Articles Tagged: Mercy Iowa City

With bankrupt Mercy Iowa City and its former managing affiliate MercyOne snared in a growing web of legal disputes, the Des Moines-based affiliate is accusing Mercy Iowa City of being too verbose in its arguments, demanding case dismissal.

A committee representing the bankrupt Mercy Iowa City has filed a complaint against its former managing partner MercyOne – along with the president it appointed to lead the community hospital – in hopes of recovering at least $55 million for alleged “breach of contract, unjust enrichment, breach of fiduciary duty, and negligent misrepresentation.”

UIHC officials in April 2025 announced that the 3 Center inpatient unit — after being closed for many years — would “soon be refurbished and reopened.” The 26-bed unit, officials said, would be dedicated to family medicine — offering acute care for patients and learning opportunities for residents in the “community-based hospital setting.”

In both defense and attack mode as a lawsuit against it looms, MercyOne has asked a higher court to weigh in on the recent dismissal of its appeal of Mercy Iowa City’s bankruptcy liquidation plan while also denying the defunct hospital documents it wants for any lawsuit it files against MercyOne.

Although MercyOne for nearly two years has criticized a bankrupt Mercy Iowa City for not paying its outstanding $31,524 bill -- citing that debt repeatedly as grounds to fight Mercy’s liquidation plan and demand thousands of documents and emails -- MercyOne now is refusing the hospital’s payment.

In seeking its own batch of records from a bankrupt Mercy Iowa City — which last week won a court order for voluminous documents in its ongoing liquidation battle — the community hospital’s former managing affiliate MercyOne is airing new details about backroom discussions, discord, and deals that precipitated Mercy Iowa City’s downfall.

A federal judge this week ordered MercyOne to produce a long list of records associated with its six-year management of the bankrupt Mercy Iowa City after a committee overseeing the hospital’s liquidation accused the former managing partner of withholding documents and details about what led to Mercy Iowa City’s “swift financial decline.”

A U.S. District Court judge on Monday dismissed MercyOne’s appeal of a liquidation plan for the bankrupt Mercy Iowa City hospital it managed for years -- a plan MercyOne opposed, in part, because it left the Des Moines-based health care system exposed to potential lawsuits.

In the year since taking over Iowa City’s bankrupt Mercy Hospital and transitioning the 78-year-old facility into its new downtown campus, University of Iowa Health Care has not completed a comprehensive review of staff badge access, “increasing the risk of unauthorized entry,” according to an internal audit made public this week.

The Iowa Supreme Court has reversed a $97.4 million verdict against an OBGYN clinic in Coralville — undoing what was believed to be the largest medical malpractice judgment for a birth trauma in state history — and ordered a new trial.

When Iowa City’s 150-year-old Mercy Hospital cut ties with managing operator MercyOne and brought in New York-based ToneyKorf Partners as an interim successor in spring 2023 — more than four months before filing for bankruptcy — the community hospital had just 60 days “cash on hand.”

University of Iowa Health Care’s new $280 million deal to expand its cancer-care reach into Central and Western Iowa is about better serving patients in the midst of a statewide “cancer crisis” and is “not a play to have more and more patients come to us in Iowa City,” UIHC officials told the Board of Regents on Tuesday.

With the bankruptcy case of Iowa City’s only community hospital winding down – and tens of millions in liquidated assets already distributed to bondholders – attorneys, consultants, and other professionals still are fighting for their cut, with fee applications topping $13 million.

Adding to nearly $1 billion in construction University of Iowa Health Care is pursuing across its main Iowa City campus and new North Liberty site, system officials Wednesday aired preliminary plans to spend more than $25 million upgrading its new downtown campus to meet UIHC standards.

In arguing its appeal of a Mercy Iowa City liquidation plan that releases thousands of people and entities from potential lawsuits tied to the community hospital’s demise, its former manager MercyOne said a judge erred and overstepped in confirming the plan.