Cobble Hill

Brooklyn Health Partners still in the LICH game? $25 million check returned late Friday

BHP: This is the 'craziest thing'

May 9, 2014 By Mary Frost Brooklyn Daily Eagle
BHP's Merrell Schexnydre, by Mary Frost
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The group rejected by SUNY in their bid to purchase Long Island College Hospital (LICH) thought they cleared a major hurdle on Friday when a Brooklyn court accepted their non-refundable deposit for $25 million dollars.

But in a late-day reversal, after SUNY objected to the deposit, the judge ordered Brooklyn Health Partners (BHP) to come back to court and pick up their check, pending a court conference between BHP and SUNY lawyers set for Monday morning.

Another court hearing is set for Tuesday.

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This is just the latest glitch in BHP’s attempts to purchase LICH from SUNY, which has already moved on to talks with Peebles Corp., the bidder who came in second in the much-contested Request for Proposals (RFP) process to buy LICH.

If state Supreme Court Justice Johnny Lee Baynes allows the deposit to go through on Monday, BHP may have a shot at convincing Justice Baynes that their bid to buy the 156-year-old hospital in Cobble Hill is a serious one.

If not, however, they stand to lose the entire $25 million.

At roughly 2 p.m. on Friday, Merrell Schexnydre, President and CEO of BHP and his investor Harry (Chaim) Miller, represented by attorneys Donald Kravet and Maria Rodi of Kaplan, Kravet & Vogel deposited the money with the clerk at state Supreme Court in Downtown Brooklyn.

Justice Baynes had initially ordered BHP to deposit the money by 3 p.m. on Thursday, but because of an administrative mix-up, the group was told to return on Friday.

A beaming Schexnydre showed the stamped receipt for $25 million to reporters. Moses Reser, affiliated with Mr. Miller, told the Brooklyn Eagle, “We hope to have the PSA signed on Tuesday.”

Late in the afternoon, however, the group received an email asking them to come back to court and take back their money.

Larry English, a representative of BHP, said that the latest twist in the bidding war for LICH was “the strangest thing.”

“Our lawyers and SUNY’s lawyers are meeting with the judge Monday morning. We fully expect the negotiations to continue.”

BHP will have to go a long way to convince the judge to entertain their motion to prevent SUNY from moving on to the second-place finisher, Peebles Corp., as became clear during an emotional and high-stakes hearing before state Supreme Court Justice Johnny Lee Baynes on Thursday.

Before the judge and a capacity crowd of LICH advocates, attorneys for SUNY and the state Department of Health called BHP’s financial letters of credit “essentially meaningless,” and their plans to provide continuity of care at the hospital, closing on May 22, far less than what they originally proposed. They also raised substantial questions about BHP’s ability to obtain a hospital operating license any time soon.

Justice Baynes, who has been shepherding the convoluted case for more than a year, confronted BHP with increasingly blunt questions about their ability to both finance and operate a full-service hospital at the historic LICH campus.

“Do you have the ability to procure a license? SUNY is not going to gratuitously provide a license. How do you intend to get a license, and who is going to continue with the operation of the hospital on May 23?” Justice Baynes demanded.

Attorney Richard Seltzer, representing the New York State Nurses Association (NYSNA), expressed disappointment with BHP’s interim plan, covering health care from May 23 through November.

BHP lawyers told the judge they have received commitments from the Joseph P. Addabbo Family Health Center, Garner Health and QHR Intensive Resources (Quorum) to operate interim and bridge services at LICH. They complained, however, that SUNY had moved so much equipment from the hospital that they would have to spend $15 million before they could operate inside the building -– an accusation that SUNY contested.

Justice Baynes warned SUNY’s attorneys, “If you believe I may order you to return key medical equipment, you need to do it before I see you again.”

Addabbo’s plan to park a mobile facility in from of a vacant LICH building drew tears from courtroom spectators and scorn from Seltzer.

“When I read their proposal, I read about continuity of care, a bridge facility and a hospital right away. I am astounded to hear it’s been converted to a truck in front of LICH, and it’s a dialysis provider. This is very, very meaningful,” Seltzer said. “The truck does not say to us what evaluators looked at in the proposal.”

Justice Baynes told BHP’s lawyers, “I was disappointed to hear about trucks; it’s very disheartening.” He warned BHP, I don’t like shell games. If you are for real, prove it.”

He ordered BHP to supply a letter of credit for the remainder of the full $250 million purchase price and other proof of commitments on Tuesday — and warned them that he might use some of their deposit to compensate laid off LICH employees.

He also warned any other bidders considering jumping into the fray, “Anyone else wants to go before this court, you need to get $25 million. People talk the talk, but I don’t know if they walk the walk.”

Attorney Jim Walden of Gibson, Dunn & Crutcher, representing six community groups and the Concerned Physicians of LICH will be appearing before Justice Baynes on Thursday to ask the judge to throw out some questionable scores submitted by panelists in the state’s RFP (Request for Proposals) bidding process. Justice Baynes retains the authority to enforce the RFP, which was designed to ensure that proposals providing full-service hospitals would rise in the top — but only if evaluators followed the rules.

Several panelists, however, gave their highest score to non-hospital operators, such as Peebles.

One evaluator gave every one of the four hospital proposals a score of zero, and gave developer Fortis, a non-hospital bidder failing to meet the minimum healthcare requirements, a perfect score of 70.

If the community groups are successful in their bid to throw out non-compliant scores, a full-service hospital proposal by the Prime Healthcare Foundation would move into second place, knocking Peebles into third. BHP’s ranking would not be affected.

Deep-pocketed Prime Healthcare Foundation, together with it’s parent company, operates 25 hospitals across six states. Prime proposes to operate LICH from four core buildings, immediately return services to previous levels and beyond, and improve efficiency. Prime also commits to investing $40 million in infrastructure improvements and capital expenditures.

SUNY attorney Frank Carone objected to throwing out the questionable scores, however, warning of a situation where “we get mired in litigation.”

Justice Baynes gave SUNY permission to continue negotiations with Peebles while legal talks continue, but warned them not to sign any contracts.

“Today was one of the toughest court days for everyone,” said Susan Raboy, spokesperson for Patients for LICH. “Because — yes, there’s the money — but it’s about lives and jobs. It was one of the most emotional hearings we’ve had.” Raboy said when she heard about plans to park a mobile medical van in front of the hospital as part of the interim plan, “I was so outraged.”

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