Judge OKs Agreement to Keep Local Hospitals Open
YOUNGSTOWN, Ohio – The final settlement order involving agreements for local hospitals owned by Steward Health Care System was approved by U.S. District Bankruptcy Judge Christopher Lopez on Tuesday afternoon.
The settlement between Steward, Medical Properties Trust, the secured lenders and committee of unsecured lenders will allow Trumbull Regional Medical Center in Warren, Hillside Rehabilitation Hospital in Howland and Sharon Regional Medical Center in Sharon, Pa., to remain open.
Lopez said he will sign the agreement, which he called “in the best interest” of both Steward, which filed for Chapter 11 bankruptcy May 6, and the creditors. Additionally, he said with the agreement, Steward should be able to “put forward a very viable Chapter 11 plan.”
Insight Health System of Flint, Mich., is operating Trumbull and Hillside through the transition.
During the hearing Tuesday, it was noted some language still needs to be worked out, including the concerns filed by the commonwealth of Pennsylvania and the Buhl Legacy Trust, which was the former owner of Sharon Regional Medical Center. Both reiterated during the hearing that they had concerns that language in the agreement did not protect the rights of those who may still have a claim.
Lopez asked for language to be drafted that both protects the interim managers from concern, but allows for a pure direct cause of action claim by a third party.
The agreement allows Steward to retain $395 million from the $439 million sale of three hospitals in Florida, which will be used to pay creditors. The agreement also includes the waiver of claims by MPT, which announced Sept. 11 the agreement should allow it to continue receiving about $160 million in aggregate annualized cash rental payments, according to lease agreements.
Pennsylvania will continue to fund Sharon Regional in the amount of $4.5 million total until Dec. 1, when Meadville Medical Center reportedly will take over the operation if funding can be obtained.
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