Parties in hospital merger Supreme Court case ask to dismiss cases

By Kyla Asbury | Jan 23, 2018

CHARLESTON – Oral arguments were to be heard today at the West Virginia Supreme Court of Appeals in two cases involving the merger between Cabell Huntington Hospital and St. Mary’s Medical Center. In the hours before court began, the parties in the cases asked for dismissal of the cases.

The cases involved St. Mary’s Medical Center v. Steel of West Virginia and Attorney General Patrick Morrisey v. Steel of West Virginia. A third case scheduled to be heard, Steel of West Virginia v. West Virginia Health Care Authority, was previously withdrawn.

In the hours before the oral arguments were to begin, the three parties brought an agreed to voluntary dismissal order to the court.

Katherine Schultz, of the West Virginia Attorney General’s Office; James Thomas, the attorney representing St. Mary’s and Pallottine; and Carte Goodwin, the attorney for Steel of West Virginia all spoke at the oral arguments, apologizing for not filing the motion sooner.

Schultz said they apologized for the lateness of the order.

“The order wasn’t able to be here any sooner because the parties reached an agreement last night in the certificate of need case—which I notice has been taken off the argument docket—and this morning, we were able to present to the court a voluntary dismissal order because now the parties have agreed that this case is moot because Steel of West Virginia has withdrawn its FOIA request…”

The Supreme Court asked to hear Schultz’s argument for the case, which she provided.

Schultz asked that the order to obtain documents be reversed because the circuit court misapplied the law.

“The circuit court relied solely on the fact that the Legislature passed Senate Bill 597, which took away some of the attorney general’s powers,” she said.

Schultz said the senate bill wasn’t passed until months after the attorney general’s investigation and that the judge wrongfully applied it retroactively.

She also argued the circuit judge violated federal law because documents filed with the Federal Trade Commission should have stayed confidential.

Thomas said St. Mary’s no longer has dispute with Steel of West Virginia after the joint agreement for voluntary dismissal. He asked the dismissal to be granted.

Goodwin said the parties worked diligently to settle and compromise this case and the certificate of need case and that Steel agreed to withdraw its FOIA request.

“In light of that withdraw and in light of the pleadings filed today…I must respectfully decline to offer any argument and do so with a keen appreciation of the level of preparation of work,” Goodwin said.

Justices were set to hear arguments in all three appeals related to the merger, but with the withdrawal of the appeal of the certificate of need, two related appeals concerning Freedom of Information Act requests for documents regarding the merger were made moot.

Steel of West Virginia had voiced its unhappiness with the merger from the beginning.

The company claimed the deal would create a healthcare monopoly for Huntington and its surrounding area. It also claimed healthcare prices would be higher and quality would diminish.

St. Mary’s and Morrisey filed separate appeals of two Oct. 28, 2016, orders of Kanawha Circuit Court requiring production of certain documents related to the proposed sale of St. Mary’s.

The documents at issue were requested by a third-party through a Freedom of Information Act request served upon Morrisey. St. Mary’s and Morrisey argue that the circuit court erred in requiring the disclosure of these documents, as said documents were exempt from disclosure by West Virginia Code §§ 29B-1-4(a)(1) and (5), and West Virginia Code § 47-18-7(d).

St. Mary’s and Pallottine Health Services also appeal the circuit court’s Oct. 28, 2016 order denying their motion to intervene and argue that the circuit court erred in finding that their interests were adequately represented by the existing parties.

In Steel’s suit against WVHCA, Steel appeals the circuit court’s April 19 “Final Order” that affirmed the WVHCA’s decision to issue a certificate of need to Cabell Huntington in its purchase of St. Mary’s.

Steel claimed WVHCA committed an error of law by not considering alternatives in terms of cost, efficiency and appropriateness to the proposed acquisition, per state code and previous precedent.

The company believed the authority failed to consider "superior alternatives" to the merger of Cabell Huntington and St. Mary's.

In April, Kanawha Circuit Judge James Stucky affirmed WVHCA’s decision to grant a certificate of need in the hospital merger between the hospitals.

Stucky ruled that other bids are not "practicable" because they have already been rejected by St. Mary's and that the bid information is not relevant.

He wrote that the certificate of need law was not intended to serve as a legal review process over how a private corporation conducts the sale of its own property.

The hospitals still need Vatican approval to complete the $165 million transaction.

In 2014, the Pallottine Sisters announced plans to sell the hospital. Cabell began the acquisition then.

In November 2014, a transfer agreement was signed between the two hospitals. The WVHCA approved the hospital’s certificate of need in January and approved the cooperative agreement in June.

W.Va. Supreme Court of Appeals case numbers: 16-1101, 16-1104

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