Judge refuses to block sale of hospitals to Santa Clara County

Xavier Becerra
A federal judge on Friday rejected a bid by California Atty. Gen. Xavier Becerra, above, to put a hold on the sale of two financially strapped hospitals to Santa Clara County.
(Rich Pedroncelli / Associated Press)

A federal judge in Los Angeles refused Friday to put an emergency hold on the $235-million sale of two financially strapped nonprofit hospitals to Santa Clara County.

U.S. District Judge R. Gary Klausner denied an emergency motion by California Atty. Gen. Xavier Becerra to halt the sale until the county agreed to conditions set by the state.

The county argued that an emergency stay would scuttle the sale and leave the hospitals vulnerable to closure.

The sale of O’Connor Hospital and St. Louise Regional Hospital is scheduled to be completed by the end of the month.


O’Connor and St. Louise are among six struggling hospitals in Northern and Southern California previously owned by the Daughters of Charity of St. Vincent de Paul.

Verity Health System purchased them but could not restore them to financial health and declared Chapter 11 bankruptcy in August.

At the time of the sale, former Atty. Gen. Kamala Harris imposed conditions, including requirements for capital improvements, job security, emergency services and treatment of the poor.

Becerra has sought to require the hospitals to comply with the conditions.


Santa Clara County Supervisor Joe Simitian, president of the county Board of Supervisors, called Becerra’s litigation “a distraction from the important work we have to do.”

“It’s time to stop arguing about who’s right, and start focusing on what’s right,” Simitian said. “And that’s taking care of the folks here in the county who need our help.”

Asked whether Becerra planned to appeal, a spokesperson said only: “We are exploring our options.”

Santa Clara County already operates a $1.5-billion healthcare system, but its hospital often lacks enough beds to meet demand.

Strategic Global Management Inc., a California-based for-profit hospital operator, has bid $610 million to take over the other four hospitals: St. Francis Medical Center in Lynwood, St. Vincent Medical Center in Los Angeles, Seton Medical Center in Daly City and Seton Coastside in Moss Beach.

Dr. Patrick Soon-Shiong, a medical entrepreneur who owns the Los Angeles Times, is a creditor in the bankruptcy. A company he controls previously loaned Verity $148 million, according to court records.

Twitter: @mauradolan


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