Mass. AG wants more time to review sale

Jessica M. Karmasek Jul. 11, 2011, 12:10pm


BOSTON (Legal Newsline) - Massachusetts Attorney General Martha Coakley, in a court filing last week, said her office needs more time to review a medical center's sale procedures.

Coakley, in her six-page motion filed in U.S. Bankruptcy Court for the District of Massachusetts Tuesday, said she opposes Quincy Medical Center Inc.'s motion for approval of sale procedures.

The time frames and deadlines proposed in the sale procedures motion, she said, may not permit her office to satisfy its statutory obligations under Section 8A(d) of state code.

Last week, the medical center filed for Chapter 11 bankruptcy protection as part of the sale to Steward Health Care System LLC.

The center's Interim Chief Executive Officer John N. Kastanis said in a recent statement that the Chapter 11 filing will allow Quincy to restructure its debt and reorganize its operations, "providing our selected capital partner a predictable and manageable process forward."

"This will not affect the day-to-day operations of the hospital, as we continue to provide the cost-efficient, high-quality patient care and services the people of Quincy and surrounding communities rely on," Kastanis said.

Under federal and state law, the transfer of a charitable nonprofit entity to a for-profit corporation needs the approval of the state attorney general. In its proposed $38 million sale to Stewart, Quincy is seeking such a transfer.

The attorney general argues that under state code her office is required to consider "any factors that the attorney general deems relevant," including, but not limited to whether:

- The proposed transaction complies with applicable general nonprofit and charities law;

- Due care was followed by the nonprofit entity;

- Conflict of interest was avoided by the nonprofit entity at all phases of decision making;

- Fair value will be received for the nonprofit assets; and

- The proposed transaction is in the public interest.

Coakley said she also is required to hold at least one public hearing following at least 21 days advance notice by newspaper publication.

In her court filing, the attorney general requests the following:

- That the parties to the proposed sale transaction and the court take notice of potential issues that may arise as a result of any discrepancies between the time frames and deadlines proposed in the sale procedures motion and the statutory requirements of Section 8A(d);

- That any sale approval be contingent upon the court holding a hearing on the medical center's motion, with the attorney general's assent, concerning the attorney general's report and findings
pursuant to Section 8A(d) with respect to the proposed sale;

- That the attorney general receive notice of all pleadings, orders, notices, motions, demands, requests, applications, objections, and other documents filed in these case; and

- That the court enter such other orders as may be just and proper.

According to the Patriot Ledger, under the sale agreement, either Quincy or Stewart can terminate the agreement if all proceedings are not finished by December.

Also, if the court dismisses the case without approving the sale to Steward, the deal is off.

From Legal Newsline: Reach Jessica Karmasek by e-mail at

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