California Attorney General Xavier Becerra is making one last attempt to block the sale of O’Connor and Saint Louise hospitals to Santa Clara County, asking the U.S. District Court for an “emergency” stay before the sale is final March 1.
Becerra submitted his 29-page filing late Friday, just two days after a similar request for a stay was rejected by the same U.S. Bankruptcy Court judge who had approved the hospitals’ sale in late December. If the District Court—where the appeal of the December ruling is pending—grants the stay before deadline, the deal is dead and the hospitals will likely close, according to the county and Verity Health System, owner of the hospitals.
Verity Health System’s request for Chapter 11 bankruptcy protection last fall led to the sale. The purchase agreement with Santa Clara County expires March 1. Becerra argued in his court request that a stay “would promote the public interest,” and “involves important issues of state law regarding health, safety and welfare.”
Without the stay, “the families and patients served by O’Connor Hospital and Saint Louise Regional Hospital will suffer irreparable injury,” wrote Becerra.
The AG made no mention in his filing of the claim by the county and Verity Health that if he is successful in his legal fight, O’Connor and Saint Louise will close.
In bankruptcy court last week, the attorney general’s staff said simply that they did not believe the hospitals would close, despite the fact that the purchase agreement expires March 1 and there are no other suitors. Becerra’s latest filing repeated arguments that were soundly rejected by bankruptcy Judge Ernest Robles, who said in his Jan. 23 ruling that he was concerned about the impact on county residents if the hospitals were to close.
The attorney general warned that without a stay, the sale would go through and would render his appeal moot. He claimed that only his office could “protect” the wellbeing of county citizens, because without his enforcement of specific conditions, ““the county is free to close the hospitals or eliminate vital healthcare services in those communities.”
This claim was called “just absurd,” last week by Santa County Executive Jeff Smith. Smith was the county offered $234 million to buy the two hospitals to keep—and expand—vital healthcare services, not to shut them down.
In the Feb. 1 documents, Becerra repeated his claim that the county had refused to commit to providing vital healthcare services.
This claim was called “false,” and “misleading” last week by Smith, who said the county had in fact offered the attorney general in mid-January a memorandum of understanding to Becerra’s office, committing the county to providing a wide variety of essential services, 24-hour emergency services and services for MediCal and Medicare patients, which the attorney general had rejected without discussion.
Becerra acknowledged in court papers Feb. 1 that the Jan. 23 ruling by Robles means that the sale order became immediately effective and allows the parties to close the transaction before the federal court could rule on the appeal.
“Without a stay, the attorney general’s appeal regarding an important state law issue affecting public health, safety and welfare will likely be rendered moot.”
Smith said the attorney general’s actions could only be explained by a desire to exert his authority, at the expense of the health and safety of county residents, especially those in Morgan Hill, Gilroy and San Martin. In his Jan. 23 ruling, Robles agreed with that assessment, saying the harm to the attorney general’s office would pale in comparison to the harm to Santa Clara County if the hospitals were to close.
Robles also said that Becerra’s District Court appeal was futile and that he would probably lose. Becerra said the opposite on Feb.1, telling the District Court he is likely to succeed on the merits of his appeal of the Bankruptcy Court’s approval of the sale.
Robles said Becerra didn’t have legal authority to get involved in the sale of a private non-profit hospital to a government entity.
Smith said in a Jan. 31 interview that the stated goals of quality health care for all are share by the county and the AG. “We’re on the same time team, with the same goals,” he said. “It’s as if someone on the same team is trying to shoot me in the back.”
“We’re going to continue to work as if it’s a done deal,” he said. “We’re anticipating a clean sale order on the First of March.”