Oklahoma refused a certificate of need that would allow long-term-care chain Sun Healthcare Group, Irvine, Calif., to complete its $150 million acquisition of Peak Medical Corp., Albuquerque. Sun said it will appeal the decision and may take other action if the appeal is denied. Peak operates 11 skilled-nursing facilities in Oklahoma and 51 healthcare facilities in six other states. Sun said it had received CONs in the other states. The CON denial cited Sun's failure to comply with an injunction reached with the California attorney general, fines against the company and quality-of-care violations in California in the three years prior to the CON application. Sun subsequently agreed to pay $2.5 million to California for violating the injunction and agreed to comply with other staffing requirements. The acquisition had been expected to close before year-end, and Sun said it is working with Peak to extend the merger termination date, now set for Dec. 31.
Also, Sun Chief Executive Officer Richard Matros said the company still plans not to renew its membership in the American Health Care Association trade group at year-end. Sun was among several large nursing home chains that had complained that the trade group's governance made it difficult to move quickly on an agenda. The AHCA restructured in October, and some of the companies subsequently agreed to stay in the association. Sun operates 85 skilled-nursing facilities and 17 other healthcare facilities. -- by Joseph Mantone