DOUBLE VISION.

Byline: Christian Wihtol The Register-Guard

CORRECTION (ran 4/22/03): MR Imaging Associates, 960 N. 16th St., Suite 10 in the McKenzie Medical Center in Springfield, has operated a magnetic resonance imaging machine since 1986. A story on Page F1 on Sunday failed to mention MR Imaging Associates' machine in a description of the number of MRI machines in the Eugene-Springfield area in 1999.

SPRINGFIELD - Step into the waiting room of the Advanced Imaging Center in the Gateway Marketplace shopping strip and it's easy to assume that you're entering a single business.

Seated in the small room are patients who hope the magnetic resonance imaging - or MRI - the center offers will help detect hidden growths, disease or damage in their bodies.

On one side of the waiting room, there's a glass sliding window and a sign for Oregon Imaging, which operates an MRI machine on the premises.

A few yards away, on the other side, there's a similar sliding window and a sign for Open Advanced MRI, which also operates an MRI machine on the premises.

But the close quarters belie the fact that the two entities are bitter rivals and have been waging a furious behind-the-scenes legal fight for two years.

The core issue: Who has the right to offer MRIs in the building at 860 Belt Line Road?

These fancy diagnostic scans are spendy, $500 to $2,000 a pop. The MRI machines are spendy, too, at $1 million to $2 million or more. So it's no surprise that the bottom line in the dispute is money.

Open Advanced is part of a Virginia-based MRI chain called Medical Imaging and Diagnostics Inc. Oregon Imaging is a Eugene-based venture controlled by local radiologists and health care giant PeaceHealth.

In lawsuits filed in Lane County Circuit Court, the Virginia firm claims that a 1999 partnership agreement it has with the radiologists bars them from operating a competing MRI. And in a separate lawsuit, the Virginia firm claims that the building's landlord, the Springfield-based Boyles family, wrongfully interfered in the dealings between the Virginia firm and the radiologists by letting the radiologists remodel the Gateway building to install the rival MRI in 2001.

The Virginia firm is seeking at least $60 million in damages from the radiologist group and PeaceHealth, and wants the court to stop them from using the MRI machine.

The radiologists, Oregon Imaging, PeaceHealth and the Boyles family deny that they've done anything wrong.

As the lawsuits inch forward, they've revealed plenty about the hardball, high-stakes business dealings that can lie behind the soothing music and pastel colors of an MRI suite.

They've also shown the jam that doctors can get into when they not only do diagnostic work - in this case interpreting MRI scan results - but also act as business investors, owning costly MRI machines.

Oregon Imaging put its rival MRI into use in late 2001 and since then "has siphoned a substantial amount of business from" Medical Imaging, the Virginia firm claims. The Virginia company put its MRI into use in 2000.

Oregon Imaging, meanwhile, stresses that it spent heavily to buy and install its own MRI - to the tune of nearly $2 million - because of strong demand.

The issue "has been hotly contested," said Pat Neill, an attorney for the radiologists. "Both sides feel very strongly."

MRI clinics proliferate 

In recent years, MRIs have become big business. The technology uses magnetic and radio waves to produce high-resolution images that doctors can examine to detect growths, wear-and-tear or other damage inside the body that might be hard to find using conventional X-rays and X-ray-based CT scans.

MRI clinics have sprung up across the country to feed the demand.

For years, the only business offering MRIs in the Eugene-Springfield area was Oregon Imaging, at its main office next to PeaceHealth's Sacred Heart Medical Center on Hilyard Street in Eugene. There, Oregon Imaging operates two MRI machines.

The majority owner of Oregon Imaging is Radiology Associates, a group of 15 local radiologists who do all the readings on the Oregon Imaging MRI machines.

The minority owner in Oregon Imaging is a unit of PeaceHealth, owner of Sacred Heart. The decision-making power of Oregon Imaging is split 50/50 between the radiologists and PeaceHealth, according to court filings.

The Gateway dispute dates to February 1999, when the Virginia firm approached the radiologists about putting a new type of MRI - an "open" MRI - in the Eugene-Springfield market.

At Oregon Imaging's Hilyard MRI machines, the patient slides into a long, narrow tunnel - a potentially claustrophobic experience, and one that can be difficult for obese patients.

By contrast, with an "open" MRI, the patient slides into a broader, shorter opening that looks and feels airier and less restrictive.

The Virginia firm's strategy for entering new markets is to partner with local radiologists in order to quickly drum up business for a new machine. In the Pacific Northwest, it has opened MRI centers in Vancouver, Wash., as well as in Portland, Tigard and Clackamas.

Local radiologists sign on

Radiology Associates liked the idea of the "open" MRI and joined with the Virginia firm to form Open Advanced MRI. The radiologists paid $400,000 for a 40 percent stake in the new company.

The Virginia firm was the controlling partner, pumping in the additional $600,000 needed to purchase and set up the equipment, according to court filings.

The partners picked for their office 5,500 square feet in the Gateway Marketplace complex, which is owned by the Boyles family's Sycan B Corp. As part of the deal, Radiology Associates would do the readings on the scans and would get space in the suite.

Plus, Oregon Imaging - headed jointly by the radiologists and PeaceHealth - agreed to set up an Oregon Imaging clinic in the radiologists' part of the leased space to offer other imaging such as X-rays and CT scans, according to the filings.

In late 1999, the parties signed assorted agreements. These include noncompete clauses under which Radiology Associates "shall not ... take any actions that are detrimental to (the Virginia firm) or the open magnet concept," and which forbid Radiology Associates or its agents from "any act which would make it impossible to carry on the ordinary business of" the Open Advanced center, according to the complaint filed in court.

The agreement also bars Radiology Associates from operating any other "open architecture" MRI.

The radiologists and the Virginia firm opened Open Advanced MRI in May 2000.

In a deposition, radiologist Dr. Lee Michels, one of Radiology Associates' owners, said he was surprised at how successful the business quickly proved.

The deal goes sideways

But the relationship soon soured.

In late 2000, Oregon Imaging's six-member board - three local radiologists and three representatives from PeaceHealth - decided unanimously to buy a new MRI machine, what's called a "short bore high-magnetic field" model, according to the court filings. With this machine, the patient slides into what looks like a big doughnut. The machine is a sort of hybrid between an open MRI and the long tube construction of an enclosed MRI.

Oregon Imaging decided to put the new MRI in the radiologists' section of the leased Gateway property.

Just why it did that is a matter of dispute.

That site had a skilled staff available, Dr. John Ekstrom, a partner in Radiology Associates and a member of the Oregon Imaging board, explained in a deposition. Ekstrom also said there was enough patient demand to warrant the new machine.

The Virginia firm argues that the reason was greed. "After successfully launching the (Open Advanced MRI/Medical Imaging) center in Springfield (the radiologists) decided that this success was not enough," argues the complaint from the Virginia firm.

As part of the lawsuit, the Virginia firm has scrutinized the records of Radiology Associates and Oregon Imaging. Those records show that the radiologists put the new MRI in the Gateway building in order "to recapture patients" from the Virginia company, the firm claims. Those records have been kept sealed from the public under a secrecy agreement.

Ekstrom said in his deposition that Oregon Imaging opted to buy its own new MRI because the Virginia firm didn't have experience operating that type of MRI.

In the deposition, Ekstrom also acknowledged, however, that perhaps half the patients who Oregon Imaging is scanning with its new MRI could have been adequately scanned by the Virginia firm's MRI.

Before Oregon Imaging installed its MRI, the Virginia firm caught wind of the plan. The Virginia firm objected and also offered to partner with Oregon Imaging and PeaceHealth to install a new MRI, to no avail.

In their defense, the radiologists argue that the MRI machine that Oregon Imaging bought isn't an "open" MRI and so does not violate the noncompete agreement.

Also, the radiologists note that the entity that signed the noncompete agreement with the Virginia firm is Radiology Associates, and that Oregon Imaging didn't sign any such agreement. Oregon Imaging is a separate corporate entity that isn't bound by the noncompete agreements, the radiologists argue.

Neill, the attorney for the radiologists, said Oregon Imaging has every right to compete against the Virginia MRI firm.

The Virginia firm "understood that they were coming into a market where Oregon Imaging was already a major player, and there is nothing in the agreements that limits what (Oregon Imaging) could do," he said.

The Virginia firm contests that, saying its agreements with Radiology Associates limit the actions that the radiologists can take in their role as owners of Oregon Imaging.

Bad-mouthed by doctors

Meanwhile, competition from a rival MRI wasn't the only problem the Virginia firm encountered. It also says its MRI was being bad-mouthed by some Eugene-area doctors.

The Virginia firm in May 2001 wrote to Radiology Associates that a Eugene area neurosurgery practice was making critical statements about the MRI machine in an effort to "sabotage" it.

Radiology Associates had shown "unwillingness or reluctance to counter this attack," wrote the Virginia firm's president, Richard Fried.

"Our (MRI) does not deserve the unilateral condemnation that it is receiving from this group," Fried wrote. He does not name the neurosurgery group.

The negative comment about the machine "has been negatively affecting our center and its staff," Fried added.

The Virginia firm's lawsuit against Radiology Associates, Oregon Imaging and PeaceHealth is set to go to trial in July.

Business Editor Christian Wihtol can be reached at 338-2381 or [e-mail].

THE PLAYERS

Medical Imaging and Diagnostics Inc.: Virginia-based MRI chain; majority owner in Open Advanced MRI, which runs an MRI machine in Gateway. Minority owner in Open Advanced is Radiology Associates, a group of Lane County radiologists.

Oregon Imaging: Company owned jointly by an arm of PeaceHealth and Radiology Associates. Oregon Imaging runs an MRI machine in Gateway.

Sycan B Corp.: Property firm headed by Richard Boyles that owns the building where both MRIs are operating.