Bankrupt California health system lays off 920 employees

More than 900 workers lost their jobs when Verity Health, a nonprofit system based in El Segundo, Calif., closed one of its hospitals last month.

In August 2018, Verity and 16 of its affiliates entered Chapter 11 bankruptcy. About five months later, the health system agreed to sell four hospitals, including St. Vincent Medical Center in Los Angeles, to KPC Group's Strategic Global Management. However, the deal fell through and Verity shut down 366-bed St. Vincent in late January.

In documents filed with the California Employment Development Department, Verity cited SGM's failure to meet the court-appointed closing deadline as the reason for closing St. Vincent.

"Given SGM's failure to close the sale transaction, and there being no feasible alternative for continued operations, the debtors made the difficult decision to close St. Vincent," reads the Worker Adjustment and Retraining Notification Act report filed by Verity.

Verity said 920 employees were laid off as a result of the closure. The employees were laid off between Jan. 14 and Jan. 27, according to the WARN report. The closure of St. Vincent does not affect Verity's other three hospitals in California: St. Francis Medical Center in Lynwood, Seton Medical Center in Daly City, and Seton Coastside in Moss Beach.

In a Jan. 8 release, SGM disputed Verity's claims regarding the closure of St. Vincent. 

"Verity falsely ascribes its decision to an alleged default by Strategic Global Management … on its contract to purchase St. Vincent as well as St. Francis Medical Center, Seton Medical Center and Seton Coastside," states the release. 

SGM claims it raised concerns about Verity's compliance with the purchase agreement last fall, including concerns about safety and health issues at St. Vincent. 

"SGM remains interested in resolving its differences with Verity and closing the purchase transaction," an SGM spokesperson said in the release. "However, Verity has refused to meet with SGM. While SGM is hopeful Verity will reconsider its position, SGM will vigorously defend itself from Verity's claims and at the appropriate time, bring its own claims against Verity for its wrongful conduct."

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