Ardent GC Deals with Regulations, Litigation

Mary Welch

Daily Report

12-17-2012

Steve Petrovich has served as general counsel, senior vice president and secretary of Ardent Health Services since its formation in 2001, and was general counsel to Ardent's predecessor company, Behavioral Healthcare Corp. Based in Nashville, Ardent's subsidiaries own and operate health care facilities in the United States, and its network includes 10 acute care hospitals, a rehabilitation hospital, a multi­specialty physician group, a 250,000-member health plan and retail pharmacies.

Prior to joining the company, Petrovich clerked for U.S. District Judge Harold L. Murphy of the Northern District of Georgia. He then worked in private practice, concentrating on litigation, employment and health care regulatory work before becoming litigation counsel for Charter Behavioral Health Systems.

Petrovich graduated from the University of Georgia School of Law, where he was editor of the Georgia Law Review, and he received his undergraduate degree from DePauw University.

He is married to Emilie Koers Petrovich, who also graduated from the University of Georgia School of Law in 1990, and they have three children. He is a big supporter of the Williamson County, Tenn., soccer community where he has been a team manager and pro bono legal counsel. He and his family support several community groups that help families dealing with cancer.

Daily Report: Describe your department and your role in it.

Steve Petrovich: The legal, compliance and risk management departments report directly to me, although compliance also reports to the company's board of directors. The legal department has three in-house counsel and two paralegals. Our lawyers are located in Nashville (myself) and two in Albuquerque, N.M., who focus on our health plan operations.

I am responsible for all legal services for all aspects of our company's operations in all three states we operate in. I handle matters [such as] corporate governance, health care regulatory advice, employment issues and transactional matters.

DR: What is the biggest legal challenge facing today's health care industry?

SP: With the presidential election settled, our biggest challenge will be implementing and adjusting to the changes being instituted by the Patient Protection and Affordable Care Act.

DR: You clerked for U.S. District Judge Harold Murphy. What did you learn?

SP: First, that was the best job I have had and will probably ever have. He was and remains the consummate judge in all aspects of what people ask for and expect in a judge in the traditional and honored sense of that post.

What I learned is that being a lawyer is an honored profession and that it should be treated as such. A lawyer is a counselor and adviser and the advice and counsel given should not be colored or changed to fit the desired outcome.

DR: What type of litigation do you face and how do you handle it?

SP: WIth a small in-house shop, we outsource all litigation to lawyers who can and will go to trial. We have the typical caseload of malpractice cases, employment litigation and various commercial cases. We try to resolve our cases early through mediation and early evaluation, if possible. It we cannot resolve early, then we will try cases. I don't like to spend legal fees and also settlement fees. It does not make good business sense.

DR: Do you mediate?

SP: Yes. Early mediation gives the businesspeople a good sense of the strengths and weakness of a particular matter and helps us perform a risk assessment of the value of the case. We also use arbitration, although in my experience that is becoming less of a useful alternative as it slows down the process and is more costly. Plus, it seems that finding good arbitrators is becoming more difficult.

DR: Do you use outside counsel?

SP: Yes, we predominantly use outside counsel for most matters. We have used a "buy it" model and not a "build it" model for our legal function, but that may be changing in the next year.

We use Bass Berry & Sims in Nashville as our primary outside counsel as they basically serve as a valued extension of our in-house department in most matters and for due diligence on transactions; Patrick Clark at Ogletree Deakins in Atlanta for employment; Louis Glaser in Chicago for physician transactions; Stephen Braun at Bradley Arrant in Nashville for hospital transactions; Sidley Austin in Chicago for financing; Donna Bergeson and Robert Stone from Alston & Bird in Atlanta on academic medical center issues; Jennifer Vaughan from Parker Hudson for managed care items. We also have strong ties to local counsel in our markets to handle the state-specific items.

DR: What is your policy on outside counsel conflicts?

SP: I use a pretty simple rule that I learned when I worked in the mail room at Alston & Bird when I was in college: A firm represents Coke or Pepsi, not both. I don't waive conflicts very often as I don't think that is the correct route.

I have yet to find a businessperson who will understand why a firm represents us in one matter and then is opposed to us in another matter—whether directly or indirectly—regardless of the magnitude of the matter, placement of "Chinese walls" or any other device to keep matters separate. A firm is my firm or it is not.

DR: How do you handle discovery? Are you considering changing it?

SP: I believe we have installed a pretty good system for archiving and tracking electronic documents. But we do not have a specific vendor for a large electronic discovery matter, and I hope to avoid having to incur that expense any time soon.

DR: A recent survey of corporate counsels said that the increasing number of regulations and their growing complexity is their biggest problem. Would you agree?

SP: Yes, I wholeheartedly agree, especially in health care. As the Affordable Care Act is implemented, there will be changes in almost all aspects of the care continuum involving managed care, hospital operations and provider relationships. Each aspect of the care continuum will try to protect its operations and change the way it delivers quality care and service to people who are less sure about what the changes will mean to them.

Staying in compliance with the newest round of regulations and changes will be challenging.