UMass Memorial tells bankruptcy court Steward can’t cancel $650k they’re owed

UMass Memorial Medical Group and UMass Memorial Medical Center are crying foul over Steward Health Care’s apparent attempt to zero out hundreds of thousands they’re owed, according to court filings.

UMMG and UMMC say are owed over a pair of arrangements made in 2012 and 2016 that saw their employees working at Steward’s St. Elizabeth’s Hospital, in Brighton. Those agreements, UMass lawyers wrote, were terminated last summer, months before Dallas-based Steward filed for Chapter 11 protections.

“As described more fully in the Complaint, St. Elizabeth’s owes UMass Memorial $319,158.41 under the UMMG Agreement and $336,852.25 under the UMMC Agreement,” they wrote.

Steward’s “Proposed Cure Amount” offered to the bankruptcy court of “$0″ is unsatisfactory, according to UMass lawyers. Besides which, Steward’s assertion to the court that there is a “Purported Agreement” to settle that debt doesn’t match their records.

“The books and records of UMass Memorial do not reflect the existence of the Purported Agreement, or any active agreements, between UMass Memorial and Steward or St. Elizabeth’s,” they wrote.

Even if Steward’s attorney’s are speaking of the 2012 and 2016 arrangements, lawyers for UMMG and UMMC say those agreements were already terminated “prepetition, and the Debtors incorrectly state the Proposed Cure Amount as $0.00.”

“In any event, the Agreements cannot be cured as they were terminated well before the Petition Date,” they told the court.

Those debts, they say, cannot be made to go away just because Steward had accepted an “executory contract.” The attorneys note that the 5th Circuit has found that “where the debtor assumes an executory contract, it must assume the entire contract, cum onere – the debtor accepts both the obligations and the benefits of the executory contract.”

UMass is asking the court to accept their objection and grant them financial relief.

Steward, according to its lawyers, is staring down about $9 billion in debt obligations that they are attempting to meet by selling their hospital network.

Several of the company’s Bay State Hospitals — Good Samaritan Medical Center in Brockton, Holy Family Hospitals in Haverhill and Methuen, Morton Hospital in Taunton, Saint Anne’s Hospital in Fall River, and St. Elizabeth’s Medical Center in Brighton — may be the subject of a sale hearing currently scheduled for this Friday, though Steward has delayed that hearing four times.

Recent court filings also show that lawyers for the Roman Catholic Archbishop of Boston have reentered the conversation, reminding the court they still have a vested interest in the success of the institutions they sold in 2010. They Archbishop wants those hospitals to succeed, according to his lawyers.

“The Caritas Hospitals play a critical role in meeting the health care needs of Massachusetts patients and the communities within which the hospitals operate. The RCAB, for its part, supports the continued operation of the Caritas Hospitals in a safe, responsible manner,” they wrote.

However, considering that “the Debtors have not disclosed, as required by the Court’s Bidding Procedures Order, the successful bidders for the Proposed Sales of the Caritas Hospitals or filed proposed orders or asset purchase agreements indicating the terms of the Proposed Sales,” the Archbishop is forced to “reluctantly files this limited objection and reservation of rights to preserve its rights, claims and defenses with respect to: (a) the Proposed Sales; and (b) under the Stewardship Agreement dated as of April 30, 2010.”

Other Steward facilities in Massachusetts include Carney Hospital in Dorchester and Nashoba Valley Medical Center in Ayer, which the company says they will close by the end of the month. The company’s Norwood Hospital has been closed since 2020 due to flooding, and the company closed New England Sinai Hospital permanently in April.

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