Buhl Trust, Commonwealth Contest Ownership of Sharon Hospital

SHARON, Pa. – The future of Sharon Regional Medical Center remains in question as the Dec. 1 deadline nears for a new operator to take over.

Court documents filed in U.S. Bankruptcy court Thursday state the commonwealth of Pennsylvania and the Buhl Trust intend to pursue legal action against Medical Properties Trust Inc. and MPT of Sharon-Steward LLC, alleging those organizations do not have legal claim to ownership of Sharon Regional.

According to the court documents, the commonwealth has negotiated with Medical Properties Trust and MPT of Sharon-Steward regarding the sale of the hospital to Meadville Medical Center, but no agreement has been reached on the property.

While the commonwealth contends MPT-Sharon and MPT do not have a valid title to the hospital property, court documents state MPT claims those allegations are without merit.

Due to this disagreement, Pennsylvania Attorney General Michelle Henry and the original operators of the Sharon hospital, the Buhl Trust, state they intend to ask for an injunction in Mercer County Common Pleas Court regarding the sale of the Sharon hospital property and for a constructive trust to be set up with $20.2 million in MPT funds. 

Additionally, the commonwealth and the Buhl Trust are seeking an equitable lien in favor of the attorney general and an order that should MPT Sharon and MPT fail to follow orders of the Pennsylvania court, they will be forced to divest legal and equitable ownership rights.

The documents, filed in U.S. Bankruptcy Court in Houston on Thursday by attorneys representing Steward Health Care System, the Pennsylvania Attorney General’s office and the Buhl Trust, were signed by U.S. Bankruptcy Judge Christopher Lopez on Friday. Lopez has been overseeing Steward Health’s bankruptcy case since it was filed in May.

Presumably, Lopez would have to agree to allow the filing of the case in a Mercer County court by lifting the stay placed on litigation involving the Steward-owned hospitals during the bankruptcy process.

The commonwealth has contended that when the Buhl Trust sold the hospital to Community Health Systems in 2014, there were stipulations or terms that needed to be met should CHS sell the hospital later.

Bob Lackey, an attorney representing the Christian H. Buhl Legacy Trust, said in August the trust believes the deal when the hospital was sold to Steward, which then signed a leaseback deal with MPT for the real estate, was not disclosed to the Buhl Trust as required. The Buhl Trust and the Pennsylvania attorney general argued in prior legal documents that the deal contained “burdensome financial terms … and undermined the financial viability” of the hospital.

The Buhl Trust and commonwealth believe the continued ownership of the property by MPT and MPT-Sharon is detrimental to the operations of the financial stability of the hospital.

Although Steward threatened to close the hospital in August, a reprieve came when the commonwealth reportedly paid $1.5 million per month for three months to cover the costs until a deal could be reached. That three-month deadline is Dec. 1.

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