The Catholic health system seeking to acquire Denver-based Exempla Healthcare met with another legal hurdle last week when Exemplas directors sued to halt the deal.
The lawsuit is the second seeking to stop the Sisters of Charity of Leavenworth Health System, one of Exemplas co-owners, from buying out its partner, the Community First Foundation based in Arvada, Colo. The eight-hospital Sisters of Charity, based in Lenexa, Kan., has agreed to pay Community First $311 million and invest $300 million in Exemplas hospitals, under the deal.
The $311 million payment to Community First and Catholic healthcare restrictions are at the center of the litigation. Two of Exemplas three hospitals would be required to adopt Catholic religious and ethical rules for medical care, which prohibit some reproductive services and set guidelines for end-of-life care. Exemplas third hospital, 436-bed St. Joseph in Denver, already adheres to the churchs directives because it is owned by the Sisters of Charity but governed and managed by Exempla under a 10-year-old joint operating agreement.
We believe this is a significant compromise on the nonsectarian community heritages of both hospitals that Exemplas founders intended to preserve, said Jeff Selberg, the systems president and chief executive officer.
A second lawsuit, filed by a physician; a Boulder, Colo., resident; and Compassion and Choices, an end-of-life care advocacy group, contends the conversion would violate Good Samaritans and Lutheran Medical Centers original charitable purpose. The lawsuit filed by Exemplas directors last week in Colorado District Court in Denver argues that converting the hospitals would violate the affiliation agreement that formed Exempla in 1997 and sought to maintain the distinct religious traditions of each hospital. Exemplas 172-bed Good Samaritan Medical Center in Lafayette, Colo., and 543-bed Lutheran Medical Center, in Wheat Ridge, Colo., do not adhere to religious restrictions on medical care. Its not the boards first effort to derail the sale. Exemplas director unsuccessfully asked Colorados attorney general in November 2007 to intervene.
The assets which Exempla holds in trust will not be dedicated in the future to the charitable purposes to which those assets have been dedicated in the past, the lawsuit said. The deal would also divert more than $300 million from hospital operations to Community First, the lawsuit said.
The Sisters of Charity and Community First dismissed the lawsuit as being without merit in a written statement.