who was friends with Morgan Stanley broker Jeff Seubel, pressured then New England Medical Center to enter into a risky interest-rate exchange without disclosing the relationship.
In 1997, the two companies merged, but the merger dissolved in 2002 because of financial disputes, according to The Providence Journal.
"This ruling is going to put more pressure on healthcare systems that have come together and are having growing pains,'' said Michael W. Peregrine, a healthcare attorney for McDermott Will & Emery in Chicago. "When you have a federal case that's saying the nature of the relationship created a fiduciary responsibility, which Lifespan breached, that could destabilize [hospital] systems that are under stress--maybe blow them up,'' he said, according to the Globe.