Marshall, Mo.-based John Fitzgibbon Memorial Hospital and its long-term care affiliate, Fitzgibbon Health Services, sued planned buyer Strawberry Fields and operator American Medical Administrators Sept. 2, alleging they backed out of their court-approved sale at the last minute.
In the filing obtained by Becker’s, the nonprofit hospital, which sought Chapter 11 protection in April, alleged breach of contract, anticipatory breach of contract, tortious interference and promissory estoppel, and asked the court to force the deal to close.
“The Court-approved sale of Fitzgibbon’s assets did not close by the Aug. 31 deadline,” the hospital said in a Sept. 4 Facebook post. “In response, Fitzgibbon filed an adversary proceeding on Sept. 2 seeking to enforce the Court-approved transaction and compel the buyer and operator to fulfill their obligations under the agreements. We are also continuing to pursue all available options through the bankruptcy process to preserve hospital operations and healthcare services for our community.”
The complaint claimed that Fitzgibbon ran a competitive sale process, which saw offers rise as high as $14.5 million. However, the hospital instead chose Strawberry Fields and AMA for $10.5 million because they committed to ongoing care, jobs and Medicare participation.
The sale was set to close Aug. 14, but in the days prior, the complaint alleged AMA “raised a rotating series of issues,” including a first letter of credit dispute, an executory contract cure dispute, an excluded asset and an alleged billing compliance concern. The hospital claimed it addressed each issue, but on or about Aug. 20, AMA decided the deal’s economics no longer worked.
“Rather than honor its commitments, AMA proposed to immediately shut down inpatient services, sharply cut outpatient care, walk away from the Medicare commitments that had resolved the United States Objection, and reject nearly all of the Plaintiffs’ executory contracts, exposing Plaintiffs’ estate to a dramatically larger pool of claims,” the complaint claimed.
The hospital also alleged it agreed to pay $250,000 for a one-week extension to close Aug. 25, but the buyers did not move forward.
“Fitzgibbon Hospital remains open and continues to provide care to our patients and community. While the situation remains serious and continues to evolve, there is no established date for a hospital closure,” the hospital’s Facebook post said. “Our focus remains on our patients, employees and the community we serve. Because litigation and related discussions are ongoing, there are limits to what we can share at this time, but we will provide additional information as circumstances develop and information is confirmed.”
Becker’s has reached out to Strawberry Fields and American Medical Administrators for comment and will update this story should more information become available.
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