West Penn attorneys argue Highmark fixed on bankruptcy

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On day two of the courtroom face-off between Highmark Inc. and West Penn Allegheny Health System, WPAHS attorneys continued to make the case that Highmark has wanted to push the hospital system into bankruptcy.

Highmark's Chief Financial Officer Nanette DeTurk testified throughout the morning. She told the court that "we are committed to get this done," regarding the proposed affiliation between the Pittsburgh health insurer and WPAHS.

But she also said that Highmark had been trying to get WPAHS's board of directors to look at bankruptcy and talk with its bondholders for months.

WPAHS's lawyers also tried to make the case that Highmark had made a series of decisions that were damaging to WPAHS's finances and patient volumes, including Highmark's decision to extend its contract with UPMC through 2014.

But Ms. DeTurk, in response to questioning from Highmark's legal counsel, noted that there is no language in the 2011 affiliation agreement that prevents Highmark from contracting with other hospitals, including UPMC.

At issue at today's preliminary injunction hearing, before Common Pleas Judge Christine Ward, is whether Highmark "breached" its agreement with West Penn Allegheny.

On Sept. 28, WPAHS announced that it was walking away from the Highmark affiliation. Three days later, Highmark sued to prevent WPAHS from seeking other partners.

Former Highmark CEO Kenneth Melani, who initiated the merger plan, also testified today.

Dr. Melani, upon questioning, acknowledged that Highmark had been having "high-level" discussions about a possible debt restructuring as early as November 2011, just a month after the affiliation agreement with WPAHS was signed.

But he also said the affiliation agreement would need to be "amended" before WPAHS could be steered into bankruptcy.

He said that Highmark's contract extension with UPMC kneecapped WPAHS' Forbes hospital campus in Monroeville, in that it would allow Highmark customers to use the new UPMC East. breaking - businessnews

Bill Toland: btoland@post-gazette.com or 412-263-2625.


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