The attorney for a Waterloo medical clinic is being sued by other Iowa healthcare providers for alleged conflicts of interest in his legal work.
The lawsuit centers on representatives and affiliates of Cedar Valley Medical Specialists, a multispecialty medical clinic located in Waterloo that, according to one of its lawyers, is currently in financial distress.
Three of CVMS’ affiliates — Waterloo’s Digestive Health Center, a gastroenterological ambulatory surgery center; P & H, a company that functions as CVMS’ landlord, and Dr. Ravindra Mallavarapu, who has worked at CVMS since 2002 and is also the majority owner of both Digestive Health Center and P & H — filed suit last week against Michael D. Schwartz and the Schwartz Law Firm of Oakdale, Minnesota.
Court records indicate Schwartz has represented CVMS for 25 years, and it’s that representation that’s at issue in the lawsuit, which was filed in U.S. District Court for the Northern District of Iowa.
While significant portions of the lawsuit and related filings are either redacted from public view or sealed entirely by order of the court, the case appears to involve not only alleged conflicts of interest by Schwartz, but also financial issues at CVMS.
Plaintiffs move to close hearing
During a court hearing on Monday, the plaintiffs’ attorney, Mark E. Weinhardt, informed Chief Judge C.J. Williams that an Iowa Capital Dispatch reporter was covering the proceedings, and he questioned whether the hearing should be closed to the public since the discussion could touch on “sensitive matters” that had so far only been raised in sealed court records.
“It’s my inclination that there has to be a very strong, compelling legal reason to close court proceedings,” Williams told Weinhardt, “and so I am not likely to grant (your request), but go ahead and tell me why you think this needs to be sealed,”
“There are parties that we have mentioned in the pleadings — including in the unredacted version of the complaint, particularly Cedar Valley Medical Specialists — that are in some financial distress,” Weinhardt told the court. “The depth and nature of that, I think, is something that, if discussed publicly, could have ramifications for that entity. And so, in order to not create difficulties for it — but also to be completely candid about where it is in its financial circumstances — that was the basis for wanting to file things under seal and to discuss them as such.”
Williams told Weinhardt he didn’t anticipate posing any questions about the financial condition of any of the parties, and so the hearing remained open to the public.
CVMS separating from Digestive Health Center
Weinhardt then informed the court that his three clients are currently in the process “of separating themselves from CVMS, and it’s going to take some time for them to work their way out of that arrangement.”
He said the plaintiffs and the defendants have agreed on the language for a temporary restraining order that, if approved by the court, would prevent Schwartz from representing Cedar Valley Medical Specialists as long as there are any pending legal disputes between the clinic and the plaintiffs.
In addition, Weinhardt said, the proposed order would prevent Schwartz from representing the clinic in any actions against Farmers’ State Bank, which he described as one of CVMS’ creditors.
Weinhardt said that last week the bank reached an agreement with the plaintiffs “about matters between them.” Although he didn’t elaborate, he did say the interests of the plaintiffs and the bank “are now aligned … We believe, therefore, that for Mr. Schwartz and his law firm to represent CVMS against Farmers’ State Bank would result in them taking actions that are detrimental to our clients’ interests.”
Lawsuit alleges conflicts of interest
The lawsuit seeks a temporary restraining order, as well as preliminary and permanent injunctions, barring Schwartz and his firm from continuing to represent CVMS in any matters that include the plaintiffs as potential adversaries.
The lawsuit alleges that until he was asked to resign on March 5, 2026, Schwartz was a member of Digestive Health Center’s management board, and had, in the past, represented the center, P & H and Mallavarapu as their attorney — even in matters related to their contracts with CVMS, another longtime Schwartz client.
As one example of the alleged conflicts of interest that arose from these roles, the lawsuit claims that last year Digestive Health Center sought to decrease the fees it paid to CVMS for certain services.
Schwartz allegedly advised Mallavarapu, head of the center, to write a letter to CVMS, and even provided instructions on the letter’s contents. Then, in his role as legal counsel for CVMS, Schwartz allegedly attended a CVMS board meeting during which members agreed to a reduction in the fees charged to Digestive Health Center.
“Mr. Schwartz represented both sides in those negotiations without obtaining conflict of interest waivers,” the lawsuit claims. “After the plaintiffs [information redacted from public view], they repeatedly demanded that the defendants withdraw from representing CVMS… The defendants refused to withdraw. In mid-April 2026, the Defendants suddenly withdrew from representing CVMS altogether, only to, on April 27, 2026, reengage with CVMS.”
Schwartz: ‘No breach of duties’
Schwartz said little during Monday’s court hearing, except that “obviously, we would disagree with the allegations in the complaint. There has been no confidential information shared with us, and there has been no breach of duties, et cetera.”
Schwartz cautioned that if he and his attorneys “were to respond to the complaint, we would need to disclose information about Dr. Mallavarapu and his employment contract and his medical services agreement and various other things that are best left for the parties to resolve themselves.”
At the conclusion of Monday’s hearing, Chief Judge Williams indicated he will issue the agreed-upon temporary restraining order, but told all of the parties he had “grave concerns” as to whether he could retain jurisdiction over the case given the fact that federal rules require that such a case involve $75,000 or more that is in controversy.
“What’s brought before me right now is an assertion that a law firm should not represent certain parties,” he said.
Williams gave Weinhardt 14 days to file papers establishing the court’s jurisdiction on those grounds.
