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Cooper Health sues after failed hospital acquisitions

Cooper University Health Care has gone to court seeking to recover $15 million held in escrow following its abandoned attempt to acquire Lourdes Health Systen and St. Francis Medical Center.

The Virgin Mary statue atop Our Lady of Lourdes Medical Center in Camden. TOM GRALISH / Staff Photographer
The Virgin Mary statue atop Our Lady of Lourdes Medical Center in Camden. TOM GRALISH / Staff PhotographerRead moreTOM GRALISH / Staff Photographer

Cooper University Health Care has gone to court to recover $15 million held in escrow after its abandoned attempt to acquire Lourdes Health System and St. Francis Medical Center.

In late August, Cooper announced it had signed a letter of intent to acquire Lourdes and St. Francis from Trinity Health, a large Catholic health system based in Livonia, Mich.

Once completed, Camden-based Cooper would have grown into the largest health system in South Jersey with nearly $2 billion in revenue yearly.

The lawsuit, filed Monday in Superior Court in Camden County, came swiftly after an announcement Friday that Cooper had decided against the acquisition and contained a letter outlining what it claims were the reasons the deal fell apart.

The Dec. 15 letter alleges that the interim president of Lourdes "spoke with the Bishop of Camden, disparaging Cooper and asking the Bishop to intervene to prevent the Transaction from proceeding."

Carol Lynn Daly, a spokeswoman for Lourdes, denied the allegation.

"These claims have no merit. We disagree with Cooper's assessment. The allegations about Dr. Blaber's conversation with the bishop are not true. We will present the facts in court. Our focus remains on our patients and our colleagues, as always," Daly said.

Michael J. Walsh, a spokesman for the Diocese of Camden, said Bishop Dennis J. Sullivan was briefed on the proposed transaction between Cooper and Trinity.

However, Walsh said, "at no time did he intervene in any way, on behalf of either party, in any element of the transaction."

The letter lists other problems identified during a due diligence review that were "the subject of repeated discussions" between Cooper and Trinity and could not be resolved.

As a result, Cooper stated that it was entitled to the return of the $15 million placed in escrow and demanded a response by Monday.

In an email response Monday, a lawyer for Trinity said that "we do not agree that the basis for the Cooper termination of the transaction are well founded" or rise to the thresholds required under the letter of intent. The email was contained as an exhibit in the Cooper lawsuit, which names Maxis Health System, a division of Trinity, as the defendant.

The acquisition deal between the nonprofit health systems was subject to state and federal regulatory approval.

No financial terms were disclosed.

Typically when a nonprofit buys another nonprofit, no money is exchanged, though the acquirer assumes debt. Trinity's financials attributed $211 million in debt to Lourdes and $80 million to St. Francis as of June 30, 2016.

Cooper said it had planned to invest more than $135 million in the Lourdes and St. Francis campuses.

"This agreement will bring together health-care providers from across south and central New Jersey, allowing us to dramatically expand access to the high quality of care for thousands of new patients," George E. Norcross III, chairman of the board of trustees of Cooper, said in a statement after the letter of intent was signed.