More problems at two Queens hospitals

There is more trouble brewing at two Queens hospitals - this time in the form of a new lawsuit filed in bankruptcy court by their previous owners.
While Caritas Health Care Inc. continues to implement its turnaround plan for St. John’s Queens and Mary Immaculate Hospital, the hospitals’ previous owners, Saint Vincent Catholic Medical Center (SVCMC), filed suit against Caritas on April 2, alleging that Caritas has violated terms of the Asset Purchase Agreement (APA).
Lawyers for SVCMC allege that Caritas has failed to make millions of dollars in payments to satisfy the assumed cure obligations, failed to pay and discharge the assumed liabilities and failed to pay $1.2 million for technology services and access to SVCMC’s nurse registry.
“Even with the commencement of this lawsuit against Caritas, Saint Vincent’s is continuing to provide Information Technology (IT) and nursing registry services to Caritas as requested,” read part of a SVCMC statement in response to inquiries about the suit. “Saint Vincent’s cannot, however, continue to provide these services for long without assurance that they will be paid for and that the obligations assumed by Caritas will be satisfied.”
In addition, the suit claims that for the last three weeks Caritas officials have refused to participate in reconciliatory meetings with SVCMC officials to determine where incoming funds and receipts should be directed.
It also contends that Caritas has imminent plans to sell two garage properties that adjoin the hospital, and that the revenue, which SVCMC estimated to be worth more than $9 million, should go towards satisfying the APA.
“On Tuesday, April 3, 2007, the Bankruptcy Court in which this lawsuit was filed entered an order limiting Caritas’ ability to use the proceeds of any sale of these assets without further court order,” said the SVCMC statement.
Wyckoff Heights Medical Center purchased St. John’s and Mary Immaculate hospitals out of bankruptcy from SVCMC last year, and now all three belong to the newly formed Brooklyn Queens Health Care Inc. After Wyckoff purchased the two hospitals, it set up Caritas Health Care Inc. to run the two hospitals, effective at midnight onJanuary 1, 2007.
Since Caritas took over the hospitals, it has experienced a cash-flow shortage due to a three-week billing delay. On March 16 the New York State Department of Health (NYSDOH) announced that it granted a $6 million loan to St. John’s Queens and Mary Immaculate in order for them to meet payroll, provide employee health and pension benefits and pay overdue taxes and penalties.
In addition, $500,000 of that loan required Caritas to hire an independent management consultant to monitor and review its financial issues.
Repeated phone calls to the NYSDOH during the week of April 2 regarding whether Caritas requested additional help to meet its next payroll (April 6) were not returned, but it issued the following statement.
“The Department continues to monitor the situation and engage in discussions with Caritas,” said Jeffrey Hammond, a spokesperson for the NYSDOH. “The funding situation as portrayed by the institution is fluid based on a number of variables. The Department will maintain our vigilance and communication so that access to services by the community is not placed in jeopardy.”
Another NYSDOH spokesperson acknowledged that it was aware of SVCMC’s suit, but said he could not comment on pending litigation.
At a meeting with reporters on March 28, Wyckoff Heights President and CEO Dominick J. Gio said that Caritas was experiencing cash-flow problems, but they were beginning to see an upshot in revenue from the delayed billing.
“We are very confident that we are going to come out of this, and we are going to be much stronger for it,” Gio said.
Calls to Wyckoff officials about the new SVCMC lawsuit were not returned as of press time.