Legal dispute among Iowa pathologists escalates with new lawsuit

This is the Urbandale office building from which four Iowa pathologists initially launched Goldfinch Laboratories. (Photo via Google Earth)

A third lawsuit has been filed involving a group of central Iowa pathologists who are competing for market share.

The new lawsuit marks the latest legal conflict in a series of legal claims and counterclaims that include allegations of unfair competition, harassment, retaliation and discrimination. The new lawsuit alleges that efforts by one group of central Iowa physicians has illegally suppressed competition for pathology services in Iowa and included practices that are harmful to patients.

As part of the most recent lawsuit, the four pathologists behind Goldfinch Laboratory of Urbandale – physicians Tiffani Milless, Caitlin Halverson, Renee Ellerbroek and Jared Abbott — are suing their previous employers, Iowa Pathology Associates of Des Moines and Regional Laboratory Consultants, alleging the two companies have tried to suppress competition for pathology services in violation of state and federal law.

Goldfinch is a new company having been incorporated in Iowa in January 2023. Like the other companies involved in the litigation, it provides dermatopathology and other pathology services for patients in central Iowa whose physicians refer specimens to Goldfinch for diagnoses.

The lawsuit alleges that since 2021, IPA and RLC pressured its pathologists to sign employment agreements that include a no-compete clause. At the time, the four IPA-employed pathologists who would later defect and form Goldfinch, refused to sign the agreement.

Despite that refusal, the lawsuit claims, IPA and RLC repeatedly “badgered the four pathologists to try to get them to say that the agreement had taken effect even though they hadn’t signed the agreement.” Then, the administrator of IPA and RLC allegedly told the four that the agreement was in effect even though they had not signed it.

The lawsuit claims the agreement was not intended to prohibit the use of confidential corporate information and was instead aimed at preventing the formation of a practice that would compete with IPA and RLC for referrals.

The lawsuit also alleges “the on-going campaign” by IPA and RLC to have its pathologists sign no-compete agreements was “only the beginning of their efforts to suppress competition in the market for pathology services” once Goldfinch was launched in January 2023.

At least one partner of IPA, or that partner’s spouse, has posted negative Google reviews falsely stating that Goldfinch pathologists are immoral and poorly trained, the lawsuit claims.

Goldfinch also alleges IPA “refused to share biopsy slides with Goldfinch pathologists,” even when those slides were required to ensure the continuity of care offered to patients and even when the refusal “could well have caused harm to patients.”

IPA and RLC are also accused of making several false and deceptive statements designed to dissuade referral sources from doing business with Goldfinch, and have tried to “drive Goldfinch out of business or, at a minimum, to cripple its ability to compete.”

On Dec. 31, 2022, IPA and RLC allegedly employed nearly 100% of the pathologists in central Iowa who were not associated with a single private-practice group that served only the physicians within that group. “As a result,” the lawsuit alleges, “these two corporations were able to charge supra-competitive prices for their services.”

As an example, the lawsuit states that IPA and RLC charge rural hospitals in Iowa “at least 400% of the actual Medicare fee schedule amount for the technical component of pathology services.” Goldfinch estimates that it has incurred a loss of more than $3.3 million as result of IPA’s and RLC’s practices.

The lawsuit notes that in January 2023 the Federal Trade Commission proposed a rule that would ban non-compete clauses. A final rule declaring most contractual covenants restricting competition to be anticompetitive and unlawful was issued in April 2024.

In addition to seeking damages for its losses, Goldfinch is seeking an injunction enjoining IPA and RLC from engaging in the “wrongful and unlawful acts” alleged as part of the lawsuit.

Two other cases pending in state court

The federal lawsuit follows a state-court lawsuit filed by IPA and RLC against the four Goldfinch partners in late 2022 that is still being litigated. That lawsuits seeks to block Goldfinch from soliciting IPA clients or using IPA information, and alleges the Goldfinch pathologists were “flagrantly, rampantly and disloyally working against” IPA’s interests even before they left IPA.

A trial in that case is scheduled for September, but there are pending motions for deadline extensions currently before the court.

Separately, two of the Goldfinch pathologists — Tiffani Milless and Caitlin Halverson – have filed a discrimination lawsuit against IPA and RLC, alleging they were paid $200,000 to $350,000 annually, which was far less than what some of the less qualified male doctors were paid.

“Dr. Milless and Dr. Halverson were never given any reason for the enormous difference in pay between them and the men,” the lawsuit states.

The lawsuit also alleges various forms of harassment, including IPA’s alleged distribution of corporate-branded T-shirts in honor of Laboratory Week. One year, the slogan on the back of the shirt pertained to Formalin, which is a preservative commonly used in labs, and read, “Formalin Causes Shrinkage, Too” — a “Seinfeld”-inspired reference to male genitalia.

Halverson was allegedly criticized for not wearing the shirt and was accused of not being a team player.

A trial in that case is scheduled for August 2025.

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