Judge: Restart sale of hospitals
WEST CHESTER » A Common Pleas Court judge granted the request for an injunction against Tower Health Monday, ordering the Readingbased firm to again begin the process of selling Jennersville and Brandywine hospitals in Chester County after terminating the sale to Canyon Atlantic Partners, a Texas-based health care company in 2021.
In a 10-page order, Judge Edward Griffith ruled that Canyon Atlantic had shown that its request that Tower be held to its original agreement of sale was justified, and that if Tower were allowed to terminate the sale it would harm not only Canyon Atlantic, but the wider community as well.
“The harm to Canyon is substantial,” Griffith wrote in his order granting the injunction. “Absent enforcement of the agreement, Canyon will lose this opportunity forever. No harm is suffered by Tower Health if the relief sought by Canyon is entered.”
Moreover, the judge wrote, “the hospitals provide signif
icant health resources for Chester County and its citizens. The hospitals are critically important to their local communities. The impact of the hospital closures spreads beyond the local community. Neighboring hospitals will be overburdened rendering health resources scarcer to a greater community.”
Griffith ruled that Tower’s December notice of termination of the hospitals’ sale was “null and void” and that the firm was prohibited from taking any further action towards their ultimate closure. It will have to “maintain and preserve” the current state of physical facilities at both Brandywine and Jennersville, and cannot transfer any more of their assets to others.
He gave Canyon 90 days to evaluate the condition of the hospitals, and to determine what steps it must take to complete the real estate closing on, and transfer of, the properties. Tower Health was also ordered to grant Canyon representatives access to the hospital properties so that they could examine any documents and information necessary to proceed to closing. For its part, Canyon was ordered to post a $1 million bond — the amount it had agreed to pay to Tower on Dec. 31 last year within 10 days.
The ruling was a victory for the Texas firm that manages hospitals across the country and which agreed to buy the financially strapped facilities in the county for $16.5 million in November after Tower — which had purchased the two along with Phoenixville Hospital, Pottstown Hospital, and Chestnut Hill Hospital in 2017 for $423 million — announced it intended to close the pair.
It is also a win for those in government and the medical community in the county who raised an outcry after Tower abruptly said it was backing out of the deal to sell the hospitals to Canyon, citing unspecified financial and regulatory problems it claimed Canyon suffered from. The county commissioners, several state lawmakers, and members of the Chester County Medical Society — along with first responders in the southern and western portion of the county — harshly criticized Tower’s move.
“People are going to die,” said state Rep. Dan Williams, D-74th, of Sadsbury, at a meeting with constituents in January, noting that some county residents will now need to travel 40 minutes to get to a hospital. Chester County Hospital has seen traffic at its emergency room increase substantially, and had to make room for modular facilities at its site to handle the overflow. Commissioners’ Vice Chairman Josh Maxwell called it “gross incompetence” to close the facilities, Brandywine in Caln and Jennersville in Penn.
Local attorneys for Canyon at the West Chester area law firm Lamb McErlane could not be immediately reached for comment. An attorney for Tower with the firm of Stevens & Lee in Reading did not return calls seeking a response to the judge’s ruling, or to answer whether Tower planned to appeal the decision to the state Superior Court.
In a brief statement, Tower, whose main operation is Reading Hospital, said: “We are reviewing the judge’s ruling and will not have any additional comment until that process is complete.”
Attorney Jamie Goncharoff of West Chester, representing the Medical Society, which has asked to intervene in the case, hailed the ruling.
“I am very happy and very pleased with the decision,” he said Monday. “I think Judge Griffith addressed all the legal requirements need to obtain the injunction. And I think this opportunity to get these two hospitals re-opened is so much closer to becoming a reality. It’s going to solve a lot of problems.”
In a statement issued later Monday, the commissioners said they were “encouraged” by the decision and would be “monitoring this situation closely.
“We want to see emergent care, acute care and behavioral health services return to these locations as soon as possible,” said the trio, which includes Maxwell, Chairwoman Marian Moskowitz, and Commissioner Michelle Kichline.
“Until then, our County departments continue to take action to ensure residents’ healthcare needs throughout the county are met,” the statement said. “Staff in Chester County’s Department of Emergency Services have been coordinating communication with, and providing support for first responders, especially emergency medical services, and Chester County’s Human Services staff have been ensuring that behavioral health services are maintained for those who need them.
“In short, restoring the services these two hospitals provided prior to closure continues to be a major focus for us,” they said.
The decision comes after two days of hearings on the injunction request this month. Two witnesses testified for Canyon Atlantic, while one testified for Tower.
In his ruling, it was clear that Griffith took a dim view of Tower’s behavior after it had signed the sale agreement with Canyon. The Reading firm hindered Canyon’s ability to get information; said it had provided Canyon with information when it had not; required Canyon’s personnel to be escorted about the two properties when it inspected them and could not speak with hospital personnel unless at prearranged meetings.
Additionally, although the sate Attorney General’s Office is required to approve the transfer of hospitals from one owner to another, Tower specifically forbid Canyon from communicating with that office, meanwhile setting arbitrary and unsupported deadlines.
“Tower Health’s conduct interfered with Canyon’s ability to provide necessary information to its finance partners, respond to Tower Health’s questions regarding financing, work through the regulatory process to secure licenses, and complete other necessary tasks,” Griffith wrote.
When P. Sue Perotty, Tower’s president and chief executive officer, informed Canyon in a Dec. 8 letter that it was terminating the sale of the hospitals, she did not cite any of the language of the agreement that laid out the terms under which either Tower or Canyon could cancel the sale, Griffith said.
In a footnote, he said that Tower’s witness, Executive Vice President Daniel Ahern, “conceded as much during his testimony. Tower Health never declared Canyon to be in breach.”
Griffith said that Canyon had shown that it had met each of the six requirements for getting an injunction of the kind it sought against Tower, which reset the conditions that had existed prior to the time when the sale was canceled.
Canyon’s case had shown that it would suffer “immediate and irreparable harm;” that its injury would be greater than anything Tower would suffer; that others would no be harmed if an injunction were granted; that the status quo would be restored; that there was a valid legal reason behind the request; that an injunction would solve the plaintiff’s harm; and that it would not adversely affect the public interest.
In its case, Tower had contended that the injunction should fail because Canyon had waited too long to ask for it in court. Jennersville closed its doors on Dec. 31, two weeks before Canyon filed its request, while Brandywine closed to the public on Jan. 31, before the hearing with Griffith could take place.
But in taking Canyon’s side, Griffith said that Tower would face no harm if it returned to the table to complete the sale. It is not currently marketing the properties, although Ahern said it had received inquiries from “interested suitors.
“Tower Health finds itself in the position it is in because of its own conduct,” the judge wrote. “Given this history, Tower Health cannot now be heard to say, with its unclean hands, that the entry of an injunction against it is unjust.”
In his ruling, Griffith said that now, “the parties can work toward (completing the sale). Canyon has represented that it is ready, willing and able to perform. Given Tower Health’s conduct, equitable considerations support granting Canyon additional time to perform to restore the operations of the hospitals.”