Hearing Date: 8/30/2019 10:00 AM - 10:00 AM

Courtroom Number: 2410

Location: District 1 Court FILED
Cook County, IL 5/2/2019 12:15 PM
IN THE CIRCUIT COURT OF COOK COUNTY, ILLINOIS DOROTHY BROWN
CIRCUIT CLERK
COUNTY DEPARTMENT, CHANCERY DIVISION
COOK COUNTY, IL
FILED DATE: 5/2/2019 12:15 PM 2019CH05553

2019CH05553
VILLAGE OF MELROSE PARK,
4906588
Plaintiff,
2019CH05553
v. Case No. ______________

ILLINOIS HEALTH FACILITIES AND

SERVICES REVIEW BOARD; PIPELINE–
WESTLAKE HOSPITAL LLC, a Delaware
limited liability company; SRC HOSPITAL
INVESTMENTS II LLC, a Delaware limited
liability company,

Defendants.

COMPLAINT FOR REVIEW OF FINAL ADMINISTRATIVE DECISION

Plaintiff Village of Melrose Park (“Plaintiff” or “Village”) brings this action against

Defendants Illinois Health Facilities and Services Review Board (the “Board”), Pipeline-

Westlake Hospital, LLC, and SRC Hospital Investments II, LLC (“Pipeline-Westlake Hospital,

LLC and SRC Hospital II, LLC are together referred to as “Pipeline”), seeking judicial review of

two Board decisions issued on April 30, 2019.1 Plaintiff, for its Complaint, alleges as follows

based upon personal knowledge as to itself, and for all other matters, upon information and

belief:

NATURE OF THE ACTION

1. This lawsuit seeks judicial review of two final orders issued by the Board during

its April 30, 2019 meeting, specifically: (1) the Board’s decision to decline to defer consideration

1 Plaintiff will supplement the record with a transcript of the April 30, 2019 proceedings
and any written decision issued by the Board as soon as they are available.

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 of Pipeline’s application for an exemption to close Westlake Hospital until all related litigation

has been completed, and (2) the Board’s decision to approve Pipeline’s request for an exemption
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to close the hospital, which, as stated on the record, was expressly based on the (incorrect) belief

that it lacked discretion under the law to deny it. Both decisions were made in error and in

violation of the Board’s mandatory regulations.

2. First, the decision not to defer consideration of the exemption application violates

the Board’s rules. 77 Ill. Admin. Code § 1130.560(b)(2) states that the Board “will defer

consideration of an application for exemption when the application is the subject of litigation,

until all litigation related to the application has been completed.” This was an issue of first

impression for the Board—it has never before been presented with a situation where litigation

related to an exemption application was pending at the time of the Board meeting.

3. Prior to voting on the deferral, the Board’s general counsel advised the Board

that, consistent with the mandatory rule, it must defer consideration of Pipeline’s exemption

application until the litigation related to the application is completed. The Board’s general

counsel also advised the Board that the Office of the Illinois Attorney General concurs and

agrees with her assessment that the Board must defer consideration of the exemption application.

4. Despite the advice of counsel on a purely legal matter, the Board fell one vote shy

of the five votes required to take an action—though four Board members voted in favor of

deferral, three ignored the regulatory mandate. By failing to defer its consideration of the

exemption application, the Board violated its own mandatory rules. This decision must be

overturned.

5. Next, though all seven Board members voted to approve the exemption

application, three of the Board members did so under protest, and stated on the record that they

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 were only voting to approve the application because of their belief that the Illinois Health

Facilities Planning Act, 20 ILCS 3960/1, et seq. (the “Planning Act”) required them to do so. But
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nothing in the Planning Act nor the Board’s regulations required the Board to approve the

application. In fact, as explained below, Pipeline lacked standing to request an exemption to

close the hospital and thus, its application should have been denied. This decision must be

overturned as well.

BACKGROUND

6. Westlake Hospital is a hundred-year-old community hospital located in the

Village that provides medical care and critical “charity care” services to an underserved

population.

7. In 2018, Pipeline approached the Village about purchasing Westlake. Pipeline

represented that it would not close hospital, but would rather reinvest in it. Pipeline continued to

make these representations to others, including, most importantly, the Board.

8. To acquire a hospital in Illinois, an entity must first receive approval for a

“change of ownership” from the Board. 20 ILCS 3960/5. Approval can be obtained in one of two

ways: by submitting an application for a permit or an exemption. See id.; see also 77 Ill. Adm.

Code 1130.310(a)(5). Generally speaking, exemptions are different from permits because Board

review is more limited. The purpose of an exemption is to allow an expedited path to approval

for entities that are willing to follow the rules. One rule that an exemption-seeker must follow is

affirming that the applicant will continue providing the same levels of “charity care” as the

previous owner once the applicant takes over the hospital. 20 ILCS 3960/8.5. Charity care is

defined by the statute to mean care provided for free—without expectation of payment from the

patient or an insurer. 20 ILCS 3960/3. The legislature takes this quite seriously, for it is the only

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 condition that a change of ownership exemption applicant must follow, and the statute requires a

“signed certification” that this obligation will be complied with. 20 ILCS 3960/8.5(a).
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9. Pipeline wanted to take advantage of the exemption route. To do that, it submitted

an application for a change-of-ownership exemption to the Board. It also promised to undertake

the charity care obligation. Specifically, Pipeline represented it would implement a charity care

policy that “is not more restrictive than the current charity care policies at Westlake” and that

Westlake’s “charity care policy will remain in place for not less than two years following the

consummation of the transaction.” (Change of Ownership Exemption Application, attached as

Exhibit 1 at 0150–51 (emphasis added).) Nicholas Orzano, the principal of the Pipeline entities,

personally certified that the charity care obligation would be complied with. In doing so, it took

on an affirmative obligation to provide such services for those two years.

10. Pipeline also promised outright that, “following the transaction, Westlake will

continue to operate for the benefit of the residents of Chicago and the greater Chicago area,

including serving poor and underserved individuals through Westlake’s charitable activities,”

and the transaction “will result in no changes to the scope of services offered at Westlake.” (Id.)

Based on these statements, the Board granted the change of ownership exemption and allowed

Pipeline to move forward with the purchase.

11. Despite these clear affirmations, Pipeline had no intention of carrying them out.

Instead, Pipeline decided at the latest in December 2018 that it would shutter the hospital

immediately after the purchase closed. 2 It kept this conclusion secret, however, and failed to

2 Pipeline’s CEO, Jim Edwards, admitted this fact under oath at a recent evidentiary
hearing. There are significant indications in the record of the Board hearing that Pipeline reached
this conclusion far earlier, and perhaps as early as October 2018, before the Review Board even
approved the application at all.

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 follow the procedure to notify the Board that the change of ownership exemption process could

not be completed pursuant to the terms on which it was granted. That is, once Pipeline concluded
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that it would not carry out its two-year charity care obligations, a requirement in order to obtain

the exemption in the first place, it was obligated to inform the Board and go through a different

application process—the permit process, in which it would not have to undertake the charity care

obligations.

12. Instead of sharing their new plans with the Board or the Village, however,

Pipeline continued its plan to purchase the hospital. Just weeks after closing the purchase,

Pipeline announced its intention to close and filed an application for a discontinuance exemption

with the Board. See Westlake Hospital, Melrose Park E-004-19, Health Facilities and Services

Review Board, https://www2.illinois.gov/sites/hfsrb/Projects/Pages/Westlake-Hospital,-Melrose-

Park--E-004-19.aspx. At that point, the Village filed a lawsuit seeking to hold Pipeline and

related parties accountable for its fraud, a finding that would impact its ability to complete the

discontinuance exemption process. See Village of Melrose Park v. Pipeline Health Systems, LLC,

et al., 2019 CH 03041 (Cook Cty. Cir. Ct.) (“the Underlying Action”).

13. After a public hearing on the discontinuance exemption and after hundreds of

letters in opposition to Westlake’s closure were sent to the Board, the Board held a meeting on

April 30, 2019 where it considered Pipeline’s application. Despite being advised by its general

counsel and the Attorney General’s office that deferral of the application was mandated under

the implementing regulations of the Planning Act, the Board did not follow this mandatory

obligation. To make matters worse, it then considered the application to close Westlake and

voted to approve it. In doing so, three Board members expressly stated their belief that granting

the application was mandatory. In fact, granting the application was not mandatory, and it should

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 have been denied altogether. Had the three Board members understood that approval of the

application was not mandatory, they would have voted against it, as they stated, and the
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application would not have received the five votes necessary for approval.

14. The Village seeks reversal of both final decisions.

PARTIES

15. Plaintiff Village of Melrose Park is a municipal corporation existing under the

laws of the State of Illinois. The Village is a person3 adversely affected by a final decision of the

Board and is domiciled in the geographic area that Westlake serves.

16. The Illinois Health Facilities and Services Review Board is an Illinois State Board

created pursuant to 20 ILCS 3960/4(a).

17. Pipeline–Westlake Hospital LLC (“Pipeline–Westlake”) is a limited liability

company existing under the laws of the State of Delaware, with its principal place of business

located at 1225 West Lake Street, Melrose Park, Illinois 60160. Pipeline-Westlake is an

applicant for the discontinuance exemption that the Board approved.

18. Defendant SRC Hospital Investments II LLC (“SRC Hospital Investments”) is a

limited liability company existing under the laws of the State of Delaware, with its principal

place of business located at 898 Pacific Coast Highway, Suite 500, El Segundo, California

90245. SRC Hospital Investments is an applicant for the discontinuance exemption that the

Board approved.

JURISDICTION AND VENUE

19. This Court has jurisdiction to review final administration decisions entered by

3 The Planning Act defines person as “one or more natural persons, legal entities,
governmental bodies other than federal, or any combination thereof.” 20 ILCS 3960/3.

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 state boards, including the Illinois Health Facilities and Services Review Board. See 735 ILCS

5/3-104.
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20. Venue is proper in this Court because it is the Circuit Court of a county in which

(1) part of the hearing or proceeding culminating in the decision of the administrative agency

was held, and (2) part of the subject matter involved is situated, and (3) part of the transaction

which gave rise to the proceedings before the agency occurred. See 735 ILCS 5/3-104.

21. Plaintiff has exhausted all available remedies under the Administrative Review

Law and has no further plain, speedy, or adequate remedy under the law.

THE BOARD DECISIONS FOR WHICH REVIEW IS SOUGHT

COUNT I
The Board refused to defer Pipeline’s application
in contradiction of mandatory language obligating it to do so.

The Board was obligated to defer a decision on Pipeline’s application for a discontinuance
exemption.

22. Plaintiff incorporates the foregoing allegations in paragraphs 1-21 as if set forth in

full herein.

23. The Planning Act’s implementing regulations state that the Board “will defer

consideration of an application for exemption when the application is the subject of litigation,

until all litigation related to the application has been completed.” 77 Ill. Admin. Code §

1130.560(b)(2).4

24. Here, the discontinuance application (and the change of ownership exemption

upon which it is premised) are the subject of the Village’s Underlying Action. (See generally

4 This is in contrast to the Board’s approach to deferral in permit proceedings, which is

discretionary. 77 Ill. Admin. Code § 1130.655(b)(5) (“HFSRB may defer consideration of an
application for permit when the application is the subject of litigation. . . .”) (emphasis added).

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 Verified Complaint, Village of Melrose Park v. Pipeline Health Systems, LLC, et al., 2019 CH

03041, attached as Exhibit 2.) The central tenet of the Underlying Litigation is that Pipeline
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defrauded the Village, the community, and this Board by publicly promising to keep Westlake

Hospital open, while at the same time, privately planning to immediately shut it down once the

sale closed.5

25. Prior to the vote, the Board’s general counsel informed the Board that given the

pending litigation, they must defer consideration of the application.

26. The Board, however, failed to follow this mandatory regulation to defer

consideration of the exemption. Instead, the Board allowed the application to go forward.

27. The Board members that voted against the deferral stated their reasoning on the

record. The reasoning of the Board members was unrelated to the application of the mandatory

deferral regulation, and was instead concerned with the merits of Pipeline’s application—merits

that the Board should not have reached with pending litigation.

28. The Board’s failure to follow its own regulations must be overturned.

COUNT II
The Board’s approval of Pipeline’s application to discontinue
contravenes Planning Act procedures.

Pipeline’s Change of Ownership Exemption Is Invalid and Its Discontinuance Exemption

Application Is Moot.

5 Through the Underlying Action, it has already been proven that Pipeline made the
affirmative decision to close Westlake well before it purchased the hospital and while the project
for which the change of ownership exemption was issued—i.e., the purchase of Westlake—was
still “open” and had not yet been completed. This evidence shows that Pipeline concealed
material information from the Board (as well as the Village and the community) that voided its
change of ownership exemption and required Pipeline to seek approval through the permit
process instead. (See Excerpt from Transcript of Evidentiary Hearing on Rule to Show Cause,
attached as Exhibit 3, at 200:12–201:1.)

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 29. Plaintiff incorporates the foregoing allegations in paragraphs 1-28 as if set forth in

full herein.
FILED DATE: 5/2/2019 12:15 PM 2019CH05553

30. The fraud that Pipeline perpetrated in its change of ownership application

precludes it from applying for a discontinuance exemption, because the change of ownership

exemption that permits it to own the Hospital—and gives it cognizable rights before the Board—

is invalid.

31. When Pipeline applied for the change of ownership exemption, it promised to

provide the same, then-existing charity care policy at Westlake Hospital for two years following

completion of the sale. Pipeline further stated, in no uncertain terms, that Westlake Hospital

would remain open.

32. In doing so, it took on an affirmative obligation in order to receive a valid change

of ownership exemption. Pipeline would not have had to take on these obligations if it had

submitted a request for a permit to change ownership. See 77 Ill. Admin. Code 1130.310(a)(5).

33. When Pipeline decided that it would not keep its charity care obligations by

closing the Hospital, it unilaterally changed the scope of the project in a way that would have

required Board approval. 77 Ill. Admin. Code 1130.750(c). This rendered its change of

ownership exemption invalid. 77 Ill. Admin. Code 1130.570(f)(5).

34. Pipeline now owns the Hospital without a valid change of ownership exemption.

35. An entity that lacks a valid permit or exemption to own a hospital has no standing

to seek to discontinue it.

36. The Board’s approval of the application to discontinue Westlake Hospital when

that application was moot must be invalidated.

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 The Board Cannot Grant a Discontinuance Exemption That Violates Statutory Requirements.

37. The Health Facilities Planning Act requires a change of ownership exemption
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applicant to affirm that the subject hospital will continue providing the same charity care policies

as the predecessor owner for two years. 20 ILCS 3960/8.5(a).

38. Here, the Board’s granting of Pipeline’s application to discontinue services

sanctions a plain violation of the statute. Pipeline will not continue providing charity care

services for two years.

39. The Board’s approval of an application that violates statutory requirements cannot

stand.

The Board’s Conclusion That It Lacked Discretion to Deny Pipeline’s Application Was
Legally Flawed, and Resulted in Approval of Pipeline’s Application.

40. The statute does not mandate that the Board grant an application to discontinue a

healthcare facility once the application is complete, and in fact specifically refers to only one

type of exemption—the discontinuance of services, not a whole facility. Compare 20 ILCS

3960/8.5(a-5) (noting that discontinuation of a service exemption “shall be granted”) with 20

ILCS 3960/8.5(a-3) (lacking any mandatory instruction that exemption must be granted for

discontinuation of a health care facility).

41. Nor do the Planning Act’s implementing regulations divest the Board of any

discretion to approve or deny an application an exemption to discontinue a health care facility.

To the contrary, they specifically state that “the application for exemption is subject to approval

under Section 1130.560.” 77 Ill. Admin. Code § 1130.525(b). In turn, Section 1130.560 provides

that the Board “shall approve an application for exemption that it determines to be in compliance

with the requirements.” 77 Ill. Admin. Code § 1130.560(b)(2) (emphasis added). This

necessarily imparts discretion to the Board to determine whether an application is appropriately

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 granted, because among the requirements is documentation sufficient to evaluate “how the

services proposed in the applicant’s future projects will improve access to area residents,” and
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the availability of alternative health care facilities within the planning area and the impact the

applicant’s proposed future projects will have on the utilization of those facilities.” 77 Ill.

Admin. Code § 130(a). The Board could have found that Pipeline had not produced sufficient

documentation to demonstrate, accurately, the effect that Westlake’s closure would have on the

community.

42. Thus, the Board’s view that it lacks authority to prevent Pipeline from obtaining a

discontinuance exemption because it has filed particular paperwork is contradictory to the

Planning Act’s and its implementing regulations’ plain language. Indeed, at least three Board

members stated they would have voted to deny the discontinuation exemption if they were not

under the mistaken instruction they had no discretion to deny the application. Had the Board

properly understood the critical differences between discontinuation exemptions for services and

entire health care facilities apparent in the statutory scheme, the Board would not have had the

five necessary votes to approve the discontinuation exemption in the first place.

43. The Board’s interpretation of the statute and regulations that required automatic

approval of Pipeline’s application—and the approval of Pipeline’s application premised on that

interpretation—must be overturned.

* * *

44. The Illinois Health Facilities and Services Review Board is requested to file an

answer consisting of the administrative record of the proceeding resulting in the above decisions.

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 PRAYER FOR RELIEF

WHEREFORE, Plaintiff Village of Melrose Park respectfully requests that the Court
FILED DATE: 5/2/2019 12:15 PM 2019CH05553

enter an order granting the following relief:

A. Overturning the Board’s decision not to defer consideration of Pipeline’s

discontinuance application;

B. Overturning the Board’s decision to grant Pipeline’s application for a

discontinuance exemption, or, in the alternative, remanding to the Board for further

consideration of that decision consistent with the statute and regulations; and

C. Awarding such other and further relief as equity and justice may require.

Respectfully submitted,

VILLAGE OF MELROSE PARK,

Dated: May 2, 2019 By: /s/Ari J. Scharg

One of Plaintiff’s Attorneys

Jay Edelson
jedelson@edelson.com
Ari Scharg
ascharg@edelson.com
J. Eli Wade-Scott
ewadescott@edelson.com
Michael Ovca
movca@edelson.com
EDELSON PC
350 North LaSalle Street, 14th Floor
Chicago, Illinois 60654
Tel: 312.589.6370
Fax: 312.589.6378
Firm ID: 62075

Special Counsel to the Village of Melrose Park

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 Hearing Date: 8/30/2019 10:00 AM - 10:00 AM
Courtroom Number: 2410
Location: District 1 Court FILED
Cook County, IL 5/2/2019 12:15 PM
DOROTHY BROWN
CIRCUIT CLERK
COOK COUNTY, IL
FILED DATE: 5/2/2019 12:15 PM 2019CH05553

2019CH05553

4906588

Exhibit 1
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 Hearing Date: 8/30/2019 10:00 AM - 10:00 AM
Courtroom Number: 2410
Location: District 1 Court FILED
Cook County, IL 5/2/2019 12:15 PM
DOROTHY BROWN
CIRCUIT CLERK
COOK COUNTY, IL
FILED DATE: 5/2/2019 12:15 PM 2019CH05553

2019CH05553

4906588

Exhibit 2
 Return Date: No return date scheduled
Hearing Date: 4/9/2019 9:30 AM - 9:30 AM
Courtroom Number: N/A
Location: District 1 Court FILED
Cook County, IL 4/8/2019 3:54 PM
DOROTHY BROWN
CIRCUIT CLERK
COOK COUNTY, IL
2019CH03041
3:54 PM 2019CH05553

2019CH03041
FILEDDATE:
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:
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2019CH03041
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3:54 PM 2019CH05553
2019CH03041
FILED
FILEDDATE:
DATE:5/2/2019
4/8/201912:15
3:54 PM 2019CH05553
2019CH03041
 Hearing Date: 8/30/2019 10:00 AM - 10:00 AM
Courtroom Number: 2410
Location: District 1 Court FILED
Cook County, IL 5/2/2019 12:15 PM
DOROTHY BROWN
CIRCUIT CLERK
COOK COUNTY, IL
FILED DATE: 5/2/2019 12:15 PM 2019CH05553

2019CH05553

4906588

Exhibit 3
FILED DATE: 5/2/2019 12:15 PM 2019CH05553

Transcript of Trial
Date: April 16, 2019
Case: Melrose Park -v- Pipeline

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WORLDWIDE COURT REPORTING | INTERPRETATION | TRIAL SERVICES

 Transcript of Trial 1 (1 to 4)

Conducted on April 16, 2019

1 3
IN THE CIRCUIT COURT O COOK COUNTY, ILLINOIS A P P E A R A N C E S
2 COUNTY DEPARTMENT, CHANCERY DIVISION 2 ON BEHAL O THE PLAINTI :
FILED DATE: 5/2/2019 12:15 PM 2019CH05553

3 x 3 ARI SCHARG, ESQ.

4 VILLAGE O MELROSE PARK, 4 JAY EDELSON, ESQ.
5 Plaintiff, 5 J. ELI WADE SCOTT, ESQ.
6 v. CASE NO. 9 CH 0304 6 MICHAEL W. OVCA, ESQ.
7 PIPELINE HEALTH SYSTEM, LLC, A 7 EDELSON, PC
8 DELAWARE LIMITED LIABILITY 8 350 North LaSalle Street
9 COMPANY; SRC HOSPITAL INVESTMENTS 9 3th loor
0 II LLC, A DELAWARE LIMITED 0 Chicago, Illinois 60654
LIABILITY COMPANY; PIPELINE (3 2) 572 72 8
2 WESTLAKE HOSPITAL LLC, A DELAWARE 2
3 LIMITED LIABILITY COMPANY; TWG 3 ON BEHAL O THE DE ENDANT:
4 PARTNERS LLC, AN ILLINOIS LIMITED 4 RONALD SA ER, ESQ.
5 LIABILITY COMPANY; NICHOLAS ORZANO, 5 MATTHEW C. CROWL, ESQ.
6 AN INDIVIDUAL; AND ERIC WHITAKER, 6 PATRICIA BROWN HOLMES, ESQ.
7 AN INDIVIDUAL, 7 MERILI SEALE, ESQ.
8 Defendants. 8 RILEY SA ER HOLMES & CANCILA, LLP
9 x 9 70 West Madison Street
20 RULE TO SHOW CAUSE 20 Suite 2900
2 2 Chicago, Illinois 60602
22 JOB NO.: 240 30 22 (3 2) 47 8745
23 PAGES: 300 23
24 TRANSCRIBED BY: Bobbi J. isher, RPR 24

2 4
Trial in the above matter held: I N D E X
2 2 CONTENTS PAGE
3 Before the Honorable Moshe Jacobius, Judge 3 ROSLYN LENNON
4 Richard J. Daley Center 4 Direct Examination by Mr. Crowl 22
5 50 West Washington Street 5 Cross Examination by Mr. Scharg 67
6 Chicago, Illinois 60602 6 Redirect Examination by Mr. Crowl 2
7 Tuesday, April 6, 20 9 7 Recross Examination by Mr. Scharg 4
8 9:00 a.m. 8 DR. RICHARD RUH
9 9 Direct Examination by Mr. Crowl 9
0 Pursuant to Notice, before Erin Schuppert, 0 Cross Examination by Mr. Wade Scott 43
Digital Court Reporter in and for the State of Redirect Examination by Mr. Crowl 67
2 Illinois. 2 JAMES EDWARDS
3 3 Direct Examination by Mr. Crowl 70
4 4 Cross Examination by Mr. Scharg 86
5 5 Redirect Examination by Mr. Crowl 228
6 6 JOSEPH OTTOLINO
7 7 Direct Examination by Ms. Brown Holmes 230
8 8 Cross Examination by Mr. Scharg 254
9 9 MOTION OR DIRECTED INDING 267
20 20 JUDGE S RULING 286
2 2
22 22
23 23
24 24

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 Transcript of Trial
Conducted on April 16, 2019
97
1 the same.
2 Q. I'm not asking about your ability to
FILED DATE: 5/2/2019 12:15 PM 2019CH05553
3 recruit. I'm just asking you if you are living
4 under constant threat of unanticipated or
5 unforeseen circumstances simply because you own a
6 hospital in the state of Illinois.
7 A. I disagree. I think the threat is much
8 greater. I wouldn't call it a threat when people
9 in the normal course of business -- because, again,
10 we've got the ability to recruit qualified
11 employees into those positions. When they leave in
12 this situation, okay, as the judge alluded to,
13 trying to replace them is nearly impossible. So it
14 is a much different situation. I can't anticipate
15 how many more people are going to leave tomorrow or
16 next week. We have to provide a safe environment
17 of care for the patients who are in-house and for
18 the patients that are going to walk through the
19 door of our hospital.
20 Q. Sure. Are you saying that, when you
21 announced the hospital was closing --
22 A. We didn't announce the hospital was
23 closing.
24 Q. Okay. I'm sorry. You filed an
98
1 application to discontinue the facility; right?
2 A. That's correct.
3 Q. And isn't it your testimony that you said
4 that you expected that staff members would leave at
5 that point?
6 A. I expected that there would be attrition.
7 Q. Yes. And it's very difficult to recruit
8 staff members --
9 A. Correct.
10 Q. -- when you have announced that a
11 hospital is going to close.
12 A. That's correct.
13 Q. Okay. So it wasn't an unforeseen
14 situation.
15 A. It was unforeseen when it would happen
16 and the severity of the attrition. I could not
17 tell at that point in time, okay, when we filed
18 that on February 21st. I couldn't say with any
19 certainty or any specificity as to which staff
20 would leave in which areas with which skill sets,
21 okay, and how difficult or not difficult those
22 people would be to replace. I did not have the
23 ability to foresee the specificity, okay, that
24 you're alluding to.
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50 (197 to 200)
99
1 Q. Okay. You just spent your whole
2 testimony with counsel talking about how it's
3 obviously expected of people to not want to work at
4 a hospital that's announced -- that's going to
5 close.
6 A. That's not what I said. I said that it's
7 not unexpected that people, when a hospital
8 announces that they're closing, that many of them
9 may begin to seek employment at another employer.
10 Q. Okay.
11 A. Okay? Which is true.
12 Q. Certainly we're not talking about an
13 earthquake or anything like that here.
14 A. No.
15 Q. Okay. You talked a lot about the
16 financial condition of the hospital. And
17 apparently, that's the reason why you have
18 submitted an application to discontinue the
19 hospital; is that right?
20 A. Yes.
21 Q. Okay. So it's got nothing to do with the
22 staffing rates at the hospital?
23 A. Well, now, remember, the staffing, okay,
24 when we issued on February 19th, okay, staffing was
200
1 tight, but did we have the attrition issues that we
2 had post-announcement of closing? No, we did not.
3 Q. But it's one way or the other. So did
4 you submit your application because you were losing
5 too much money or --
6 A. Yes.
7 Q. -- because the staffing was at a
8 dangerously low level?
9 A. No, because we were losing vast amounts
10 of money, and we did not see a pathway for the
11 hospital to recover and be financially viable
12 long-term.
13 Q. When did you make the decision that you
14 had to close it?
15 A. I don't have the exact date, but it was
16 probably sometime in the late December time frame,
17 that we looked at it and said that we felt, based
18 on current financial information that had been
19 obtained, okay, from the sellers, that we felt that
20 the hospital was too far gone for us to be able to
21 make a go of it.
22 Q. Did you say December?
23 A. December, yes.
24 Q. When did you buy the hospital?
 Transcript of Trial 51 (201 to 204)

Conducted on April 16, 2019

20 203
1 A. We closed on January 29th, 2019. 1 Q. You saved two hospitals.
2 Q. Okay. So did you -- so, obviously -- 2 A. We're in the processing of trying to,
FILED DATE: 5/2/2019 12:15 PM 2019CH05553

3 okay. 3 yes, we are.

4 MR. SCHARG: Give me one moment, Your 4 Q. Okay. You want to know why people are so
5 Honor. 5 upset about this case?
6 THE COURT: Was it a package deal? You 6 A. I don't wonder why. Not at all.
7 had to buy all three of them? 7 Q. Do you --
8 THE WITNESS: We had to buy all three 8 THE COURT: No --
9 hospitals. Can I explain the situation to you, 9 THE WITNESS: I don't wonder why at all.
10 Judge? 10 THE COURT: Well, hold on. Hold on.
11 THE COURT: Sure. 11 Q. Oh, you don't wonder why at all.
12 MR. SCHARG: Um, no. 12 A. No.
13 THE COURT: Go ahead. 13 THE COURT: Mr. Edwards, you hired that
14 THE WITNESS: We had a seriously 14 lawyer to represent you. Right?
15 deteriorating financial condition that occurred 15 THE WITNESS: He's a good guy.
16 between the time that we had signed an intention to 16 THE COURT: Okay. So you know why he
17 buy the hospital, okay, which was not something -- 17 stood up?
18 the deal had not closed. Okay? We based all our 18 THE WITNESS: Okay.
19 decisions based on the 12 months ending June 2018 19 THE COURT: That was to object.
20 numbers. For that period of time, the three 20 THE WITNESS: I'll be quiet.
21 hospitals, on a combined basis, had lost 21 THE COURT: Okay. Thank you.
22 approximately $12 million. Okay? So from July 22 MR. CROWL: Objection, Judge.
23 1st, '17, through June 30th of 2018, it had lost a 23 Argumentative.
24 combined $12 million. The majority of that had 24 THE COURT: Sustained.
202 204
1 been Westlake had lost that money. Okay? 1 MR. SCHARG: I'll withdraw it.
2 Fast forward up -- 2 Q. Okay. So you submitted an application
3 THE COURT: How much did you say? 12? 3 for a change of ownership exemption on September
4 THE WITNESS: 12 million. 4 6th, 2018.
5 By the time we got to the end of the 5 A. Yes.
6 year, that loss had increased to roughly 6 Q. And in that change of ownership
7 $31 million across all three hospitals. Okay? 7 application, you made a number of representations.
8 Westlake made up the overwhelming majority of that, 8 A. Correct.
9 but the other two hospitals, at that point in time, 9 Q. Among --
10 were losing money as well. 10 THE COURT: What was the date, please?
11 We looked at it and said that we thought 11 The date?
12 that we could turn around the other two hospitals, 12 MR. SCHARG: September 6, 2018.
13 that being Weiss and West Suburban, but we felt 13 Q. I want to read a couple of these
14 that Westlake Hospital had gone too far, the 14 representations. Now, this is what was submitted
15 financial conditions had deteriorated too much, and 15 to the Health Facilities and Services Review Board;
16 that we only had the money to turn two of the 16 right?
17 hospitals, not three. We made the decision that we 17 A. Correct.
18 could save the other two hospitals and prevent them 18 Q. That's a State board.
19 from closing, but Westlake had gone too far, and 19 MR. CROWL: And, Judge, I'm going to
20 that it wasn't viable financially for us to try to 20 object on relevance. This is far afield from the
21 save the other hospital because it would jeopardize 21 Rule to Show Cause hearing.
22 the survival of the other two. 22 THE COURT: I think -- I think we're --
23 Q. So you're a hero then? 23 we are getting a little far afield because, you
24 A. I didn't say that. You did. 24 know, these -- and I'll take the blame for asking
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