Judge Says Yes to Hospitals’ Sale

Saint Louise Regional Hospital in Gilroy and O’Connor Hospital in San Jose will not close. U.S. District Court Judge R. Gary Klausner today rejected a bid by California Attorney General Xavier Becerra to block the sale of the two Verity Health System hospitals to Santa Clara County. That deal will close Feb. 28.

“We are pleased that the District Court denied the stay, which will allow the county to complete its purchase of the hospitals next week,” County Counsel James Williams said in a statement today. “We will now be able to keep these hospitals open to ensure access to healthcare for the residents of Santa Clara County.”

Becerra had appealed a Bankruptcy Court’s December approval of the sale to U.S. District Court, and sought a stay of the sale, pending resolution of the appeal—which would have voided the county’s purchase agreement and forced the two hospitals to close. There were no other purchase offers.

“The public interest factors weigh against the stay,” Klauser wrote in his opinion. “A stay may result in the cancellation of the sale, which could in turn lead to a closure of both hospitals. The bankruptcy [court] did not abuse its discretion when it found that ‘far from protecting the health and welfare, a stay would set in motion a series of events that, in all probability, would reduce the availability of healthcare services to the public.”

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