Stewart’s Boston and Ayer Hospitals Doomed, Bankruptcy Judge Rules

A Texas-based federal bankruptcy judge has allowed Steward Health Care to close Carney Hospital in the Bay State and Nashoba Valley Medical Center, a decision he said he did not make lightly.

Bankruptcy Court Judge Christopher Lopez, noting that he had read and entered into the record letters from the Massachusetts Nurses Association, the state attorney general, the Executive Office of Health and Human Services, and taken into account the 120-day notice period for hospital closures required by the San Francisco Bay Area state, concluded that federal bankruptcy law left him no choice but to allow the hospitals to close.

“Closing one hospital is real – it affects the lives of the people who are there now,” he said. “The importance of each unit weighs on me when I hear that there may be life decisions … but from a legal perspective, debtors have the right to close.”

“The debtors will be authorized to close the hospitals. The legal standard has been met. My job is to enforce the law. I hope people understand how keeping these hospitals open, based on the evidence before me, jeopardizes the entire hospital system in Massachusetts,” Lopez said, his voice trailing off as he struggled to find the right words for such a delicate decision.

With his decision, Steward will be able to close hospitals by August 31 at the latest, as announced last week.

Lopez said his decision was made with the best interests of each party in mind, including dozens of patients at the two hospitals. But he said the decision to close the hospitals was not his, but Steward’s “business judgment” as he navigates Chapter 11 bankruptcy proceedings.

The commonwealth’s recent offer of $30 million to help stabilize hospitals for another month could not even be considered in the decision-making process because the state decided to withhold the funds until Steward took steps to approve bids for the remaining Massachusetts facilities and until certain other agreements were reached, Lopez said.

The money hearing was scheduled to take place on Wednesday, along with the hospital closure hearing, but has been postponed until next Tuesday, August 6.

“There is no financing agreement,” Lopez lamented. “I cannot discuss the financing agreement and the money coming in because I do not have it in front of me today.”

Lopez said that at this point he’s not even sure if the money will help, given the “incredible losses that both hospitals are suffering every week.”

Hugh McDonald, a lawyer with Pillsbury, Winthrop, Shaw & Pittman, who represented the commonwealth, said Bay State could not simply give Stewart a fortune in taxpayer money without reaching an agreement on how to transfer the company’s remaining Massachusetts hospitals to new owners or on the terms of recouping the money.

“We were very frustrated from the very beginning,” McDonald said, telling the judge that they met with Steward and the property owners but at no point were they able to get all the necessary people together at one table to finalize the transactions.

Without it, the state cannot advance Stewart $30 million in MassHealth payments, he said, and without the parties involved joining forces, the state faces a “public health crisis.”

“We are sitting on eight hospitals that are on the brink of collapse,” he said.

The judge said he could not order everyone to gather in one room and work out the details of state funding and how to sell the remaining hospitals, but that each side had to make it a priority.

“It is clear from the pleadings that there is still much work to be done,” Lopez said.

“Whether or not there’s an agreement at this meeting, I want it to happen, and I want people to be there — certainly advocates for your clients’ positions, I understand — but we have some really sophisticated advisers here, you know what I mean when I say go in there with the mindset of wanting to get something done,” he said, urging them to “turn over every stone.”

Lopez asked the ombudsman, whose job is to monitor conditions at Stewart’s hospitals, to notify the court if any facility deteriorates in quality of care for patients before it is closed or sold, stating that if he is informed, he will hold a hearing on the matter that day, even very late at night if necessary.

“I don’t want these people to be forgotten,” he said.

McDonald, apparently sensing that the judge was uncomfortable with the idea of ​​hospital closures, paused before adjourning the hearing to assure him that Bay State had prepared well for that inevitable eventuality and that every patient would be cared for.

“We share your concerns about patient safety,” he told the judge. “This weighs on Your Majesty, and I just want you to know that we anticipated this, we prepared for this.”

“We’re going to get these patients into secure facilities,” McDonald said.

Gov. Maura Healey’s staff declined to respond to the judge’s ruling, pointing instead to comments the governor made earlier in the day during a radio appearance on Boston Public Radio.

“I’m disgusted that we’ve found ourselves in this situation,” Healey said, before blaming Steward’s mismanagement for the problem.

In addition to Carney and Nashoba Valley, Steward owns and operates 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.