Brownsville hospital surrenders license, closes doors

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Brownsville Tri-County Hospital, a long-troubled 40-bed facility in Fayette County, closed Wednesday.

The board of directors surrendered the hospital's operating license to the state Department of Health, which helped transfer the remaining 15 patients to other facilities.

Some out-patients who had procedures scheduled for yesterday were told not to show up.

Kirk Holman's 88-year-old mother, Merrell, of California, Pa., normally would have had her CAT scan done at a different hospital, but she and her son decided to have the procedure at Tri-County to "give them some cash flow," Mr. Holman said.

She'd drunk the special solution for the test and was ready to go when the hospital called to say it was closing.

"Too little, too late," said Mr. Holman of their efforts to keep the hospital afloat. "It's a big loss for the community."

But it wasn't a surprise.

The 93-year-old hospital, which had closed once before, has been in tangled bankruptcy proceedings for four years and indicated last week that it couldn't pay its 150 employees.

"We knew it was a possibility," said Stacy Kriedeman, spokeswoman at the Health Department. "We've been in close contact with the hospital."

Administrators were in meetings yesterday and didn't return a message.

The closure came on the eve of a bankruptcy hearing yesterday in Pittsburgh to determine if a $6 million judgment against the facility will stand.

Chief U.S. Bankruptcy Judge Bruce McCullough ruled that it won't, at least for now, in granting a temporary injunction requested by the property owner, Brownsville Property Corp.

The court dispute focuses on fraud allegations brought by bankruptcy trustee Robert Bernstein.

Brownsville General Hospital, as it was formerly known, closed in 2004, after which a group of doctors took over. They ran the facility and leased the building from Brownsville Property.

The doctors couldn't make a go of it, however, and filed for bankruptcy in 2005.

Mr. Bernstein was appointed trustee of the hospital assets, but those did not include the real estate itself, which was controlled by Brownsville Property.

He filed several lawsuits to secure payment for the creditors, one of which was an attempt to get the building back from Brownsville Property. In that suit, he alleged that the transfer of the valuable real estate to the property company constituted fraud because it was an attempt to avoid paying creditors.

Last year, the board and Mr. Bernstein negotiated an agreement under which Brownsville Property would pay $2 million plus interest to Mr. Bernstein to settle with the creditors.

If the money weren't paid by Nov. 11, 2009, the corporation would have to pay $6 million plus interest.

After the agreement was signed, Mr. Bernstein said he found out that the hospital's CEO, James Burnette, had signed a $2.5 million mortgage with Presidential Healthcare Credit Corp. That mortgage was in addition to an existing one for $1.25 million with another bank.

Mr. Bernstein filed a judgment against the corporation, saying it didn't have the right to grant the second mortgage to Presidential. He said the new mortgage violated the agreement the parties had worked out and demanded the full $6 million payment.

In response, Brownsville Property asked for an injunction, which the judge granted yesterday.


Torsten Ove can be reached at tove@post-gazette.com or 412-231-0132.


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