Encompass Health (NYSE: EHC) and Enhabit Inc. (NYSE: EHAB) have secured $43.1 million in attorneys’ fees and mitigation damages stemming from a dispute with home health and hospice provider VitalCaring.
In the case, a federal judge in Delaware ruled that 43% of VitalCaring’s profits, along with any proceeds from a future sale, must be placed in a trust and divided between Encompass and Enhabit. The remaining 57% was awarded to VitalCaring’s private equity owners, The Vistria Group and Nautic Partners.
The dispute centered on allegations of “willful misconduct” by VitalCaring CEO April Anthony, President Luke James and CFO Chris Walker, who previously served as senior executives in Encompass Health’s former home health and hospice division, according to the court’s 116-page opinion. That division was spun off in 2022 to create Enhabit.
Anthony founded Encompass Home Health & Hospice in 1998 and built it into a nationwide provider. In 2021, she partnered with The Vistria Group and Nautic Partners to launch VitalCaring.
Encompass Health alleged that Anthony and several former colleagues engaged in improper conduct in establishing VitalCaring and claimed she breached the terms of her employment agreement.
VitalCaring had been positioned to acquire more than 100 home health and hospice locations being divested in connection with UnitedHealth Group’s (NYSE: UNH) acquisition of Amedisys. However, that transaction was put on hold after a court ordered VitalCaring to place 43% of its future profits in trust for Encompass Health and Enhabit.
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