Main story: Judge rules against AG’s attempt to block sale of St. Louise

Attorney General Xavier Becerra could appeal the judge’s decision

Published in the February 6 – 19, 2019 issue of Gilroy Life

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South Valley residents have rising hopes St. Louise Regional Hospital will not close permanently.

A bankruptcy court in Los Angeles ruled Jan. 30 against California Attorney General State Attorney General Xavier Becerra’s attempt to delay the sale of the Gilroy medical center to the county. The sales agreement between the county and Verity Health Systems of California requires the $235 million purchase of St. Louise in Gilroy, De Paul Medical Center in Morgan Hill and O’Connor Hospital in San Jose to close by the beginning of March. County officials consider the judgment a victory because any delay could lead to the closure of the hospitals, they argued in court.

Becerra could appeal the decision, but as of Friday’s press deadline no announcement had been made public.

Judge Ernest Robles wrote in an 18-page ruling Becerra’s effort to temporarily block the sale “would set in motion a series of events that, in all probability, would reduce the availability of healthcare services to the public.”

Becerra attempted to block the sale of the two financially struggling hospitals because he believes the county has not agreed to operate them in a way that would protect healthcare access. The AG contends any sale of hospitals owned by Verity must adhere strictly to all conditions set down three years ago by his predecessor, Kamala Harris. County officials including Supervisor Mike Wasserman said the AG’s action could end up shuttering the hospitals entirely.

Holding signs and making speeches, about 60 South Valley residents and Wasserman held a sunset rally in front of St. Louise’s entrance the evening prior to the ruling to express their concerns the Department of Justice’s attempt to postpone the county’s purchase of three medical facilities including St. Louise would risk lives and cost the jobs of at least 1,500 employees.

“It is essential every resident of Santa Clara County have access to a hospital in the event of an emergency,” Wasserman said. “One thing you don’t want to be is in labor at 8 o’clock in the morning going north on Highway 101. Minutes can literally mean the difference between life and death.”

Although dozens of organizations inquired about purchasing the hospitals, only the county made an offer to Verity to buy the three facilities.

“Santa Clara County was and remains the only entity to step forward, make an offer based on the appraisal which was accepted by the bankruptcy court, and the sale was to go through,” Wasserman said. “The judge approved the sale. Unfortunately, the attorney general’s office objected. I say unfortunately because if the only bidder, Santa Clara County, is not able to complete the purchase in the next few weeks, these hospital will likely close. That will be absolutely horrific.”

The supervisor joined a group of South Valley residents who attended a Jan. 24 press conference in San Jose to protest what they saw as the AG’s interference in the deal between the county and nonprofit Verity Health.

At that event, Santa Clara County CEO Jeff Smith stood in front of a group of hospital workers, elected officials and South Valley residents holding signs with the hashtag, #SaveSCChospitalsAG. He told them Becerra cares more about maintaining “power and control” over regulations than making sure South Valley has a public hospital to take care of its residents’ medical needs.

Becerra issued a statement Jan. 30 on the judge denying his petition. It is titled “Bankruptcy Should Not Be Used as a Means to Evade Responsibility for Care of Patients” and reads:

“Our message in court has been clear and simple. We take our responsibility to protect the health and safety of California patients and the Santa Clara community seriously. From ensuring access to emergency care to women’s healthcare, the important patient protections that apply to Verity’s health facilities must be maintained in any transfer of these hospitals. This decision unfortunately strips our office of the authority to protect patients when hospitals are transferred to public entities like the County of Santa Clara. This is concerning, since the County of Santa Clara would not articulate which of these important patient protections and services that were a condition for the operation of Verity’s hospitals would survive in the transfer of ownership. Nor would Santa Clara County explain why it would not commit to maintain these levels of patient protections and services.”

Smith said the county has done all it can to appease the Attorney General.

“Attorney General Becerra has rejected all our good-faith efforts to resolve his objections to the county purchasing the hospitals,” Smith, a medical doctor and lawyer, told members of the media attending the press conference.

Gilroy Mayor Roland Velasco said he was pleased with the judge’s ruling.

“Any interruption of services could have had a substantial negative impact on the health of our community,” he said. “Saint Louise has been a critical component of the community providing much needed healthcare services since it opened nearly 20 years ago.”

In his decision, Robles said the public interest weighs strongly against Becerra’s request to postpone the sale. Because Verity lacks the funds to maintain operations pending a sale to another buyer, it would be forced to close.

“The Attorney General’s theory is that public health and welfare can be adequately protected only if he has the opportunity to enforce the Conditions,” the report read. “This argument overlooks the reality that enforcement of the Conditions would likely lead Santa Clara to withdraw from the sale. . . . Far from protecting public health and welfare, a stay would set in motion a series of events that, in all probability, would reduce the availability of healthcare services to the public.”

The report also said postponing the sale would harm hospital employee morale by adding uncertainty into their lives and careers. Verity filed for bankruptcy Aug. 31. Facing an uncertain  future, 104 employees left between Sept. 4 and Dec. 28.