Tuesday PM June 19th, 2007

Town & Country Hospital investors sue Memorial Hermann for allegedly engineering demise...Eagle Global Logistics pays to settle overcharging allegations in Iraq...Construction of new homes nationwide drops...

Founding doctors of the now-defunct Town & Country Hospital are suing Memorial Hermann for allegedly illegally engineering the hospital's demise. They accuse the senior leadership of Memorial Hermann Healthcare System of pressuring health insurance companies to exclude Town & Country from their health care networks. The lawsuit was filed by six physicians who were among the investors in the Stealth Partnership, which invested $8.2 million into the venture. An attorney for Town & Country says the investors who filed this lawsuit do not represent the entire partnership. The lawsuit mentions United Healthcare, Aetna and Blue Cross Blue Shield of Texas, although none is a defendant.

Houston-based Eagle Global Logistics has paid $300,000 to settle allegations that it's Kuwait agent overcharged the military for rental charges on shipping containers to Iraq from January to June 2006, according to the U.S. Justice Department. The containers were for shipments of military cargo to Iraq under an EGL subcontract with KBR, the prime contractor for the U.S. Army's logistical support for overseas military operations. Whistleblowers David Vavra and Jerry Hyatt will receive $36,000 as their part of the settlement under the whistleblower provisions of the False Claims Act. In August of last year, EGL paid $4 million to settle potential civil claims under the False Claims Act, based on alleged inflation of invoices for military cargo shipments to Iraq under the same subcontract with KBR.

The government says construction of new homes dropped in May, amid indications the housing market slump continues. Homebuilders have been dealt an unexpected blow by tighter lending standards resulting from the subprime lending meltdown. The Commerce Department reports construction of new homes and apartments dropped 2.1 percent last month. The level of May starts was 24 percent below a year earlier. At the same time, building permits, a gauge of future activity, rose three percent.

Dozens of auto dealers and executives have been courting undecided Senators on Capitol Hill today. They want the Senators to oppose an energy plan that would raise fuel efficiency standards to a degree they say would hurt their businesses. The auto industry is trying to win support for an alternative that would seek more moderate increases than what the current bill would require. Under the current plan, the fleetwide average would have to meet 35 miles per gallon for cars and trucks by 2020, an increase of about ten miles per gallon from current levels. Backers of the plan contend the auto industry is simply rehashing old arguments against increased gas mileage requirements. The Senate is expected to take a key vote on fuel efficiency standards Wednesday.

British snacks giant Cadbury Schweppes said it plans to close 15 percent of its confectionary factories by 2011 and cut about 7,500 jobs. It also says it'll likely sell its Plano-based U.S. beverage unit that makes Seven-Up, Dr Pepper and Snapple. It says it wants to focus on its candy and gum businesses. The company had announced in March that it planned to separate its drinks and candy businesses. That was under pressure from investors led by U.S. billionaire Nelson Peltz. But it hadn't indicated whether it would sell the beverage business or spin it off to shareholders. While the company said Tuesday that it was still pursuing "a twin track process,'' it appeared that the business would be sold. Cadbury employs about 50,000 people in its confectionery business. It has 35 confectionery sites across Europe, the Middle East and Asia, and 59 other bottling and manufacturing sites worldwide.

Southwest Airlines is planning to add international service at its east coast hub in Baltimore. That's the word Southwest Chief Executive Gary Kelly is giving to businesses serving Baltimore-Washington International Airport. He says Dallas-based Southwest will expand its current partnership with ATA Airlines to offer service to Mexico, Canada and the Caribbean by 2009. And he says additional marketing partnerships should allow Southwest to sell tickets to Europe by the following year. Kelly says BWI is one of the best airports in the Southwest system and says it would be a good launching point for international service.

Tags: News


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