Lovelace wants out of contract with county
LHS was to provide hospital to serve Valencia County
BELEN — A month after the Valencia County commission unanimously voted to enter into a contract with Lovelace Health System for a hospital/24-hour emergency health care facility, the provider has filed an appeal in district court, asking to be released from fulfilling the contract.
Commissioners voted 5-0 on Oct. 25 to award the contract to LHS to build and operate the facility. Lovelace has not signed the contract.
Lovelace, the only provider to respond to a request for proposals for the health care facility put out by the county in late April, filed a notice of appeal in the 13th Judicial District Court last week.
The notice doesn’t contain the basis of the appeal, but in a letter dated Oct. 24, Lovelace gave two reasons for its withdrawal.
The provider claims it didn’t understand that the commission required it to make cash payments to subsidize the costs of the third-party medical services contract for inmates at the Valencia County Detention Center.
In addition, LHS believed the contract to be for eight years, but after discussion with the commission and county attorneys said it came to understand the commission required a provision to allow for termination of the contract by the county after the third year.
“These are requirements with which LHS simply cannot comply, both from a business standpoint and potentially from a legal one ...” the letter reads.
In a response to Lovelace dated Oct. 25, county purchasing officer Rustin Porter argued that under the conditions of the RFP, responses are considered firm for 90 days after the due date for proposals.
“According to the solicitation, LHS’s
response is considered firm until Tuesday, Nov. 6, 2018,” Porter wrote.
According to the proposal Lovelace submitted in response to the RFP, it was prepared to subsidize up to $950,000 a year to the detention center for inmate health care. The current inmate health care contract costs the county $940,673 annually.
According to Porter’s letter, Lovelace also proposed changes to the contract that include using property tax funds for construction “in contravention of the mill levy question approved by the voters, as well as to utilize the public’s mill levy funds as liquidated damages” if the county decided to terminate the contract after the first three years, as is allowed by state law.
Liquidated damages are often part of a contract and are typically paid as damages for failure to perform under the contract.
Under the state’s Hospital Funding Act, the county may terminate its contract with Lovelace or any provider without cause after the third year of the contract with 180 days notice.
The contract awarded under the terms of the RFP would be for eight years but still subject to the three year termination power of the county, a stipulation Lovelace argued it was not aware of prior to the proposal submission deadline.