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Empire Health Foundation v. CHS/Community Health Systems Inc.

United States District Court, E.D. Washington

July 9, 2019

EMPIRE HEALTH FOUNDATION, a Washington nonprofit corporation, Plaintiff,
v.
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 GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION FOR PARTIAL SUMMARY JUDGMENT

          Salvador Mendoza, Jr. United States District Judge.

         Plaintiff Empire Health Foundation sues Defendants CHS/Community Health Systems Inc., Spokane Washington Hospital Company LLC, and Spokane Valley Washington Hospital Company LLC (collectively “CHS”) for breach of contract, alleging it failed to fulfill the charity care commitments it made in its 2008 acquisition of two Spokane area hospitals. ECF No. 1. Before the Court is CHS's Motion for Partial Summary Judgment, ECF No. 115. CHS seeks partial summary judgment that Deaconess Medical Center provided sufficient charity care in 2012 and Valley Hospital and Medical Center provided sufficient charity care in 2011 through 2014. Id. The Foundation opposes the motion. ECF No. 144. After reviewing the record and relevant legal authorities, the Court grants the motion as to Valley hospital's charity care levels in 2011, 2012, and 2014-the only years in which its charity care levels exceeded the regional average. However, the Court denies the remainder of the motion because a genuine dispute of material fact exists on whether the rest of the hospitals' charity care levels were “comparable to” the regional average within the meaning of two nearly identical conditions in two state agency certificates enforceable under the parties' contract.

         BACKGROUND

         This case is scheduled for a bench trial on August 12, 2019. ECF No. 190. The underlying facts are set forth in the Court's February 27, 2019 Order Ruling on Cross-Motions for Summary Judgment, ECF No. 82, and will not be repeated here.

         Two Certificates of Need, issued by the Washington State Department of Health in 2008, provide that Deaconess hospital and Valley hospital “will use reasonable efforts to provide charity care in an amount comparable to or exceeding the average amount of charity care provided by hospitals in the Eastern Washington Region.” ECF No. 61-1 at 2; ECF No. 61-2 at 2. The Court previously ruled this charity care condition is enforceable under the parties' 2007 Asset Purchase Agreement. ECF Nos. 22, 36, 50, 82.

         LEGAL STANDARD

         A party is entitled to summary judgment where the documentary evidence produced by the parties permits only one conclusion. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986). The Court must grant summary judgment if “the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). “A material issue of fact is one that affects the outcome of the litigation and requires a trial to resolve the parties' differing versions of the truth.” SEC v. Seaboard Corp., 677 F.2d 1301, 1306 (9th Cir. 1982).

         The moving party has the initial burden of showing no reasonable trier of fact could find other than for the moving party. Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986). Once the moving party meets its burden, the nonmoving party must point to specific facts establishing a genuine dispute of material fact for trial. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986).

         “[A] mere ‘scintilla' of evidence will be insufficient to defeat a properly supported motion for summary judgment; instead, the nonmoving party must introduce some ‘significant probative evidence tending to support th[at party's case].'” Fazio v. City & County of San Francisco, 125 F.3d 1328, 1331 (9th Cir. 1997) (quoting Anderson, 477 U.S. at 249, 252). If the nonmoving party fails to make such a showing for any of the elements essential to its case as to which it would have the burden of proof at trial, the Court should grant the summary judgment motion. Celotex, 477 U.S. at 322.

         The Court must view the facts and draw inferences in the manner most favorable to the nonmoving party. Anderson, 477 U.S. at 255; Chaffin v. United States, 176 F.3d 1208, 1213 (9th Cir. 1999). And, the Court “must not grant summary judgment based on [its] determination that one set of facts is more believable than another.” Nelson v. City of Davis, 571 F.3d 924, 929 (9th Cir. 2009).

         DISCUSSION

         CHS argues that, using the Foundation's own calculations, Deaconess hospital provided sufficient charity care in 2012 and Valley hospital provided sufficient charity care in 2011 through 2014. ECF No. 115 at 9-11. The Court partly agrees. Using the Department's official numbers, [1] and comparing those numbers on an annual basis, without aggregation, [2] Valley hospital's charity care levels exceeded the regional average in 2011 (100.87% of the average), 2012 (106.08% of the average), and 2014 (101.25% of the average). ECF No. 116 at 1-3. Therefore, as to that particular hospital in those particular years, CHS necessarily fulfilled its duty to “use reasonable efforts to provide charity care in an amount comparable to or exceeding the average amount of charity care provided by hospitals in the Eastern Washington Region.”[3] ECF No. 61-1 at 2; ECF No. 61-2 at 2.

         However, a genuine dispute of material fact exists on whether the rest of the hospitals' charity care levels were “comparable to” the regional average within the meaning of the Certificates of Need. Using the Department's official numbers, and comparing those numbers on an annual basis, Deaconess hospital's charity care levels fell below the regional average in 2012 (78.09% of the average) and Valley hospital's charity care levels fell below the regional average in 2013 (79.22% of the average). As the Court ruled previously, “‘[C]omparable to' could reasonably require either approximation or a close match. Either way, the degree of deviation to be tolerated is not conclusively established.” ECF No. 82 at 12-13. CHS presents no new evidence to the contrary.[4] Thus, whether deviations of 21.91% and 20.78% below the regional average are nevertheless “comparable to” it remains to be determined at trial.

         In a footnote, CHS argues it cannot be held liable for the hospitals' alleged failure to provide sufficient charity care in the first and second quarters of 2017 because it sold them halfway through the year, compliance is supposedly (according to the Foundation) measured annually, and quarterly data is often inaccurate or incomplete. ECF No. 115 at 7-8, 7 n.2. But these concerns do not render any alleged charity care shortfall in the first half of 2017 entirely non-actionable, as CHS cites no contractual provision or legal authority relieving it of its charity care obligations during those transition months. Thus, CHS fails to ...


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