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Firm sues California attorney general over bid for Catholic hospitals

Firm sues California attorney general over bid for Catholic hospitals
St. Vincent Medical Center in Los Angeles is one of six hospitals operated by Daughters of Charity. (Brian van der Brug / Los Angeles Times)

Hospital operator Prime Healthcare Services Inc. is suing California Atty. Gen. Kamala Harris for imposing strict restrictions that caused the Ontario company to back out of its attempted purchase of six Roman Catholic hospitals earlier this year.

Prime Healthcare agreed to buy the Daughters of Charity Health System last year for $843 million, but backed out of the deal in March after Harris placed several conditions on the sale.

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Harris said she would approve the sale only if Prime Healthcare would keep all of the hospitals open for 10 years and provide the same level of charity care to poor patients as Daughters of Charity had. The six hospitals include St. Vincent and St. Francis medical centers in Los Angeles County.

Prime Healthcare said in the lawsuit that Harris was not impartial in her review of the sale. The company accused her of siding with a politically influential labor union, the SEIU-United Healthcare Workers West, which opposed the sale.

"Harris abused her constitutional authority by placing her need for political financial support over the healthcare needs of the people," said Troy Schell, general counsel for Prime Healthcare. "By imposing restrictive conditions on Prime and only Prime, she forced the company to withdraw its offer for the DCHS hospitals, jeopardizing health care in these underserved communities."

A spokeswoman for Harris said the conditions were a necessary step to ensure the nonprofit hospitals would continue to provide vital services to their communities.

"Prime's decision to walk away, and this lawsuit, reaffirms the concerns voiced at multiple community meetings, that Prime never intended to prioritize the continuity of vital health services," Harris spokeswoman Kristin Ford said in a statement.

Robert Issai, chief executive of the Daughters of Charity hospitals, declined to comment on the lawsuit.

In July, a private investment firm agreed to provide a $250-million cash infusion to keep the struggling hospital afloat. The firm, BlueMountain Capital Management in New York, also would oversee management of the chain, which would keep its nonprofit status. The deal is pending before the attorney general.

Twitter: @spfeifer22

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