Five former Grand River Medical Group physicians are suing the local health care provider to temporarily halt its sale to UnityPoint Health.

Andrew Bland, Ryan Elsey, Krishnarao Gorrepati, Sarah Jacobitz-Kizzier and Michelle Shafer, all shareholders in the company, seek an injunction on the sale until or unless the company respects their buyout rights. All five physicians resigned from employment with Grand River Medical Group within the past 12 months.

According to the lawsuit filed last week in Iowa District Court of Dubuque County, the plaintiffs purchased shares in Grand River Medical Group and equity stakes in its associated business partnerships during the course of their employment.

In late 2023, however, the company “began experiencing significant financial difficulties,” the lawsuit states. That led to the layoff of 52 employees on Feb. 1, 2024, and to a “decrease in the compensation paid to all shareholders.” While the plaintiffs later resigned from Grand River Medical Group, they still hold ownership interests in the company, the lawsuit states.

The lawsuit alleges that Grand River Medical Group’s board of directors focused on maximizing value for employed shareholders in pursuing a corporate transaction but did not consider the best interest of shareholders no longer working there.

Court documents state that in late February, the plaintiffs were excluded from a portion of the discussions about the then-potential purchase of Grand River Medical Group by UnityPoint Health. The plaintiffs allege they were advised that their appraisal rights would not be honored if asserted.

In a Feb. 27 meeting, Grand River Medical Group shareholders voted, 23-9, in favor of the sale to UnityPoint, with the five plaintiffs among those voting against it, the lawsuit states.

The planned purchase was announced publicly the following morning. As part of the transaction, Grand River Medical Group physicians, advanced practice providers and team members will become part of UnityPoint Clinic, UnityPoint Health’s multi-specialty medical group. A total of 50 providers and 280 care team members from Grand River Medical Group will make the move, and all office and clinic locations will remain operational.

The transition of staff is expected to take about four to six months, according to the press release announcing the transaction.

In their petition seeking a temporary injunction to halt the sale, the plaintiffs accuse GRMG of “manipulating corporate governance processes to suppress non-employee shareholder opposition to the sale” and refusing to honor their appraisal rights under state code, which would provide for the payment of fair value of their shares.

“GRMG and its associated business partnerships, through its employed shareholders/owners, have engaged in a course of conduct intended to sell GRMG and its associated business partnerships without proper adherence to the rights of non-employee shareholders like the plaintiffs,” the document states.

With the purchase of GRMG likely to close within 30 days, per court documents, the plaintiffs are asking the court to enter an injunction prohibiting the sale of Grand River unless and until it fulfills its fiduciary duties and statutory obligations to all shareholders, and requiring a “fair and lawful” appraisal process.

A hearing on the application for a temporary injunction has been set for 3:30 p.m. March 27.

Representatives of GRMG did not provide comment by deadline Wednesday. The plaintiffs’ legal representatives declined to comment.

In a statement provided by UnityPoint Health marketing and communications specialist Amanda Munger, officials said the pending litigation would not interfere with their commitment to ensure a smooth transition.

“UnityPoint Health is aware of this development but is unable to comment on pending litigation between Grand River Medical Group (GRMG) and former GRMG employees,” the statement reads. “However, we remain extremely committed to having GRMG join the UnityPoint Health team and are excited about welcoming their physicians, advanced practice providers and care team into UnityPoint Clinic. We continue to strongly believe that this partnership will strengthen our collective ability to provide exceptional care to Dubuque and the surrounding communities.”