MetroSouth Medical Center, Blue Island | Youtube screenshot
Editor's note: This article has been revised from a previous version to include a statement from Quorum Health responding to the lawsuit.
CHICAGO — A prominent Chicago class action law firm has taken point on another legal maneuver to prevent the closure of another suburban hospital.
Oak Brook-based People’s Choice Hospital LLC hired Edelson P.C. to file a lawsuit against Quorum Health Corporation, alleging the company tried to close MetroSouth Medical Center in Blue Island “under false pretenses and in breach of an agreement on all material terms that PCH reached with Quorum to purchase the hospital.”
Ari Scharg | Edelson P.C.
In response, Quorum Health has called the lawsuit "frivolous and without merit."
PCH has "repeatedly mispresented the facts regarding their discussions related to MetroSouth Medical Center. They are wasting the community of Blue Island’s time, and that of the courts, with these baseless allegations," Quorum said in an emailed statement.
The complaint, filed Sept. 16 in Cook County Circuit Court, follows closely on Edelson’s involvement in litigation to prevent Wisconsin-based Pipeline Health Systems from closing Westlake Hospital in Melrose Park. Along with Cook County State’s Attorney Kim Foxx, the firm helped the village win a temporary injunction keeping the hospital open for a time. Pipeline has since sought bankruptcy protection for Westlake, and has closed the hospital. Melrose Park and its Edelson attorneys have also challenged that bankruptcy filing.
In a related matter, Edelson represents a class of hospital workers suing Pipeline because they allege the company didn’t give them proper notice before announcing Westlake’s closure.
The PCH complaint alleges the Brentwood, Tenn.-based company “lied to the public and the Illinois Health Facilities and Services Review Board by claiming that it doesn’t have enough money to continue operating MetroSouth Medical Center and cannot find any buyers,” despite PCH allegedly negotiating with Quorum to purchase MetroSouth for $20 million. PCH says it intends to complete that purchase.
The complaint alleged Quorum filed its application to close the hospital on June 16, despite starting negotiations with People’s Choice in March. The complaint said Quorum leadership gave false testimony at a July 24 public hearing by insisting no entity was interested in acquiring the hospital. It further said the company reiterated those assertions in an Aug. 23 letter to the state hospital regulatory board.
People’s Choice alleged Quorum wants to close and liquidate the 314-bed hospital. They said the closure would put more than 800 people out of work and affect treatment for “nearly 100,000 people every year, including tens of thousands of medically vulnerable community members that cannot otherwise afford to pay for medical services.” It said the liquidation plan would involve cashing out $25 million in accounts receivable and selling assets to net about $64 million.
People’s Choice said after it accepted the deal July 9 and asked Quorum to withdraw its application to close the hospital, Quorum responded by requesting a nonrefundable $1 million deposit or a signed definitive purchase agreement, which neither side had finished. People’s Choice alleged it tried to negotiate a lower deposit amount, but said Quorum communication stopped after Aug. 13, with People’s Choice offering $450,000 and Quorum demanding $750,000.
According to the complaint, Quorum told the Health Facilities Board none of the 40 health systems it contacted offered to buy MetroSouth. Quorum issued an Aug. 28 press release saying they “have worked to give the hospital away to a qualified operator for several months.”
The complaint includes formal counts of fraud, breach of contract and breach of the implied covenant of good faith and fair dealing. In addition to a jury trial, People’s Choice seeks punitive and compensatory damages — such as compensation for the expenses associated with regulatory complication, negotiations, drafting the purchase agreement and securing financing — and wants the court to force Quorum to complete the sale according to the agreed-upon terms.
On Twitter, Edelson lawyer Ari Scharg, who is representing PCH in the lawsuit, characterized the action as “yet another fight against a for-profit, out-of-state hospital owner. We’ll never run out of energy or passion to fight for access to health care.”
Although Quorum initially announced MetroSouth would close Sept. 30, the state board on Tuesday voted 5-1 to defer a decision on the closing proposal until Oct. 22.
Again on Twitter, Scharg said: “Big victory for Blue Island and the 100,000+ people that rely on MetroSouth for care. Lots of work to do but we’re happy the Board deferred based on our suit.”
He extended special “ups” to State Rep. Justin Slaughter (D-Chicago), labor union SEIU Health Care Illinois, Indiana, Missouri and Kentucky, and “the doctors and staff that refused to give in.”