Bayonne Medical Center Status

SECAUCUS, N.J., Feb. 18, 2021 /PRNewswire/ -- Several conditions related to Hudson Regional Hospital's ownership of the Bayonne Medical Center property, leased to CarePoint Health, have materially changed.  In the public interest, we are providing the following update:

1) BMC Withdraws All Litigation Against Hudson Regional
On February 8th, BMC Hospital LLC voluntarily abandoned its litigation against Hudson Regional Hospital.  We vigorously defended these allegations and prevailed in three substantive preliminary hearings and motions that vindicated our position;

2) CarePoint Lease at Bayonne Medical Center Is Terminated
HRH served notice of significant and material defaults under its lease for Bayonne Medical Center on December 11^th and terminated CarePoint Health's lease on December 31^st, changing its status to month-to-month pending eviction proceedings.  In a 300+ page document * that detailed its defaults under the lease, HRH directed CarePoint to terminate all management agreements related to the property and its operations; and that it escrow the documents necessary to transfer the hospital operating license to HRH or its designee upon resolution of the parties' lawsuit.  To the extent CarePoint has produced informal financials, they show it to be in fiscal distress, on shaky ground and in violation of its financial covenants.  CarePoint has also been unable to produce a certified audit report for two consecutive years, and in the last year it produced an audit report – 2018 – the independent auditor determined CarePoint had "substantial doubt as a going concern."  What is CarePoint now hiding from the public that its auditor will not issue a certified audit report? 

Despite the passage of all cure periods, CarePoint has continued to flaunt its obligations under the lease and is still hiding the facts.  Therefore, HRH has terminated the lease and will evict CarePoint from the premises upon issuance of a judgment in related court proceedings now pending in Delaware, where all legal disputes between the parties have been consolidated.

3) The New Jersey Department of Health Has Declined to Advance BMC Hospital's Certificate of Need Application 
The Department of Health has notified BMC that it will not process the incomplete application for Certificate of Need filed by BMC Hospital LLC, precluding it from moving forward with plans to operate Bayonne Medical Center.  In addition, neither CarePoint nor BMC has made any public filings related to their financial condition in more than one year; and despite a DOH request for more information, there are no public documents filed related to CarePoint's announcement that it would sell its Hoboken University Medical Center operations to KPC, a California healthcare operator that has no status or filings with the New Jersey Department of Health.  Seemingly, KPC would encounter similar difficulties obtaining a Certificate of Need from the Department of Health.  HRH is under contract to purchase the Hoboken University Medical Center property. 

4) CarePoint's Illegal Marketing Practices and Connection to Clover Health Prospectively Compromises Its Acute Care Facilities in Hudson County
HRH has served a cease-and-desist letter on CarePoint seeking to discontinue CarePoint, BMC Hospital, its affiliate Surgicore Surgical Centers, and others from engaging in alleged improper physician recruitment and inducement practices, in contravention of the lease and applicable law. 

Furthermore, unscrupulous business practices by CarePoint's ownership were also published in a recent Hindenburg Research report – since picked up by national financial publications –  reporting that prior to a merger that allowed it to go public, an affiliated insurance entity, Clover Health, had been under an undisclosed active investigation by the U.S. Department of Justice on 12 counts ranging from kickbacks to marketing practices to undisclosed third-party deals (referenced in a recent Forbes article).*  Clover did not reveal that it was under active investigation by the DOJ and now is the subject of numerous class action lawsuits, and according to one filed by Labaton Sucharow, "certain of its executives may be liable for securities fraud." 

Vivek Garipalli, who founded both CarePoint and Clover, was previously found by a New Jersey State Commission of Investigation report to have plundered CarePoint Health for more than $157 million in excessive management fees.  With all of these Department of Justice, securities enforcement and class action litigation matters swirling around CarePoint's ownership, is it any wonder that CarePoint is not paying attention to the healthcare needs of Hudson County residents?

5) HRH Has Filed a Certificate of Need to Operate Bayonne Medical Center
BMC's inability to obtain a license and CarePoint's repeated indications that it will cease operating compels HRH to serve its mission of providing high-performing healthcare in Hudson County and to protect its real estate investment.  HRH has filed a Certificate of Need application with the Department of Health that will allow it to step in as operator once the Delaware court confirms HRH's right to terminate the lease and re-take possession of the premises or, in the interim, if CarePoint abandons or otherwise is forced to cease operating Bayonne Medical Center. 

"As the landlord for CarePoint at Bayonne, we are gravely concerned that the denouement of the BMC business plan and CarePoint's inability to meet the conditions of its lease could at any time result in its abandonment or its inability to continue operating an acute care facility at Bayonne," says Dr. Nizar Kifaieh, President and CEO of Hudson Regional Hospital.  "As we have asserted frequently during this process, Hudson Regional stands ready to assume operations at Bayonne at a moment's notice.  Our pending Certificate of Need application acknowledges that CarePoint remains the operator for Bayonne until such time as it fulfills on its announced intention to exit the market; but asserts that in the public interest the remainder of the Application should be considered on the merits and approved conditioned upon the Delaware courts enforcing HRH's leasehold right to possession."

*For related links, materials and filings, click here.

SOURCE Hudson Regional Hospital

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