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Cooper loses bid to recoup $15 million related to abandoned Lourdes Health acquisition in 2017

A federal jury issued a verdict against Cooper and in favor of Trinity Health in the case started in 2017.

Our Lady of Lourdes, in Camden, is one of three hospitals Cooper planned to buy under a preliminary agreement reached in 2017, but later abandoned because of what it contended were significant due diligence problems. Virtua now owns Our Lady of Lourdes.
Our Lady of Lourdes, in Camden, is one of three hospitals Cooper planned to buy under a preliminary agreement reached in 2017, but later abandoned because of what it contended were significant due diligence problems. Virtua now owns Our Lady of Lourdes.Read moreVirtua

For almost five years, Cooper Health System has been trying to recoup $15 million related to its abandoned 2017 bid to acquire hospitals in Camden, Willingboro, and Trenton from Trinity Health.

Cooper alleged in a December 2017 complaint that potential liabilities of as much as $100 million uncovered during due diligence gave it the right to back out of the three-hospital deal and recover the $15 million it had put into escrow while final terms were worked out.

After a six-day trial last month in U.S. District Court in Camden, a jury disagreed, reaching a verdict Sept. 30 that the $15 million in escrow should be paid to Trinity, which is based in Livonia, Mich.

“Trinity Health is pleased with the verdict,” said a spokesperson for the large Catholic health system, which owns St. Mary Medical Center in Langhorne, Nazareth Hospital in Northeast Philadelphia, Mercy Fitzgerald Hospital in Darby, and St. Francis Hospital in Wilmington.

Cooper said the jury recognized the significant due diligence justifying Cooper’s decision not to go forward with the deal. “Cooper believes the jury erroneously interpreted the contract to require that Cooper give written notice of the due diligence issues where no such written notice was required,” Cooper’s statement said. “As such, Cooper is evaluating its appeal rights.”

Under Cooper’s preliminary agreement with Trinity, Cooper was going to pay $150 million to Trinity, which Trinity was going to use to retire debts and other obligations of Lourdes and St. Francis, according to a court document. Cooper also agreed to spend $135.5 million on capital expenditures at the facilities in its first five years of ownership.

Cooper ended negotiations, it said, because of five significant compliance and other problems that would have put it at risk financially. Trinity countered in legal filings that Cooper backed out because it realized it would have had to spend almost $200 million more than initially anticipated to keep Lourdes Health System and St. Francis Medical Center in Trenton operational.

Trinity also alleged that George E. Norcross III, Cooper’s longtime board chairman, made a “lowball” offer of $50 million on Dec. 14, 2017. Trinity immediately rejected it and said it wouldn’t agree to let Cooper have the $15 million back. Cooper filed its lawsuit on Dec. 18, 2017.

Trinity soon found another buyer for Lourdes.

In 2019, Virtua Health acquired Lourdes Medical Center of Burlington County in Willingboro (now Virtua Willingboro Hospital) and Our Lady of Lourdes Medical Center in Camden (now Virtua Our Lady of Lourdes Hospital).

New Jersey-based Capital Health, which has hospitals in Pennington and Trenton, has agreed to buy St. Francis from Trinity but plans to close it if the deal receives final state approvals.

Cooper has since announced a $2 billion plan to add new buildings to its Camden campus.