The Firm . University General Hospital sued for alleged fraud


University General Hospital sued for alleged fraud

A lawsuit seeking $100 million has been brought against University General Hospital, alleging it defrauded its partners in an Alvin hospital project.

ACHDC LLC and Palicio Gate LP brought the lawsuit against University General Hospital LP, University Hospital Systems LLP, UGHS Alvin Hospital Inc. and Skymark Development Co. The suit was filed in the 23rd State District Court of Wharton County.

According to a statement from Houston-based Buzbee Law Firm, which is representing the plaintiffs, the suit claims University General agreed in 2011 to build a hospital in Alvin with the plaintiffs. This deal helped the hospital raise “millions of dollars during its public offering,” the suit claims.

The suit alleges the hospital then secretly began negotiations with Skymark to build a different hospital in Alvin and terminated its agreement with the plaintiffs in May.

“We allege University General unlawfully took our clients’ proprietary strategies, contacts, market research, and hospital forecasts and negotiated a secret deal with Skymark for a hospital literally across the street from our clients’ project in Alvin,” said attorney Tony Buzbee. Buzbee also represented plaintiffs with some 12,000 claims related to the BP Gulf of Mexico oil spill in an unrelated matter.

The allegations against University General include fraud, civil conspiracy, breach of contract, tortious interference with prospective business relations and tortious interference with existing contract. The suit is seeking $100 million in damages, attorneys’ fees, interest and court costs.

The court issued a temporary restraining order against the defendants on June 21.

University General President Donald Sapaugh told the Houston Business Journal that the hospital had already filed a declaratory judgment on June 15.

University General has a nonbinding letter of intent, of which the hospital believes it has honored every aspect, Sapaugh said. The hospital believes it operated in good faith and believes the foundation of the plaintiffs' cause is "completely without merit."

Sapaugh in May said the hospital system is looking to add five hospitals within the next two years.


Olivia Pulsinelli
Houston Business Journal
June 22, 2012