A nasty legal fight has surfaced between two local health-care providers with both sides filing lawsuits against each other alleging everything from forgery to a smear campaign to spread lies that a doctor was a thief and an embezzler.

The suits, filed at Mercer County Courthouse, paint a stark and, at times harsh, picture of the other side as trying to ruin their respective businesses.

Both lawsuits stem from Primary Health Network’s Physician Services, a non-profit health-care provider, and Regional Anesthesia Associates PC, an anesthesia and pain treatment business, looking to join forces this spring. The suits agree that Dr. Terry E. Buckwalter Jr., was financially involved with Regional Anesthesia Associates PC and later Comprehensive Anesthesia and Pain Services PC.

After that the two sides tell far different stories.

In its suit, Physician Services is seeking more than $1.9 million from Buckwalter, an osteopathic physician, and his wife, Christine, who worked for her husband, both of New Wilmington. Physician Services is a specialty health-care provider owned by Sharon-based Primary Health Network which also is non-profit.

The suit alleges, among other things, that the couple were involved in fraud and a conspiracy to extort funds from Physician Services with separate allegations that Buckwalter breached his employment contract and that his wife at times only worked a few hours in a month rather than 40 hours a week as required by her contract.

Under an employment contract, Physician Services hired Buckwalter as an employee and not as an independent contractor, according to the non-profit’s suit. That contract, the suit adds, prohibited Buckwalter from providing any direct or indirect anesthesia or pain management services to certain hospitals within 30 miles. RAA was to employ doctors and certified registered nurse anesthetists.

In May, Buckwalter asked Physician Services to participate in a project to expand RAA, the suit said, beyond Mercer and Lawrence counties and to provide administrative services such as billing, accounting and enhanced employee benefits. Physician Services agreed to take on RAA’s payroll, certain debts and other obligations. RAA also agreed to assign its hospital and medical facility contracts to Physician Services.

Physician Services was to bill and receive payment from insurers for RAA’s services, the suit states. RAA, controlled by Buckwalter, was the sole source of funds for which Physician Services could meet payroll expenses for that staff, the suit said.

Buckwalter later created CAPS which Physician Services said he told them was to replace RAA, the suit said.

But Buckwalter breached his employment contract when, according to the suit, he failed to transfer insurance payments to Physician Services, failed to assign hospital contracts to Physician Services, created a competing business, falsified Physician Services contracts “through both misrepresentation and forgery’’, taking collected billing funds meant for Physician Services for his personal use and/or using those funds contrary to his contractual obligations and placing a stop-payment order on a check he issued which was being relied on for payroll.

Physician Services is seeking to get, among other things, insurance payments the non-profit said it is owed and for the salary paid to Buckwalter’s wife for work she didn’t perform.

Buckwalter, along with RAA and CAPS, is suing Primary Health, Physician Services, John D. “Jack’’ Laeng, Primary Health and Physician Services chief executive officer, Louis V. Colella, chief financial officer of the two non-profits and Dr. Ashraf Razzak, a Sharon doctor who also was a CAPS director, the suit said.

In his suit Buckwalter is seeking at least $1.1 million he said he lost in profits due to breach of contract, interfering with his contractual relations, and breach of employment contracts.

According to Buckwalter’s suit, Laeng, Colella and Razzak conducted what amounts to a smear campaign by falsely “telling area hospitals Dr. Buckwalter was a thief,’’ and falsely telling Buckwalter’s employees such things as he was responsible for certain cash shortfalls, owed money to Physician Services and “had either stolen money or had conducted himself in an illegal manner.’’

Buckwalter asserts he funded all the costs associated with the anesthesia group from June 13 through Oct. 13.

Laeng, Colella and Razzak agreed “among themselves to make false statements with respect to RAA and Dr. Buckwalter,’’ the suit said.

“As a result of defendants’ strong-arm tactics, as of Oct. 23, 2006, Sharon Regional Hospital terminated its contract with RAA and hired physicians and CRNA’s (certified registered nurse anesthetists) directly,’’ the suit states. “Jameson Hospital is likely to do the same.’’

By breaching their contract, Buckwalter’s suit said, the defendants caused RAA to lose its contracts with Sharon Regional, Jameson Hospital, Ohio Valley General Hospital and Valley Gastroenterology Associates. Further, that Laeng, Colella and Razzak told area hospitals CAPS would not be formed and therefore would not be able to provide services and that unless the hospitals terminated their contracts with RAA in favor of the defendants, anesthesiologists and other RAA employees would not report for work on Oct. 24.

Buckwalter said in his suit the defendants tried to interfere with the launch of CAPS, meant to succeed the contracts RAA had with Sharon Regional Health System and Jameson Hospital by doing such things as negotiating directly to take over RAA’s hospital service agreements and conspiring to form a new anesthesia practice in competition with CAPS.

The suit seeks money for profits RAA lost with area hospitals and breach of contract.

None of the hospitals mentioned in either suit were named as defendants.

In commenting on the suits Buckwalter’s Pittsburgh attorney, Bradley S. Tupi, said his client wasn’t blaming the hospitals for the dispute.

“The hospitals were put in a take it or leave it position,’’ Tupi said. “Our gripe is with the people at PHN (Physician Services) and Razzak.’’

He added the feud has taken a toll on Buckwalter.

“Obviously, he’s out of work without a job,’’ Tupi said. “He’s stranded by these events.’’

Stephen Mirizio, the Sharon attorney representing Physician Services, Primary Health, Laeng and Colella, said he didn’t see Buckwalter’s suit and that his clients declined to comment.

In responding to Buckwalter’s suit Razzak said the allegations leveled against him “were all lies” and were untrue.

“I didn’t know Jack Laeng or any of the guys at PHN until after everything happened,’’ Razzak said. “I resigned from RAA and CAPS three times: on Sept. 7, Sept., 15 and Sept. 20.’’

In responding to an inquiry by The Herald on the suits, Sharon Regional issued a news release that said, “It was unfortunate these lawsuits developed, however, we commend the anesthesiologists and nurse anesthetists who remained committed to Sharon Regional so we did not experience any interruption of surgical services. We are extremely grateful for their dedication to our patients and the community.”

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