Hunter
10/17/25
The bankrupt Mercy Hospital of Iowa City is taking its former business partners, MercyOne and Catholic Health Initiatives, to court in a dispute over $55 million.
The Gazette reports the federal suit accuses Mercy One and CHI of killing a planned business deal to avoid paying worker pensions while giving a large severance package to Sean Williams, the former president and CEO of the Iowa City hospital, who they say often failed to show up for work.
Those claims originally filed in August as part of Mercy-Iowa City’s ongoing bankruptcy case, are now a separate cause of action that alleges breach of contract, unjust enrichment and breach of fiduciary duty.
The lawsuit claims Williams quietly advanced MercyOne’s interests at the expense of the hospital he was hired to lead.
Details allege that Williams “was regularly absent” from the hospital during business hours, and on one of his first days of employment directed the staff to remove the desktop computer that had been set up for him, stating he did not need it.
“Williams largely attempted to perform his role as CEO,” the lawsuit alleges, “from a smartphone, and was known to have issues reviewing or accessing important documents.”
The defendants haven’t yet filed a response to the lawsuit, but Mercy One has said there’s no basis for any claim against them.