State Attorney General Xavier Becerra rejected an appeal from Santa Clara County to keep two hospitals open, after they attempted to head off a Jan. 30 court showdown.
The county promised to commit to the highest levels of medical care at the two hospitals it seeks to buy from Verity Health System, according to County Executive Jeff Smith. Smith and several staff drove during a Jan. 16 rainstorm to Sacramento to hand-deliver the proposal and meet with Becerra, who earlier this month stunned the county by asking the U.S. Bankruptcy Court to block the sale of O’Connor and St. Louise hospitals.
If the AG is successful, or if he appeals a rejection of his request, the $235 million hospital purchase is dead, Smith lamented. Still, he holds out some hope.
“We are pretty confident that our legal case is strong, and that the stay will not be granted,” Smith said in an interview.
He is concerned, however, that Becerra might appeal a rejection of the stay.
Because of a death in the family, Becerra was unable to attend the Sacramento meeting, at which Smith had hoped to ease the AG’s stated concern that the county’s failure to commit to quality medical care was the primary reason the deal should be scrapped.
County supervisors last week instigated a social media, telephone and email campaign—including appeals to Gov. Gavin Newsom—in hopes of convincing Becerra he should put the healthcare needs of Santa Clara County first, and that his concerns about the county’s commitment to quality health care were unfounded. Smith told supervisors the morning before his trip that “time is running out.”
Smith said Becerra’s aides were in no mood to discuss the issue.
“Their response was, ‘We are not interested in a contract with the county; we are intent on enforcing our regulations,’” Smith said after the meeting. “It is largely an issue of control and power and has nothing to do with the hospitals.”
The AG, he charged, made “a political decision, not a legal decision.”
Becerra’s office continued this week to decline to comment.
A hearing of Becerra’s request to block the sale has been set for Jan. 30 in U.S. Bankruptcy Court in Los Angeles. On the same day, a federal bankruptcy judge scheduled one last hearing of appeals by creditors and labor unions before deciding on the final details of Verity’s Chapter 11 bankruptcy protection plan, which will include sale of two hospitals—unless Becerra’s effort in a nearby courtroom is successful.
After returning from Sacramento, Smith said he remained incredulous at the attitude of the attorney general, whose staff rejected any effort to compromise or modify a set of conditions imposed on Verity in 2015 in connection with its purchase of six troubled hospitals in northern and southern California that Becerra said dictates conditions of the current purchase agreement.
Becerra contends in court documents that any sale of hospitals owned by Verity Health must adhere to all of the strict conditions set down in December 2015 by his predecessor, Kamala Harris, even if it means the hospitals will close.
Smith has called the attorney general’s insistence on the matter “absurd.”
The county exec said that he made it clear in his personal appeal to Becerra’s staff that blocking the sale to the county will mean that O’Connor and St. Louise hospitals will close, but that this information didn’t sway the state’s lawyers.
The attorney general has no legal role in overseeing the state’s hospitals, but got involved in 2015 because a private entity was purchasing hospitals from a non-profit. In this case, the sale would involve a purchase of private hospitals by a government entity, an actual arm of state government.
Smith and his legal team contend that the attorney general doesn’t understand California law, and that the issue amounts to a power play. The county executive said he no longer thinks that healthcare workers’ unions’ concerns about losses of pensions and contracts are the issue. “It’s all about control and power,” he said.
Blocking the county purchase will mean “the hospitals will close, and nobody is going to buy them,” Smith said earlier this month.
He said the county’s asset purchase agreement expires March 1, and that a deal must be closed by then. Mike Wasserman, the county supervisor whose district includes St. Louise Regional Hospital, wrote on Facebook, “I am deeply disappointed that the California Department of Justice is trying to block the sale of O’Connor and St. Louise hospitals to Santa Clara County. As county supervisor, I will do everything I can to keep the hospitals open so as to ensure continued healthcare access for all residents.”
He urged his constituents to contact Becerra and published his contact information.
“The attorney general’s actions to block the sale of Verity’s hospitals to the county is a real threat to the health of our community, our residents and the vulnerable populations the hospitals serve,” Smith had said in a Jan.10 statement.