2014 Government Regulations & Business Summit
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By Richard Asinof
PROVIDENCE – The legal soap opera continued in R.I. Superior Court on March 9, where, after a three-hour hearing, Judge Michael A. Silverstein approved a number of changes to the asset purchase agreement sought by Steward Health Care and the court-appointed special master for Landmark Medical Center.
The deadline to conclude the purchase is now set for May 2, although that deadline does not apply to the ongoing state regulatory process by the R.I. Department of Health and the R.I. Attorney General. By statute, that date can be up to 180 days after Jan. 11, the date when Steward’s revised application under the Hospital Conversations Act was deemed complete, which could run into the middle of July.
Under the revised agreement, Steward has the ability to eliminate medical services at the hospital, in particular the hospital’s obstetrics and psychiatry programs. The for-profit health system based in Boston would also be able to terminate and lay off workers as necessary who are not covered under the collective bargaining agreement.
In addition, the new conditions enable Steward to walk away from the deal if legislative changes are not made to the Hospital Conversions Act by the General Assembly, enabling it to buy additional nonprofit hospitals in the Rhode Island market without waiting for three years.
The new conditions enable to Steward, if it cannot reach agreements with Thundermist Health Center and 21st Century Oncology, the majority owner of the hospital’s cancer center, also to walk away from the purchase.
Lawyers from the R.I Attorney General’s office, the Executive Office of Health and Human Services representing the R.I. Department of Health, Thundermist Health Center, 21st Century Oncology, and Blue Cross & Blue Shield of Rhode Island opposed changing the conditions of the agreement. Favoring the changes were Steward, the general counsel for United Nurses & Allied Professionals, the union representing about 600 workers at Landmark and the Rehabilitation Hospital of Rhode Island, and the special master, Jonathan R. Savage.
There were a number of unusual moments during the hearing. The lawyer representing 21st Century Oncology, Mark Russo, is the court-appointed special master for Westerly Hospital, now in receivership. Silverstein denied Russo’s motion for a continuance, and Russo filed a formal objection. After the hearing, Russo called the experience “educational” in what happens in hospital receiverships.
It was Matt Wojcik, Woonsocket’s economic development coordinator, and not any of the lawyers, who presented the most compelling arguments regarding the requested changes, according to Silverstein. What Wojcik told the court was that the city of Woonsocket was in financial crisis, unable to meet its payroll as of April 1. The potential $30 million capital investment in the hospital by Steward would serve as a lifeline to the beleaguered city, according to Wojcik.
Also, the number of Rhode Island public relations consultants in the courtroom increased. New entries into the fray were Meaghan Wims of Duffy & Shanley, retained by Steward Health Care, and David Preston, retained by Thundermist. They joined long-term consultant William J. Fischer, who has represented Landmark during the last four years of receivership.