A federal judge in Florida has dismissed a breach of contract lawsuit against Nashville-based Essent Healthcare and referred the plaintiff’s attorney for discipline and possible disbarment.

Late last month, U.S. District Court Judge Patricia Seitz ordered default judgment in favor of the hospital company in a suit filed by revenue cycle management firm Managed Care Solutions. Florida-based MCS was seeking several million dollars in damages from Essent for allegedly violating the exclusivity clause and other aspects of its three-year contract to provide denial management services to Essent’s hospitals.

Essent had terminated the 2006 deal, under which MCS tried to collect on claims denied by insurance companies, after about a year. MCS filed its complaint against Essent in March of 2009.

Essent refuted MCS’ allegations and in August was awarded partial summary judgment in the back-and-forth case that unfolded. By the end of September, attorneys for MCS had made several “willful failures to comply with its obligations” in the case, leading to the default judgment on Sept. 22.

For example, court records say MCS filed a motion for reconsideration after the court told the company it would not entertain such a motion and that it failed to file the exhibit and witness lists requested by the court. MCS also revealed for the first time in September that it suffered damages of nearly $1.8 million, “despite representing in pre-trial conference that its pre-termination costs were $500,000,” according to court documents.

Based on the conduct of MCS attorney Robert Ingham during the case and information presented during a sealed portion of a court conference, Seitz referred Ingham to the Florida Bar for “psychological and competency evaluation” and to the Southern District of Florida and the Peer Review Committee “for purposes of determining whether Mr. Ingham should be removed from the practice of law in the Southern District of Florida.” Her Sept. 22 order is available at this link.

Essent now is seeking $1.4 million in attorney’s fees, costs and expenses as sanctions against the company and its attorneys based on “vexatious, improper and bad faith conduct.”

Essent CEO Mike Browder e-mailed NashvillePost.com the following statement about the case:

"Our company was victimized by people who were trying to misuse the legal system. We did everything we could in protecting the interests of our patients, employees and investors, while MCS made baseless claim after baseless claim against us. Fortunately, through our own internal hard work and excellent legal representation, we were eventually able to show the court the abuses we had been subjected to and the court system responded appropriately.

"We won on the merits of the case, as we should have. We now hope that the Company can recover from MCS and its lawyers the costs Essent had to incur defending itself from this entirely frivolous lawsuit."

The case’s outcome doesn’t bode well for MCS in a similar suit its filed in February against Franklin-based Community Health Systems. Ingham was representing MCS in that breach of contract case involving a 2003 deal for MCS’ denial management services. He withdrew from the case on Sept. 27, citing “irreconcilable differences” between himself and MCS.

Waller Lansden attorney Woody Woodruff represented Essent in the case.