United States District Court, E.D. Washington
EMPIRE HEALTH FOUNDATION, a Washington nonprofit corporation, Plaintiff,
CHS/COMMUNITY HEALTH SYSTEMS, INC, a Delaware corporation; SPOKANE WASHINGTON HOSPITAL COMPANY, LLC, a Delaware limited liability company; and SPOKANE VALLEY WASHINGTON HOSPITAL COMPANY, LLC, a Delaware limited liability company, Defendants.
ORDER DENYING DEFENDANTS' MOTION FOR
SALVADOR MENDOZA, JR. UNITED STATES DISTRICT JUDGE
Health Foundation (the Foundation) filed this action against
the defendants (collectively CHS) alleging breach of certain
charity-care and capital-expenditure provisions of a hospital
purchase agreement (the contract) between the parties. The
Court denied in part CHS's motion to dismiss these
claims. The Court concluded that charity-care requirements
included in a Certificate of Need (CON) issued by the
Washington Department of Health were incorporated under
section 10.14 of the contract and enforceable by the
Foundation. ECF No. 22 at 11-13. The Court also concluded
that the Foundation had adequately alleged damages and that
its claims were not time barred. ECF No. 22 at 13-14.
Accordingly, the Court denied CHS's motion to dismiss the
Foundation's claims based on CHS's alleged failure to
provide the required minimum level of charity care. ECF No.
22 at 15. The Court granted CHS's motion to dismiss the
Foundation's other claims and dismissed all claims
against defendant CHS Washington Holdings, LLC. ECF No. 22 at
15. CHS now moves for reconsideration. ECF No. 22.
motion for reconsideration should not be granted, absent
highly unusual circumstances, unless the district court is
presented with newly discovered evidence, committed clear
error, or if there is an intervening change in the
controlling law.” 389 Orange St. Partners v.
Arnold, 179 F.3d 656, 665 (9th Cir. 1999).
asks the Court to reconsider both its decision that the CONs
charity-care requirements were incorporated under section
10.14 and its decision that the Foundation's claims are
not barred by the statute of limitations. ECF No. 25. On the
statute of limitations, CHS has not pointed to any law or
facts overlooked or intervening changes in the law.
Accordingly, CHS's request for reconsideration on
statute-of-limitations grounds is denied. On the question
of whether the CON's charity-care requirements are
incorporated under section 10.14, CHS raises a factual issue
that was previously overlooked by the parties and the Court:
The CON was issued August 29, 2008, two months before the
transaction closed on October 31, 2008. ECF No. 25.
argues that the requirements of section 10.14 did not become
effective until the transaction closed, and because the CON
was issued two months before the transaction closed, it
cannot be a change in law or policy incorporated under the
provision. ECF No 25 at 2-3. The Foundation argues
that the date the parties signed the contract, October 10,
2007, is the relevant date, not the closing date of the sale.
ECF No. 28 at 1. The question here is straightforward: is the
applicable date for the change-in-law-or-policy provision of
section 10.14 the date the parties entered the contract or
the date the transaction closed?
date the contract became effective is the relevant date here,
and the CON is therefore incorporated under section 10.14.
Section 10.14 provides that CHS must adopt certain
indigent-care polices at the “closing date, ” ECF
14-1 at 53, and indeed, it is obvious that CHS had no
charity-care performance obligations until the transaction
closed and it was operating the hospitals. But it does not
follow that the change-in-law-or-policy provision applies
from the closing date. As the Court has already explained,
the purpose of that provision was clearly to keep the
contract's charity-care provision consistent with
applicable law and government guidelines or policy. ECF No.
22 at 11-12. The contract's charity-care requirements
were negotiated and became effective when the parties signed
the contract on October 10, 2007. From that point forward,
the charity-care provision was “subject in all respects
to changes in legal requirements or governmental guidelines
or policies.” ECF No. 14-1 at 54.
important to note that the practical result of the alternate
interpretation CHS advances could not plausibly be the intent
of the parties. The parties would be obligated to renegotiate
and rewrite section 10.14 if an applicable change in law or
government policy took effect, as was the case here, between
the effective date of the agreement and the closing date of
the transaction if they wanted the contract to be consistent
with the changed law or policy. In a complicated contract
between sophisticated parties that includes a
change-in-law/policy provision like this, the parties would
expect the effective date for the change-in-law provision to
be the effective date of the contract, and would not be
actively monitoring for changes and preparing to renegotiate
certain provisions up to the moment the transaction closes.
To take the example section 10.14 uses, if Congress had
implemented universal healthcare coverage that eliminated the
need to provide charity care between the date the parties
signed the agreement and the date the transaction closed,
would CHS have been obligated to renegotiate the contract in
order to escape its charity-care obligations? Clearly, the
answer is no.
effective date of section 10.14's charity-care
requirements, including the change-in-law-or-policy
provision, was the date of the agreement, not the closing
date of the transaction.
IT IS HEREBY ORDERED:
1. Defendants' Motion for
Reconsideration or, in the Alternative, Clarification of
Order on Motion to Dismiss, ECF No. 25, is
IS SO ORDERED. The Clerk's Office is directed to
enter this Order and provide copies to all counsel.
 CHS also asks the Court, in the
alternative, to clarify that “all contract claims for
the period before June 12, 2011 and all good faith [and] fair
dealing claims for the period before June 12, 2014 are
barred.” ECF No. 25 at 8. The Foundation agrees that
those dates are correct. ECF No. 28. But that is consistent
with the Court's determination that “the claims
based upon conduct occurring within the ...