Home Health Business Quarterly: Genesis and Manor Care settle contract dispute
Home Health Business Quarterly: Genesis and Manor Care settle contract dispute
In February, an arbitrator with the American Arbitration Association awarded Genesis Health Ventures Inc. $23.4 million in compensatory damages to resolve a contract dispute with Manor Care Inc. Arbitrator Charles B. Renfrew found that Manor did not lawfully terminate its service contracts with Genesis’ long-term care pharmacy subsidiary NeighborCare Pharmacy Services Inc.
In 1998, NeighborCare acquired Vitalink Pharmacy Services Inc. and long-term service contracts between Vitalink and Manor Care, which gave Vitalink the right to provide pharmacy services to all facilities owned or licensed by Manor Care and its affiliates. Manor Care tried to terminate the contracts as of June 1999, citing changes resulting from the Medicare prospective payment system and NeighborCare’s alleged breach of pricing provisions in the contracts.
The parties agreed to binding arbitration, and Renfrew ruled that the contracts between NeighborCare and Manor Care will remain in force until they expire in October 2004 and reversed a prior ruling that allowed Manor Care to withhold 10% of the payments owed to NeighborCare.
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