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Oxford suit against Phoenix Home Care founder dismissed

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A lawsuit against a former administrator of Oxford HealthCare and Integrity Home Care, Philip Melugin, was dismissed Aug. 3 by Greene County Circuit Court Judge Jason Brown.

Melugin, who founded Phoenix Home Care Inc. on May 31, was the former co-owner of Integrity Home Care, and worked for Oxford between 1991 and 1998 before he left as assistant vice president.

Springfield attorney Rick Temple, who represented Oxford, sought to reopen a noncompete suit filed against Melugin more than 10 years ago after he founded Integra Health Care in Kansas City.

Oxford alleged Melugin had violated his noncompete clause by helping form Integrity in Springfield before those companies merged in 2003.

Oxford and Melugin settled out of court in 2001 for an undisclosed amount.

The noncompete suit received a second look by the court following a lawsuit Melugin filed Dec. 23 against Integrity in response to his termination as president of the home health care provider. In that case, which was settled out of court in mid-February for an undisclosed amount, Melugin alleged his partners at Integrity – Greg Horton and Paul Reinert – attempted to force a buyback of his shares at an undervalued rate.

According to the Integrity shareholders’ agreement, Melugin’s buyout would have been larger had he not been terminated.

In the lawsuit that followed the split, Melugin made statements about founding Integrity “from its infancy,” according to the court record.

Temple declined to comment on the recently dismissed case, but he released the following statement on behalf of Oxford:

“The underlying issue raised by Oxford’s recent suit is whether Melugin should be required to answer for his irreconcilable statements in two prior suits before the court. 

“On the one hand, Melugin avoided monetary liability for breach of his noncompete with Oxford by claiming to the court in 2000 that he had nothing to do with the formation of Integrity. 

“Then, 10 years later, after being removed from management by the majority owners of Integrity for alleged inappropriate actions, Melugin filed suit in the same court claiming that Integrity was his company, which he formed and nurtured from infancy, so as to receive millions of dollars for his stock in Integrity.

“The court’s dismissal of Oxford’s case allows Melugin to escape answering for his irreconcilable statements. Oxford respectfully disagrees and is considering its options.”

According to Melugin’s attorney, John Kizer with Fredrick, Rogers & Vaughn PC, Oxford could appeal Judge Brown’s decision, but he is hopeful that the issue has been laid to rest.

“We thought that the case was settled 10 or 11 years ago,” he said.

At issue in the dismissed lawsuit was whether Melugin’s statements in the 2011 Integrity case rose to the level of extrinsic fraud. According to the decision, Melugin’s statements were, at most, intrinsic fraud, a separate type of fraud that the judge ruled did not meet the criteria to reopen the case.

According to Law.com, extrinsic fraud is defined as “fraudulent acts which keep a person from obtaining information about his or her rights to enforce a contract or getting evidence to defend against a lawsuit.”

Intrinsic fraud, on the other hand, is defined as “an intentionally false representation which is part of the fraud and can be considered in determining general and punitive damages.”
Kizer said what Oxford was alleging would be classified as intrinsic fraud.

“We vigorously disputed that there was any fraud or any false statements made by Mr. Melugin at any time,” Kizer said. “But what they put in their petition amounted to claims of intrinsic fraud, which have to be brought within one year of the date of the judgment.

“Our position was that they were way out of time to be bringing claims of intrinsic fraud,” Kizer added.

Melugin said he felt the court did the right thing by dropping the case, and he’s glad to be moving forward with his life and new business.

“It just feels great to have the weight of that off,” he said.

“I was pleased to see that our legal system, in this instance, worked well and that a lawsuit that should have been dismissed was,” he added.

When asked if he was bothered in anyway because the judge did not clear him of making false statements in his decision, Melugin said, “the judge clearly stated that the pleadings on Oxford’s side failed to plead a cause of action, and I think that speaks for itself.”

He said had the case gone on, he would have explained how he formed Integra before merging it with Integrity after the term of the noncompete clause expired, but “that element of the case never had to be tried.”

When Melugin started Phoenix earlier this year, he said he hired roughly 60 former employees of Integrity. Integrity filed suit against five of those former workers May 20 for downloading proprietary information, among other charges, and the company seeks damages in excess of $25,000 per defendant. That case is still pending and no hearings were shown to be scheduled as of Aug. 10, according to www.courts.mo.gov.[[In-content Ad]]

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