Once considered Bayonne hospital’s savior, minority ownership group aims to halt CarePoint bankruptcy, merger
Taken from NJ.com
By Ron Zeitlinger | The Jersey Journal
November 13, 2024
The surgicenter group that four years ago was hailed as the savior for the cash-strapped Bayonne Medical Center is now attempting to halt the CarePoint Health bankruptcy and merger plans.
And despite being jilted not once, but twice, the group still wants to be “part of the solution” to Bayonne Medical Center’s financial woes.
BMC Hospital LLC, a group of surgical center owners that have a 9.9% stake in the Bayonne Medical Center, filed a motion within days of the CarePoint’s recent bankruptcy declaration, claiming
CarePoint Health violated the BMC Hospital LLC contract when it failed to attain its approval for the bankruptcy.
The group also says CarePoint was not allowed to accept temporary financing, or enter into an agreement with Hudson Regional Hospital in Secaucus to form a new healthcare system without its approval.
The motion included a copy of a lawsuit BMC Hospital LLC filed in June, claiming CarePoint Health and its CEO/President Dr. Achintya Moulick interfered with and breached an agreement to sell an additional 39.1% of Bayonne Medical Center to the group.
The motion also said the announced merger of BMC and Hudson Regional Hospital (HRH) should be invalidated because CarePoint did not ask for and not receive BMC Hospital LLC’s approval, as required by the BMC Hospital ownership contract.
The merger, which would be branded “Hudson Health System,” appeared dead when HRH sued CarePoint after CarePoint hired Michigan-based Insight in March to operate the hospitals.
But the deal, under which HRH would operate Bayonne Medical Center and Insight would operate Hoboken University Medical Center and Christ Hospital in Jersey City ― CarePoint’s two other struggling hospitals ― was revived last month, the sides said.
Ron Simoncini, spokesman for Hudson Regional Hospital, which owns the land under Bayonne Medical Center and leases it to CarePoint, said the bankruptcy will move forward.
“These claims are frivolous distractions and we expect the court to handle them appropriately,” he said.
The surgicenter group, which in 2020 had plans and widespread support to purchase 100% of the BMC, isn‘t the only party opposing the bankruptcy.
Insight, whose management services agreement with CarePoint runs through 2034, filed a “limited objection” to the terms of the debtor-in-possession (DIP) lender financing of the bankruptcy and the merger itself, saying the proposed management services agreement (MSA) with HRH would violate the Insight MSA.
As the court-approved DIP lender, HRH would be given first priority among creditors.
CarePoint Health, $108 million in debt to its top 30 creditors and millions more in debt to thousands of other vendors and individuals, filed for bankruptcy Nov. 3 after transitioning to a non-profit entity last year.
The network, which serves a mostly under- and uninsured population, maintains it does not receive enough funding aid from the state.
“BMC Hospital LLC has expressed, and lived out over last several years, a consistent desire to be part of the solution to the CarePoint challenges in Bayonne and elsewhere,” a spokesman for BMC Hospital LLC said.
“We have opposed, and will continue to oppose, those who ignore our contractual rights or seek to railroad through results favoring landlord interests over those of all the other important stakeholders and the communities who depend on these three hospitals.”
In the lawsuit and bankruptcy filings, both BMC Hospital and Insight officials expressed their disdain for CarePoint leadership.
In its lawsuit, BMC Hospital says it filed the suit “to end Dr. Moulick’s deceptive, self-interested acts and omissions aimed at interfering, for his own personal reasons and in his own interest, with the binding agreements with CarePoint-Bayonne and BMC (Hospital).”
BMC Hospital blamed Moulick for the state Department of Health delaying for the past two years a decision on approving its purchase of an additional 39.1% of the hospital.
Insight’s 11-page “limited objection” does not mention Moulick by name, but says Insight and its principal, Dr. Jawad Shah, offered CarePoint numerous solutions to improve facility operations and “approximately $41 million in liquidity injections through cash investments, management fee deferrals and other financial accommodations.”
It also says Insight also strongly encouraged CarePoint to implement “proper corporate governance to ensure a full, fair and independent value-maximizing process ― one that is free of any improper influence or control by any insider or affiliate of the debtors … (which) fell on deaf ears” and led to Shah’s resign as CEO after only four weeks in the position, the filing said.
CarePoint Health officials did not respond to a request for comment.
The BMC Hospital filings say CarePoint Health failed to find the best offer for the hospital. IJKG Opco, owner of 90% of BMC, entered into the “collateral surrender and operations transfer agreement” with HRH Oct. 9, which would in effect be a private sale to HRH “without the right to solicit competing offers.”
Late last month, prior to the CarePoint bankruptcy filing, a spokesman for the BMC Hospital LLC group said the group “has long been involved in efforts to solve the CarePoint dilemma, and has the experience and relationships of trust with the people and entities necessary to turn these hospitals around.”