In the course of terminating a fifty-year academic affiliation, a prominent hospital system and a medical college were caught in a dispute over the ownership of certain faculty practice, endowment, and research funds held by the parties that totaled more than $150 million. HMP was retained by the medical college to research the source and uses of those funds and opine as to the ownership of each individual fund.
Issues
- Because of the length of the relationship, many of the funds had little formal documentation governing the ownership of the funds or the distribution of the funds in the event that the relationship was terminated
- Because a number of the funds had evolved over many years as both parties expanded their respective operations, the source and use of cash flowing through the funds over the years had become difficult to analyze
Approach
- HMP utilized its accounting knowledge and expertise in the inner workings of hospital finance to determine the flow of funds and ultimately the ownership of those funds
- Our approach was to “follow the money” to its source and determine what actions generated the funds, what the intent of the payor or donor was, and how the funds were historically accounted for by both parties
- HMP prepared an expert report and one of its Managing Directors testified for two days and attended all fifteen days of the arbitration proceeding, where he assisted counsel
Results
- The matter was settled for an undisclosed amount