Santa Clara Co Wins Legal Battle Against State Over Hospital Sale

GILROY, CA -- A Los Angeles bankruptcy court denied a petition Wednesday by the state to suspend the sale of St. Louise and O’Connor hospitals to Santa Clara County in order to meet the California Attorney General's criteria.

The county was the only bidder on the Gilroy and San Jose hospitals, respectively -- which are owned and operated by Verity Health Systems of California. The federal judge in Los Angeles on Wednesday dismissed the state attorney general's move to block county from purchasing two local hospitals after their owner declared bankruptcy last August.

The legal maneuver made by the state placed the hospitals in peril, the county and some residents warned.

“We are happy about the court’s decision and will move forward with the maintenance and expansion of community healthcare services in San Jose and south Santa Clara County,” County Executive Jeffrey V. Smith said. “We will ensure the continued availability of essential healthcare services in the entire region, something the attorney general was jeopardizing by attempting to block the sale and threatening the closure of these hospitals.”

The threat prompted a "save-our-hospital" citizen rally in Gilroy on Monday night.

"We are absolutely thrilled -- for the residents and south county in general," said Swanee Edwards, who's lived in Morgan Hill for 30 years. In half of the time, she's worked as a citizen activist. Maintaining the local hospital serving more than 100,000 people was high on her list of priorities. "We're also happy for the employees to keep their jobs. It's a win-win for everybody."

The Los Angeles court approved Santa Clara County's $235 million bid to purchase both hospitals on Dec. 27, but Attorney General Xavier Becerra ordered a stay on the purchase Jan. 10. Becerra contends the county had failed to meet the conditions to maintain the hospital including continuing general acute care and around-the-clock emergency services.

“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,” Becerra said. “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."

But county officials insist the local government has been following the guidelines. It deems the state has stopped dialogue, something it considers unfortunate.

The judge issued a tentative ruling declaring if the attorney general's stay would have gone through, the collapse of the sale agreement would have been inevitable.

In case of a classic winning the battle but not the war, county officials await whether the attorney general's will file an appeal to the dismissed order. The hope is the state won't continue with the fight, according to the county.

--Image courtesy of Eric Stoker