Centra ordered to pay $600K to competitor from lawsuit around former Pathways Lodge

RUSTBURG — After a three-day trial, a jury determined Wednesday that Centra Health should pay $600,000 in damages to a competing health care provider that ran a drug addiction treatment center at what later became Centra’s Pathways Lodge in rural Amherst County.

Blackberry Ridge was founded in 2011 and opened residential drug treatment services in a log cabin-style facility it began leasing off of Earley Farm Road, in rural Amherst County, according to court documents. Caregivers there espoused the scenic setting, relaxed atmosphere and alternative therapy methods used, such as equine therapy and yoga.

Centra approached Blackberry Ridge’s leadership later that year proposing a joint venture, and the two providers entered into a Non-Disclosure Agreement (NDA) to see if that would be feasible, court documents state. The agreement held the providers would share confidential information and Centra wouldn’t use such information to compete or deplete Blackberry Ridge’s business.

About two years after the NDA, Centra offered to acquire Blackberry Ridge for about $220,000, which owners and operators considered a “drastic undervaluation,” according to the suit, and refused. Though contact between the two broke off, Blackberry Ridge stated in court documents the NDA held.

In a lawsuit first filed in 2017, Blackberry Ridge claimed Centra violated the NDA and used confidential information to put it out of business there and take its place at what would later become Pathways Lodge.

By early 2015, Blackberry Ridge was more than $40,000 behind in rental and repair payments, court documents state.

Centra approached Townside Realty, which was leasing the Earley Farm Road property, for a lease with a purchase option of $949,000, according to the plaintiff. In February 2015, Townside notified Blackberry Ridge it would be canceling the lease — allowed under its month-to-month contract, court documents state.

In a letter from the time that was filed in court, Townside’s president told Dr. Christopher von Elten, a Blackberry Ridge co-founder, the property owner wanted to sell and it didn’t appear that Blackberry Ridge could buy.

Blackberry Ridge moved some drug treatment services to a Lynchburg location after leaving the Earley Farm Road spot. von Elten later co-founded Addiction Allies in its stead, which provides outpatient drug treatment services in Lynchburg and Charlottesville.

After a series of recusals from area judges, the lawsuit ended up in Campbell Circuit Court and a jury trial started Monday on a claim Centra violated its contract with Blackberry Ridge. The seven-member jury deliberated for several hours Wednesday evening before returning its verdict, finding in favor of Blackberry Ridge and against Centra for $600,000 in damages.

John Loeschen, an attorney representing Blackberry Ridge, said in closing arguments Wednesday that Centra’s actions amounted to “subterfuge” and essentially replaced Blackberry Ridge. He referenced testimony of an expert witness he’d previously called who valued the provider’s losses at anywhere from $2 million to $5 million.

John Buford, representing Centra, argued many of Blackberry Ridge’s treatment ideas weren’t necessarily new or proprietary and its business plan was made public when it went before the Amherst County Board of Supervisors for a rezoning request.

Centra was independently aware of the potential costs of operating out of the facility, he said, adding the plaintiff presented no proof Centra competed with Blackberry Ridge using any confidential information.

The other provider simply was outbid, Buford said.

Centra announced last month it was moving its drug treatment services, including 15 residential beds, from what had been Pathways Lodge back to Virginia Baptist Hospital in Lynchburg. It had been leasing Pathways Lodge.

Reached Thursday, Centra spokesperson Diane Ludwig said the provider respects the court’s decision.

Following the trial, von Elten said he was pleased with the outcome.

“We hope that this will teach Centra to be fair in their evaluations and dealing with other medical practices in the area,” he said.

Campbell County Circuit Court Judge John Cook will hear further arguments for attorneys’ fees in the case in about a month.
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