Another legal battle over Hudson County hospitals

The lawsuit between BMC Hospital LLC and Hudson Regional Hospital further stirs the pot

Bayonne Medical Center sits at the heart of the crisis.
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Bayonne Medical Center sits at the heart of the crisis.

On July 9, Hudson County Superior Court Judge Jeffrey Jablonski ruled against part of a lawsuit filed by BMC Hospital LLC to block Hudson Regional Hospital’s contract to purchase Bayonne Medical Center for $76 million.

Jablonski dismissed the first count of BMC Hospital LLC’s lawsuit but allowed others to move forward before another determination on July 17.

He ruled that it was up to the state Department of Health to rule on the real estate transfer between Hudson Regional and Eisenreich, owner of nursing home operator Alaris Health, but that counts regarding a hospital license and operations at the facility could move forward.

A trial is not expected until 2021.

A months-long saga

CarePoint Health is dissolving and has been liquidating its assets, including Bayonne Medical Center, Hoboken University Medical Center, and Christ Hospital in Jersey City.

Avery Eisenreich purchased the land of Bayonne Medical Center and Hoboken University Medical Center in November of 2019. CarePoint has been searching for a hospital operator for the facilities ever since, eventually signing a formal sale agreement with BMC Hospital LLC to operate Bayonne Medical Center.

CarePoint has also signed a letter of intent with RWJBarnabas Health whereby that company would acquire operations at both Hoboken University Medical Center and Christ Hospital.

Meanwhile, Hudson Regional Hospital entered into a contract to buy the properties on which Bayonne Medical Center and Hoboken University Medical Center sit from Eisenreich for $76 million, and $144 million respectively. When the sale closes between Eisenreich and Hudson Regional Hospital, Hudson Regional intends to operate the hospitals, not BMC Hospital LLC.

The announcement came on the same day as the announcement of the formal sale agreement between CarePoint and BMC Hospital LLC.

Hudson County Executive Tom DeGise has asked Department of Health  Commissioner Judy Persichilli for help. Bayonne Mayor James Davis, Hoboken Mayor Ravi Bhalla, Jersey City Mayor Steven Fulop, Union City Mayor Brian Stack, and Hudson County Improvement Authority CEO Norman Guerra also signed the letter.

BMC Hospital LLC and Eisenreich penned their own letters to the Department of Health, asking for support of their respective transactions.

As the entities fight over the fate of the three hospitals, the county is moving forward with eminent domain proceedings to take possession of the three hospitals.

In May, the Hudson County Board of Freeholders voted to approve three resolutions invoking eminent domain on the three CarePoint Health hospitals.

Now, the Hudson County Improvement Authority has notified the property owners and operators of Bayonne Medical Center, Christ Hospital, and Hoboken University Medical Center that an onsite inspection of each facility will be conducted by the authority’s real estate appraisal experts, according to HCIA spokesperson Caitlin Mota.

Another lawsuit is further complicating the situation.

Hudson Regional vindicated         

In response to the July 9 ruling, Hudson Regional released a statement.

“Today’s ruling was even stronger than the Court’s denial of a similar motion brought by CarePoint last month,” said Dr. Nizar Kifaieh, CEO of Hudson Regional Hospital. “BMC Hospital LLC‘s dressing up these claims as its own was a frivolous attempt to upset the transaction entered by Hudson Regional to purchase the Bayonne Medical Center property and further reveals flaws in BMC Hospital LLC’s premise to take over Bayonne Medical Center.”

Hudson Regional assailed CarePoint for handpicking BMC Hospital LLC as its successor, pointing to a state Commission of Investigation report that found CarePoint distributed $157 million in management fees to its investors.

“The fact that it is CarePoint vouching for BMC Hospital LLC, and the fact that BMC Hospital LLC asserts that it will maintain the current CarePoint management, heightens rather than calms concerns over the stability of the hospital’s operation as an acute care facility.” Kifaieh said. “CarePoint’s management lost $30 million last year and operates an out-of-network healthcare system, and BMC Hospital LLC, whose own financial position is called into question as it has not even produced a balance sheet.”

Hudson Regional charged that BMC Hospital LLC does not comply with Department of Health regulations to gain a hospital license to operate Bayonne Medical Center because it does not own or control the property where the hospital is located.

Kifaieh also criticized the eminent domain process. Hudson Regional said that BMC Hospital LLC’s plan requires that the property be purchased through eminent domain and that the county lease the land to BMC Hospital LLC at a reduced rate.

“This situation does not meet the standard for eminent domain, which cannot be applied to a hospital based on a legal opinion from our attorneys and which is unnecessary because we are purchasing the property and able to operate it without public subsidy,” Kifaieh said. “Hudson Regional Hospital made a competing offer to CarePoint for Bayonne Medical Center and later made a subsequent offer – with proof of funds – to purchase the operations of Bayonne Medical Center, Hoboken University Medical Center and Christ Hospital Jersey City.  As of yet, CarePoint has not responded to the offer.”

BMC Hospital LLC also claims victory

According to BMC Hospital LLC, the Hudson County Superior Court ruling supports most of their case holds the key claims for trial, and refers a related decision to the New Jersey Department of Health.

“The court’s ruling only dealt with the real estate transfer issue – not the more-important hospital license and operations,” according to a spokesperson for BMC Hospital LLC. “The judge dismissed only Count 1 of the BMC lawsuit – and did so without prejudice – so that BMC can seek the DOH’s ruling, which BMC will seek immediately.”

BMC Hospital LLC contends that Department of Health regulations require approval of a certificate of need to become the property owner, prior to transferring a hospital’s real estate.

“The judge essentially ruled that the decision on whether a certificate of need is required to transfer a hospital’s real estate should first be rendered by the DOH, and then can be appealed to a court.”

As a result of the July 9 ruling, BMC Hospital LLC said it will send a request to the Department of Health for a ruling on the issue of whether DOH regulations require a certificate of need for the transfer of a hospital’s real estate.

CarePoint had filed a similar suit 

CarePoint previously filed suit against Hudson Regional Hospital, claiming it is interfering with the transaction to sell the hospital in Bayonne. And while a judge denied a temporary restraining order and ruled that Hudson Regional had not breached a confidentiality agreement between the entities, a trial date is set for 2021.

Amid the back-and-forth, Bayonne Medical Center’s staff voiced its support for the transaction with CarePoint in June.

Approximately 200 people comprising “the independent medical staff, doctors, nurses, union delegates and members of the HPAE Union as well as members of the community advisory group of Bayonne Medical Center” have expressed “enthusiastic support for the pending transaction between CarePoint Health and Bayonne Hospital LLC.”

Many of those staff members joined Mayor Davis a few days later outside Bayonne Medical Center, calling on the Department of Health to intervene on behalf of CarePoint and BMC Hospital LLC.

Mayor Davis said he didn’t know of any deal with Hudson Regional Hospital and was familiar only with the deal between CarePoint and BMC Hospital LLC.

After a rally in front of the hospital, Kifaieh sought to set the record straight in a letter to Davis.

Kifaieh said that as the “next owner-operator of Bayonne Medical Center,” Hudson Regional guarantees a number of things, primarily the permanent operation of the hospital as an acute care facility.

Hudson Regional will guarantee COVID-19 preparedness, uninterrupted operation, capital investment as owner-operators of Bayonne Medical Center, no public funding required, and “stable property ownership and operation.”

On June 24, the New Jersey Department of Health denied BMC Hospital LLC’s request for an expedited review of its certificate of need to operate Bayonne Medical Center.

That came after BMC Hospital LLC asked for expedited review of the application to operate Bayonne Medical Center, alleging dire financial circumstances and hinting that the medical center may close, alleging “potential loss of access to essential life-saving services.”

BMC Hospital LLC plans on reapplying to the Department of Health to operate the hospital under the full-review certificate of need application.

Hudson Regional said it has submitted a pending certificate of need application for review by the Department of Health.

With multiple lawsuits and other complicating factors, the crisis appears far from over.

For updates on this and other stories, check www.hudsonreporter.com and follow us on Twitter @hudson_reporter. Daniel Israel can be reached at disrael@hudsonreporter.com.