Twelve doctors filed suit Monday against Surgery Centers of America II, three of its employees and Texas Tech Physicians Association Inc., claiming they lost $650,000 through fraudulent sale of stock.
Attorney Floyd Holder said the case is one of standard securities fraud. He said his clients want to trade their stock back in for $650,000 plus interest and attorneys fees.
"I'd like to believe it is pretty cut and dry, but you might get a different view from lawyers on the other side," Holder said.
He said the doctors were sold stock at $50,000 a share for the Southwest Lubbock Surgery Center, which closed in December after only 18 months in operation.
The defendants are former Surgery Centers of America II employees Joe Huffmyer, Rick Mason and Chantell Preston.
John Duck, chief financial officer for SCOA II, said Monday that he was not aware of the lawsuit filed in 99th District Court. He said company officials preferred to withhold comment until they "find out the nature of the lawsuit."
The surgery center was located at 4434 S. Loop 289 on Texas Tech property. SCOA owns 60 percent of the building and 40 percent is owned by Texas Tech Physicians Associates.
An official with the Texas Tech Health Sciences Center said last week that Tech wants to purchase the building for $2.1 million.
Interim HSC president Elmo Cavin said last week that he believed SCOA II was unable to secure certification from Blue Cross and Blue Shield of Texas for insurance reimbursements.
Cavin said the center was a private venture where SCOA held the management contract, and the physician's associates acted as a private, non-profit corporation.
Prominent HSC officials were listed as officers in TTPA when it was formed in 1995, according to the lawsuit, which cited Texas Secretary of State records. Cavin was listed as secretary/treasurer and Tech Chancellor David Smith, who was HSC president at the time, is listed as president. Dale M. Dunn is listed as chairman/director.
Smith and former Chancellor John Montford signed the document for TTPA in 1998 when the regulations for the center where approved.
The lawsuit claims that false predictions were made by SCOA and other falsities were made to shareholders and potential shareholders. High-tech equipment purchased for the center was "outdated and unusable," was overpriced and was purchased from Huffmyer's son, the lawsuit alleges.
Decoration was "extravagant, inappropriate and contracted with a decorator that was in partnership with Huffmyer's wife," the suit claims.
Some equipment was stolen and could not be serviced, the suit alleges.
"Although the business was a total failure, SCOA II has reaped a huge profit," the lawsuit alleges.
The plaintiffs include Hana Canizaro, Miles R. Ray, Sammy A. Deeb, Werner De Riese, Stephen Gates, John Griswold, Alan D. Kaye, Leland Lou, Bernard T. Mittemeyer, Brian J. Norkiewicz, Gabor B. Racz and P. Prithvi Raj. All of the doctors reside in Lubbock except for Raj, who resides in Antioch, Calif.
Surgery Centers of America, which operates facilities in other Texas cities including Beaumont and McAllen, is based on Edmond, Okla.
Holder said his clients want to rescind the deal because the company was never registered with the State Securities Board and they have no exemption to cover the sale.
"If there is a sale of stock by means of omission or untruths, we can get our money back," Holder said. "We are saying they did that, too."
skitchen@lubbockonline.com 766-8753
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