Calif. AG’s move to delay Verity hospital sale could kill the deal

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California’s lawyer basic requested a chapter choose to dam the sale of two Verity Well being hospitals to Santa Clara County whereas he appeals the choose’s ruling to let the deal proceed with out the AG’s prior situations for his or her operation.

The county warned that granting the keep may kill the sale and imperil the hospitals’ survival.

The U.S. Chapter Court docket in Los Angeles will maintain a listening to Jan. 30 to contemplate Legal professional Common Xavier Becerra’s movement to remain the sale of O’Connor Hospital in San Jose and St. Louise Regional Hospital in Gilroy whereas Becerra’s workplace appeals the court docket’s determination final month to approve the sale with out the situations.

Santa Clara County signed a deal to purchase the 2 hospitals out of the Verity Well being System’s chapter for $235 million, with the concept of utilizing these services to ease overcrowding on the county’s Valley Medical Heart. It was the only bidder. The transaction is scheduled to shut Feb. 28.



“We now have to shut the deal by the top of February or it is lifeless,” stated Dr. Jeff Smith, the Santa Clara County govt. “If they’re profitable of their objections, I presume the hospitals would shut.”

He argued that the lawyer basic’s workplace had agreed to the sale with out the situations, a lot of which the county couldn’t legally adjust to.

Chapter Choose Ernest Robles agreed with the county’s place. He dominated on Dec. 27 that Becerra waived the best to object to the sale of the hospitals free and away from the situations, and that the sale of a not-for-profit healthcare facility to a public entity is just not topic to the workplace’s evaluate underneath state legislation.

In court docket papers, Becerra argued his workplace by no means waived the 53 situations it imposed in 2015 when it consented to the Catholic Daughters of Charity’s sale of its six hospitals to BlueMountain Capital administration, proprietor of Verity Well being. He stated the 2015 situations are binding for 15 years on any future homeowners.

“The California Division of Justice is dedicated to advocating for situations that guarantee communities have entry to important healthcare companies,” an company spokeswoman stated.

Final yr, billionaire entrepreneur Dr. Patrick Quickly-Shiong purchased Verity and its hospitals. He hoped to make use of the services as websites for his formidable precision medication initiatives.

However when Verity filed for chapter final September, it stated it could not proceed to function the hospitals as a result of greater than $1 billion in bond debt and unfunded pension legal responsibility, an lack of ability to renegotiate contracts and the persevering with want for important investments to deal with seismic necessities and getting older infrastructure.

Verity stated it was dropping $175 million yearly on a money circulate foundation.

Among the situations on the 2015 sale associated to neighborhood safety, together with requiring continued provision of 24-hour emergency and trauma companies, reproductive well being companies and charity care and companies to low-income sufferers.

The lawyer basic argued that granting the keep on the sale would haven’t any main affect on events within the Verity chapter case, whereas there can be better hurt to the neighborhood if the sale went by way of with out the workplace’s situations.

However Smith stated the county plans to adjust to all of Becerra’s scientific situations from 2015. It can’t comply, nonetheless, with situations reminiscent of assuming the earlier proprietor’s pension obligations or collective bargaining agreements, as a result of the county operates underneath totally different statutory necessities, he added.

“The entire cause we need to purchase the hospitals is to proceed the companies,” he stated. “We now have no want to shut down companies or cease caring for poor folks as a result of that is our mission.”

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