Bankruptcy court judge to decide fate of St. Louise, O’Connor hospitals Jan. 30

Published in the January 30 – February 12, 2019 of Morgan Hill Life

Xavier Becerra

Santa Clara County is facing a bankruptcy court showdown with California Attorney General State Attorney General Xavier Becerra. The California Department of Justice’s actions in January might jeopardize the $235 million purchase of St. Louise Regional and O’Connor hospitals, possibly closing them forever if the conflict is not resolved.

Becerra seeks 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 Heath System of California must adhere strictly to all conditions set down three years ago by his predecessor, Kamala Harris. County officials including Supervisor Mike Wasserman and Morgan Hill Mayor Rich Constantine said the AG’s action could end up shuttering the hospitals entirely.

A group of South Valley residents attended a Jan. 24 press conference held at noon at the back patio of the Santa Clara County Government Building in San Jose to protest what they see as the AG’s interference in the deal between the county and nonprofit Verity Health.

The California Department of Justice’s attempts to block the sale makes Wasserman feel “deeply disappointed,” he said.

“As county supervisor, I will do everything I can to keep the hospitals open so as to ensure continued health care access for all residents,” he wrote in a Facebook post. “Since the county was the only party to bid on Verity’s hospitals, the Attorney General’s actions jeopardize the deal and could cause the closure of both hospitals – threatening the health of our community, especially in South County.”

The sales agreement between the county and Verity requires the purchase to close by the beginning of March. At Becerra’s request, a hearing is scheduled for Wednesday, Jan. 30, in a Los Angeles bankruptcy court where a judge will consider stopping the sale of O’Connor and St. Louise. Becerra is expected to appeal the decision if the judge decides in favor of the county.

“The issue is simple, the county is the only one offering to buy it,” Wasserman said in a Facebook post to encourage supporters to contact Becerra and request he withdraw the stay. “And the judge approved the sale to us. Unfortunately, the Attorney General’s office is contesting the sale. If we don’t buy it, it will close and 100,000 county residents will lose local access to hospital services!”

The closure of St. Louise will harm all South Valley residents but especially the Latino community. That group sees a high rate of health problems and has a higher mortality rate from diseases such as cancer, heart disease and diabetes than the overall population in Santa Clara County, according to county health experts.

In response to an email request by Morgan Hill Life to explain Becerra’s reasons for requesting a stay on the sale, the AG’s press office replied with this statement:

“The Attorney General is entrusted with the responsibility under the state constitution and statute to protect the health and safety of patients and the community served by hospitals. In this case, we have the responsibility to ensure any transfer of the hospital maintains previously imposed conditions. The conditions include the requirement to have an emergency room, impatient facility beds, intensive care services, and NICU [neonatal intensive care unit]. The Attorney General is fighting to ensure these conditions are enforced.”

The statement was followed by a list of other conditions the AG demands for the deal to proceed including requirements for St. Louise to maintain cancer treatment, a seven-day urgent care center at the De Paul Center in Morgan Hill, and other programs.

At the Jan. 24 press conference, 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. Smith told them Bercerra 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.

“Attorney General Becerra has rejected all of 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. “It is clear the Department of Justice is more concerned about protecting its power than protecting the health of Santa Clara County residents.”


Sean Wherley, the media relations specialist with SEIU-United Healthcare Workers West, the union representing many of the hospital workers including nurses, emailed a statement to Morgan Hill Life:

“We support the right of the Attorney General to regulate hospital sales to ensure they are in the best interests of communities, patients and workers. In this particular case, we support the sale of St. Louise Regional Hospital and O’Connor Hospital to Santa Clara County because the county has made strong commitments to maintain services and protect workers, and we are hopeful that the attorney general’s appeal will not delay the transaction.”

Santa Clara County started taking steps to purchase the two hospitals and Morgan Hill’s De Paul Medical Center facilities after Verity Health System of California filed for bankruptcy protection Aug. 31.

Marty Cheek