Kendall Regional Medical Center was ordered to pay about $11.6 million to three doctors after undervaluing their limited partnership shares during a 2014 “squeeze-out” merger.

The hospital's aggressive growth made the ownership interests — purchased in 1991 for $15,000 each — worth more than $3 million apiece, Miami-Dade Circuit Judge Jorge Cueto ruled in a final judgment entered Jan. 10. The valuation was more than triple what the doctors were initially offered when they were pushed out of the partnership.

Hospital Corp. of America Inc., once run by now-Gov. Rick Scott, formed the limited partnership in the '90s. Drs. Rafael Madrigal, Juan Suarez and Jorge Suarez-Menendez bought in early and declined buyout offers over the years. In December 2014, a shell company was created to merge with the HCA-owned general partner to “squeeze out” the minority shareholders.

“The squeeze-out was timed to remove them right as Kendall was about to embark on significant expansion,” said Miami attorney Michael Pineiro of Marcus Neiman & Rashbaum. He and colleague Daniel Rashbaum represented the doctors.

Cueto ruled the business valuation expert who helped set the initial offers at $1.1 million each, Colin McDermott, drove down the amount by assuming a big drop in growth and a high risk based on the loss of Affordable Care Act health care exchange patients.

But Kendall Regional saw expansive growth in the years leading up to the merger, with revenue increasing from $258 million in 2011 to $348 million in 2014, the judge found after a bench trial. Before the reorganization, the hospital's plans included the addition of a Level II trauma center and a Level III neonatal intensive care unit.

Cueto dismissed McDermott's assumption that — after 20 percent growth in 2015 — the hospital would experience 5 percent growth the next year, followed by three years of 2 percent growth.

“It is unreasonable to assume, and there is no evidence showing, that Kendall's earnings growth for Years 2-5 will decline as precipitously as projected by Mr. McDermott from Year 1,” Cueto ruled.

McDermott's risk assumption for the loss of ACA patients also had no quantitative support, the judge ruled, and “was not tied to the severity or likelihood of the underlying risks. Rather, it was outcome-driven.”

The judge ruled the defense expert plugged in a risk number that would bring the total valuation to about five times the hospital's earnings. That was the company's standard amount for buyout offers, according to Pineiro.

Cueto decided to go with plaintiffs expert Viresh Dayal's valuation of $3.34 million per ownership interest, which assumed 10 percent growth for four years after 2015. He also tacked on about $517,000 in prejudgment interest per plaintiff, bringing each doctor's award to about $3.86 million.

“We believe we offered fair value and are therefore disappointed with the ruling,” Kendall Regional said in a statement. “We have filed a notice of appeal.”

The hospital was represented by Miami attorneys Walter Tache and Marissel Descalzo of Tache, Bronis, Christianson and Descalzo and Yolanda Strader of Carlton Fields.

Pineiro said he believes the doctors' decision to challenge the appraisal under the Florida Revised Uniform Limited Partnership Act may inspire others to search for faulty risk assumptions underlying similar offers.

“The use of that type of assumption is probably widespread in terms of hospitals or larger companies trying to take advantage of a party with less bargaining power,” Pineiro said. “That's what I think happened here. These physicians just happened to not accept what was offered to them, even though it was a hefty buyout.”