The art of reaching a sales deal for Sharon Regional a legal curiosity

Getting Sharon Regional Medical Center sold and reopening a legal slugfest. It started when its former for-profit owner, financially ailing Steward Health Care, filed for bankruptcy on May 6. At the outset, Steward said it wanted to sell all of its 31 hospitals.

Tenor Health Foundation Sharon LLC said it closed the deal to buy Sharon Regional on Wednesday. While the legal bickering may not have ended for Sharon Regional, the past two days saw drama hitting new heights. Buhl Legacy Trust — the original owner of the hospital when it was a community institution — said it wasn’t notified by the state Attorney General’s office that the state was dropping its lawsuit against Medical Properties over ownership of the Sharon Regional real estate.



The agreement was approved by Mercer County Common Pleas Court Judge Tedd C. Nesbit on Tuesday. A hearing on the case had been scheduled before Nesbit on Jan.

28. He could have ruled Buhl Legacy Trust, not MPT, was the rightful property owner. The trust claimed the for-profit owners of Sharon Regional Health System had no right to sell the real estate.

The Buhl Legacy Trust is a separate organization from the Buhl Regional Health Foundation, a charity that received most of the proceeds of the hospital's original sale with the mission to use the money to promote the health and well-being of the community. The nonprofits that run Buhl Park in Hermitage and the F.H.

Buhl Club in Sharon also are separate entities not involved in the hospital situation. A Buhl Legacy Trust representative said they only learned the state was dropping the lawsuit after being informed by The Herald on Tuesday evening. There was more than just a hint of irritation from the nonprofit group over the Attorney General’s actions.

“The commonwealth's release of all claims and its discontinuance of the pending lawsuit was negotiated with MPT without input from, or participation by, Legacy Trust,’’ the organization’s statement issued Wednesday said. While the state settled, Buhl Legacy Trust can file its own lawsuit against MPT. Like most of its hospitals, Steward sold much of Sharon Regional’s real estate, including the hospital building in Sharon itself, to MPT.

Steward then leased back the properties with that cost being part of the blame by many for Steward’s financial woes. But the lease also required Sharon Regional to absorb any maintenance costs — which is almost unheard of in lease terms, Charles Kelly, a Pittsburgh attorney representing Buhl Legacy Trust, said in a Herald interview last week. As a condition of funding $10 million towards Sharon Regional’s reopening under Tenor, MPT demanded the state and Buhl Legacy Trust agree to drop any litigation dealing with its ownership of Sharon Regional property.

Buhl Legacy Trust said it's standing by its entire Jan. 15 statement whereby it wished Tenor well and pledged never to go after MPT in a way that would interrupt hospital operations. But the statement also hammered away at MPT.

Story continues below video “Because of MPT, the hospital is now a patient in serious heart failure and near death,” Buhl Legacy Trust’s statement said. “MPT’s threat to kill any resuscitative effort unless this community surrenders its claim for the terrible damage done over the last decade is unconscionable, but exactly what we have come to expect from MPT.” This all goes back to 2014.

At the time, Buhl Legacy Trust sold the then-nonprofit Sharon Regional Health System to the private company Community Health Systems. CHS eventually sold Sharon Regional to Steward, which in turn sold Sharon Regional Health System’s real estate to MPT then leased it back. But Buhl Legacy Trust contends the sale violates the original (and still binding) agreement because it had to be notified of the property sale, which didn’t occur.

MPT contends it bought the property fair and square. Buhl Legacy Trusts continues to insist it is the rightful owner of the real estate. Wednesday’s announcement by Tenor Health Foundation that it had closed the deal to buy Sharon Regional offers a legal curiosity.

By saying the deal had closed means the terms of the sale were met. Among the terms called for Tenor Health Foundation to pay $1.9 million in cash and take on, among other things, certain “unexpired leases’’ that were held by Steward.

MPT had said the sale’s deal was linked to its $10 million pledge to fund Tenor’s purchase of the hospital, which Tenor said was essential to open and operate the hospital. Terms of MPT’s request essentially called for the state Attorney General’s office and Buhl Legacy Trust to withdraw any ongoing or potential future lawsuits against MPT over the deal. The Attorney General agreed to the terms — Buhl Legacy Trust did not.

Another term was that MPT agreed to enter into a lease agreement for the Sharon Hospital Real Estate, “which lease includes a purchase option with Tenor Health Foundation Sharon LLC.’’ It also requires MPT to provide a promissory note to support the continued operations of Sharon Regional Medical Center. No amount was given for the promissory note or how a sales price would be figured for the real estate, which Buhl Legacy Trust previously said was worth "at least $25 million.

'' Terms of MPT's lease agreement with Tenor weren't given in bankruptcy court documents or the agreement inked by MPT and the Attorney General's office. An email to an MPT spokesman late Wednesday afternoon wasn’t immediately returned. Also, the settlement of the lawsuit came on the same day Pennsylvania Attorney General Dave Sunday was sworn into his first four-year term as the state’s top law enforcement officer.

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