The local radiology group Virginia Medical Imaging earlier this month filed a lawsuit against Mary Washington Healthcare — its partner in the company Medical Imaging of Fredericksburg — alleging that the healthcare system engaged in “self-dealing and harmful conduct” against MIF, which provides outpatient diagnostic imaging services at eight locations across the region.
The suit, filed in Fredericksburg Circuit Court on June 3, accuses MWHC of breaching its contract with VMI, breaching its fiduciary duty to MIF, attempting to “poach” MIF’s radiologists, and acting “with the predatory purpose of crippling MIF’s independent operations.”
It asks the court to remove the healthcare system as a member of the company and to award VMI “no less than” $2.25 million in monetary damages that resulted from these actions.
It also contends that as a result of MWHC’s actions, mammography services — which MIF currently provides at the Imaging Center for Women in Fredericksburg and at Medical Imaging of King George — could be eliminated in a 50-mile radius of Fredericksburg.
“The main reason we filed this lawsuit was to protect the Imaging Center for Women,” Ian Gass, chief executive officer of the physician-owned radiology group Radiologic Associates of Fredericksburg, wrote in a June 17 email to the Free Press. VMI is closely associated with RAF and is owned by RAF partner physicians.
“Thousands of women in this region rely on ICW for breast cancer screening and, when something is found, for diagnostic imaging, biopsies, and other follow-up care,” Gass wrote. “The potential loss of that service was not something we could ignore.”
In a statement to the Free Press, MWHC’s vice president for marketing and corporate communications, Kendra Gerlach, alleged that the lawsuit is “financially motivated” and “has nothing to do with patient care.”
“Patient safety and quality of care remain our highest priorities,” Gerlach wrote. “Our patients and community should be reassured that Mary Washington Healthcare is committed to providing high-quality radiology services now and for the long term. This is a core part of delivering healthcare services and any allegations to the contrary are simply false.”
Declining relationship between radiology group, hospital
Mary Washington Healthcare is a controlling member of MIF, with a 51% membership interest in the company, compared to VMI’s 49%. The company was formed in 2000 and is governed by an operating agreement between the two parties and a manager’s committee with three representatives from MWHC and two from VMI.
The lawsuit comes one year after the expiration of a service agreement between RAF and the healthcare system, under which RAF provided inpatient interventional radiology services at Mary Washington and Stafford hospitals.
Interventional radiology services include procedures such as stenting, angioplasty, and embolization, and imaging procedures such as ultrasounds, mammograms, CT scans, and MRI scans.
RAF still provides interventional radiology services at hospitals in North Carolina, West Virginia, and Maryland, and at outpatient imaging centers, including the MIF’s eight locations in the Fredericksburg region.
The service agreement to provide imaging services at the hospital ended last year after the two parties were unable to agree on its terms. Specifically, RAF had requested that its radiologists be permitted to work remotely — a very common practice and one that helps with recruitment in a competitive job market, according to Gass.
The Litigants
Plaintiffs Virginia Medical Imaging and defendant Mary Washington Healthcare hold 49% and 51% membership interests, respectively, in Medical Imaging of Fredericksburg. VMI is associated with Radiology Associates with Fredericksburg, and its lawsuit against MWHC follows the non-renewal of a service agreement between MWHC and RAF last year.
MWHC instead wanted to institute a model in which radiologists would be employed directly by the healthcare system, and, amidst the negotiations with RAF, it sent employment offers to all RAF partner radiologists.
The nonrenewal of RAF’s service agreement isn’t part of the current lawsuit, but it is “the impetus for the retaliatory campaign of minority member oppression and insider dealing by Mary Washington that followed, almost immediately,” according to the suit.
Allegations of withholding distributions, increasing lease rates
The suit alleges that the three MWHC representatives on the MIF managers committee voted in December of 2024 — eight days after RAF notified MWHC that it would not renew the service agreement — to withhold the company’s fourth-quarter distributions, a departure from what had been the practice for 13 years.
It alleges that from December 2024 through February 2025, MWHC solicited RAF radiologists to work directly for the healthcare system instead of at MIF’s eight area locations. When that was not successful, the suit alleges, MWHC made a written offer to purchase the 49% minority share in MIF at a proposed price and terms that could be considered a serious offer.
Then, last summer, according to the suit, MWHC informed MIF that the leasing rate for the company’s location in Fredericksburg, the Imaging Center for Women — which is the exclusive location for biopsies and other women’s imaging services — would be increasing by more than 50%.
The building is owned by MediCorp Properties and two other entities, all of which are affiliates of the healthcare system, the lawsuit states.
“VMI has repeatedly asked for the legitimate business justification” for the rate increase, but “to this day, no legitimate business justification has been provided,” the lawsuit states.
“At present, absent meaningful and swift progress, [the Imaging Center for Women] will close” with the expiration of the service agreement in February 2027, and the result will be “the elimination of mammography services within a 50-mile radius of Fredericksburg.”
The sublease on another MIF location, Medical Imaging of King George, also expires early next year. MediCorp, the master tenant, will not extend the sublease, the lawsuit states, and the healthcare system “abruptly” last fall backed out on a relocation that had been planned since 2024.
“Mary Washington has refused to provide any further information on long-term lease options or the rationale for abruptly foreclosing” on the relocation, which has already been budgeted for, the lawsuit states. “The confluence of [these lease expirations] creates an additional risk for service loss for an already underserved community, particularly for pediatric and mammography patients.”
Negotiations continued through May
Gerlach told the Free Press on Thursday that she was not able to provide further information about whether or how the healthcare system will respond to the lawsuit, which asks for a trial by jury.
Typically, defendants in civil suits filed in circuit court have 21 days from the date they were served to respond to the filing. A copy of the suit obtained by the Free Press states that MWHC was served on June 5.
According to Gass, RAF is open to entering into a new agreement to provide inpatient radiology at the hospitals.
He said the group’s president, Dr. Roni Talukdar, reached out to MWHC President and CEO Dr. Christopher Newman this spring in hopes of restarting negotiations, and that the two met on April 27.
“Dr. Talukdar came away from the meeting encouraged,” Gass said. “Dr. Newman asked RAF to submit a proposal and directed us to the appropriate person to handle it.
“We submitted the proposal on May 4 with terms similar to those in our agreements with the other nine health systems we have partnered with in the past year, but we did not receive a response.”
Disclaimer: Mary Washington Healthcare is a major donor to the Free Press. Donors do not influence newsroom operations.
