State sued over St. Elizabeth’s property-taking

St. Elizabeth’s Hospital in Brighton, now run by Boston Medical Center.

The owner of the property and buildings for St. Elizabeth’s Medical Center in Brighton has made good on its promise to fight the state’s takeover of the hospital by eminent domain.

St. Elizabeth LLC, a group of Apollo Global Management investors whose attorney said it became the property’s owner shortly before the state takeover, has filed a complaint asking the court to stop the takeover, arguing that it’s unconstitutional. The complaint alleges that state officials offered too little for the property, and favored another private hospital operator and therefore the takeover was not a “public purpose” as required by law

The complaint argues that the process to transfer hospital ownership favored Boston Medical Center, which agreed to pay $140 million to take over St. Elizabeth’s and Good Samaritan Hospital in Brockton after the hospitals’ former operator, Steward Health Care, filed for bankruptcy.

“Directly or indirectly, the Commonwealth is funding BMC’s acquisition of the hospital or providing improper aid to maintain the hospital while allowing it to use the Hospital Property for no rent or below-market rent,” attorneys wrote in the complaint.

The attorneys for St. Elizabeth LLC further argue that they did not stand in the way of transferring St. Elizabeth’s to another hospital operator but wanted to negotiate a sale or lease of the property to a new owner, claiming the state made an unreasonable $4.5 million dollar offer for a property assessed at $200 million.

Apollo was the mortgage lender for Medical Properties Trust and Macquarie Asset Management, the two companies that owned the real estate of Steward’s Massachusetts hospitals. MPT and Macquarie agreed that Apollo would help facilitate hospital sales during the bankruptcy proceedings.

Massachusetts is expected to spend hundreds of millions of dollars to keep the Steward hospitals operating. Much of the funding will come from a state hospital assessment fee and federal reimbursements.

The complaint also asks the court to declare the eminent domain proceedings for St. Elizabeth’s Medical Center invalid because the governor did not seek legislative approval.

The complaint names the state, Gov. Healey and state Health and Human Services Secretary Kate Walsh as defendants. The state Executive Office of Health and Human Services said it does not comment on pending litigation.

In August, Healey announced the state would take St. Elizabeth’s by eminent domain. She also announced deals for Steward’s other Massachusetts hospitals: Holy Family Hospital in Haverhill and Methuen, which was taken over by Lawrence General Hospital; and Morton Hospital in Taunton and St. Anne’s Hospital in Fall River, which were bought by the Rhode Island-based Lifespan system, now known as Brown University Health.

Steward closed two other Massachusetts hospitals, Carney Hospital in Dorchester and Nashoba Valley Medical Center in Ayer, in August after no viable buyers emerged as part of the bankruptcy process.

Priyanka Dayal McCluskey contributed to this report.


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