decorahnews.com exclusive: Winneshiek Medical Center and Mayo Clinic Health System argued about $2 million, not $412,000

(Editor's note: decorahnews.com started its series of news stories about Winneshiek Medical Center with a story about an argument between Mayo Clinic Health Systems and Winneshiek Medical Center over the hospital's payments to Mayo from its Management Services Agreement.  At that time, we stated the argument involved one year of payments totaling $412,000.  Now numerous sources have told us the argument involved FIVE years of payments, not one.  We are re-posting our original news story, with updated information):

The Winneshiek Medical Center Board of Trustees has signed two contracts with Mayo Health Systems that cover the terms of Mayo's involvement with the hospital.  The Physician Services Agreement covers the payments Winneshiek Medical Center makes to Mayo for services provided by Mayo doctors.  The Management Services Agreement covers the payments Winneshiek Medical Center makes to Mayo for the salaries of the hospital's top four administrators, who are employees of Mayo Health Systems.

(The hospital board met in March) in closed session for what the meeting notice says is "Strategic Planning."  Decorahnews.com has learned that the purpose of the meeting will be to discuss ten-year renewals of the two contracts with Mayo.

The proposal to renew the two contracts is being discussed even though decorahnews.com has learned the hospital board and Mayo Health Systems were locked into a dispute last summer over the payments the hospital makes to Mayo.

An audit done by one of the top 25 accounting firms in the country—Eide Bailley—discovered that Winneshiek Medical Center had overpaid Mayo Health Systems in 2009 to the tune of $412,000.  The results from the Dubuque office's audit were presented to Mayo Health Systems officials.

(While the audit involved just payments made in 2009, decorahnews.com has learned from several sources that the issue dated back to 2005--and involved roughly $2 million)  Sources tell decorahnews.com that the initial response from Mayo Health Systems was that it did not think it owed the hospital the money.  Sources also tell decorahnews.com that the Winneshiek Medical Center Board of Trustees discussed the matter in closed session—and several board members were willing to write off the ($2 million) amount.

Decorahnews.com has learned that the biggest opponent of writing off the amount was not a Board of Trustees member, but the longtime attorney for the hospital—Doug Gross.  Gross was hired by the hospital in the late 1980s after graduating summa cum laude from Iowa Wesleyan in 1977 and from Drake University Law School with honors in 1985.  Gross also ran for Iowa Governor in 2002.

Sources tell decorahnews.com that Gross strongly urged the board to continue pressing Mayo Health Systems for the money.  As a result, the WMC Board of Trustees accepted a $206,000 settlement offer from Mayo Health Systems at a board meeting August 3rd, following a closed door session to discuss the offer.  (The payments from 2005 through 2008 were not a part of the agreement--meaning the board accepted a $206,000 settlement of the disputed $2 million amount).

It was a bittersweet victory for Gross, decorahnews.com has learned.  Sources tell decorahnews.com that Mayo Health Systems officials were upset with Gross.  At the same meeting the Winneshiek Medical Center Board of Trustees voted to accept the $206,000 settlement from Mayo Health Systems, the board also voted to terminate the hospital's contract for legal services from Brown Winick Law Firm—the firm Gross works for.  (A source tells decorahnews.com that even though Gross had represented the hospital since the late 1980s, he was informed of the decision when he opened a letter in the mail.)