WHEELING – District Judge Frederick P. Stamp Jr. has refused to disqualify an attorney who allegedly paid witnesses for testimonies in connection with a $1.5 million arbitration award that Weirton Medical Center in challenging.
Stamp also confirmed the award and dismissed the suit.
In his order, Stamp denied requests by Weirton to disqualify Ellis R. Lesemann.
“WMC seeks to disqualify Lesemann as counsel for QIR because it seeks to depose him regarding the witness compensation agreements. Because this court denies WMC’s motion for limited discovery, WMC’s motion to disqualify Lesemann must also be denied,” Stamp wrote in his order.
The court finds that there are no grounds to vacate the arbitration award and “that must be confirmed,” the order states.
Weirton filed the suit on Oct. 13, claiming that the award of $1,486,903.11 did not meet the mandatory requirements as the document was devoid of the arbitrator’s own reasoning and analysis and was nothing more than QHR Intensive Resources’ 49-page proposal for findings of fact and conclusions of law with the arbirtrator’s signature affixed.
Weirton claimed the award should be vacated.
In 2009, the hospital was in financial distress and, after concluding that internal changes would not restore the hospital to profitability, hospital management looked externally to solve the financial crisis.
It eventually entered into a turnaround agreement with QIR in which the company agreed to provide administrative services to the hospital.
After continued unimpressive financial performance, Weirton terminated the agreement and refused to pay its invoices, prompting QIR in January 2012 to bring the dispute to arbitration.
In August 2015, an arbitrator entered an award in QIR’s favor. Weirton then filed its suit.
The hospital called for Lesemann’s disqualification in November, arguing that he will be required to testify regarding compensation and reimbursement of expenses incurred by witnesses during arbitration.
Weirton alleged that the witnesses were paid tens of thousands of dollars by either Lesemann or QIR in what basically amounted to bribes in exchange for "biased" and "false" testimony, which led the arbitrator to draw an improper conclusion.
In December, QIR argued that the payments were “reasonable compensation” for the three witnesses’ time and expenses and that Weirton’s motion failed to pass the required three-part Smithson test.
Stamp denied Weirton's motion in an opinion ruling on a number of orders, including opposing motions to vacate and confirm the arbitration award.
Weirton had challenged the arbitration award on several grounds, but Stamp granted QIR’s motion to confirm the arbitration award.
Weirton was represented by Patrick S. Casey and Sandra M. Chapman of Casey & Chapman PLLC.
QIR is represented by Ellis R. Lesemann of Lesemann & Associates and Athanasios Basdekis of Bailey & Glasser LLP.
U.S. District Court for the Northern District of West Virginia case number: 5:15-cv-00131