West Virginia Business Litigation Lawyer & Attorney : Law Office of Jeffrey V. Mehalic : Charleston, Huntington, Parkersburg

    The West Virginia Health Care Authority last week dissolved the stay it had issued pending reconsideration of the certificate of need for The Carlyle Group's buyout of HCR Manor Care's nursing homes in West Virginia, but denied Manor Care's request to affirm the CON immediately.  Here is the WVHCA's order and my post from last week with links to the parties' pleadings. 

    Joe Morris of The Charleston Gazette wrote about the dissolution of the stay on Friday (which doesn't seem to be online), then wrote a lengthier overview in yesterday's edition.  The WVHCA's decision means that the transaction can go forward at this point, but could be derailed if the WVHCA withdraws the previously-issued CON.  Morris quoted the WVHCA's chairperson, Sonia Chambers, in his story from last Friday as follows:

"'There's not anything legally staying them [Manor Care and Carlyle] from going through with it,' she said.  'But they run the risk that we might grant the reconsideration ... We could change our mind and deny the certificate of need application.'" 

Also, regulators in Michigan and Oklahoma have yet to approve the transaction for their respective states, although Manor Care's COO was quoted as saying that all states except West Virginia had given their approval.

    The takeover still faces problems in Florida, too.  The Miami Herald's website reported that last Friday, SEIU Healthcare Florida filed suit in the Circuit Court of Leon County (Tallahassee), Florida, seeking to block The Carlyle Group's buyout of Manor Care's 29 nursing homes in Florida, which have 3,700 residents. 

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    I wrote earlier this month about the West Virginia Health Care Authority’s decision to reconsider the certificate of need issued for The Carlyle Group’s buyout of the HCR Manor Care nursing home facilities in West Virginia.  The WVHCA held a hearing to reconsider the CON on December 14.   Since the hearing, the parties have filed several pleadings, including Manor Care’s motion to dissolve the stay imposed by the WVHCA’s decision to reconsider and affirm the CON (the motion’s cover letter is dated December 10, but it was filed on December 17), Service Employees International Union District 1199’s response in opposition, Manor Care’s supplemental memorandum in support of its motion, SEIU’s supplemental response in opposition, and Manor Care’s reply to SEIU’s supplemental response. 

     Also last week, the SEIU filed a petition for a writ of prohibition in the Circuit Court of Kanawha County (Charleston), West Virginia against the WVHCA, regarding its decision not to permit the SEIU to engage in any discovery concerning the buyout.  The petition asks the court to suspend the proceedings before the WVHCA and permit the SEIU to engage in discovery.  Manor Care has responded in opposition, but I do not have its response.  As of this point, I am not aware of any briefing schedule or ruling by the court.

    Yesterday, The Charleston Gazette’s Eric Eyre wrote that according to Manor Care executives, its shareholders are losing $1 million every day that the WVHCA and regulators in other states do not approve the buyout.  According to the article, the WVHCA could issue a decision on the reconsideration by mid-January.  Also, here’s a link to Juvan’s Health Law Update, written by Jayne E. Juvan, who posted a few days ago about the transaction.

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    Bob Coffield, who writes the Health Care Law Blog, had a post earlier this week about a potential obstacle to the proposed purchase by The Carlyle Group of several nursing homes in West Virginia that are currently owned and operated by HCR Manor Care.  The transaction is part of The Carlyle Group’s proposed $6.3 billion buyout of HCR Manor Care.

    The West Virginia Health Care Authority issued a certificate of need for the purchase on October 19, 2007, but District 1199 of the Service Employees International Union requested reconsideration on November 15 because of its concern that The Carlyle Group, as a private equity firm, has relatively little experience in operating nursing homes, which could negatively affect the nursing homes' residents.

    The WVHCA granted the reconsideration on November 20 and has scheduled a hearing on December 14 to reconsider the certificate of need.  Without having any sense one way or the other about how the hearing will turn out, the basis cited by the WVHCA as good cause for reconsideration does not sound like good news for the Carlyle Group:

District 1199 did not request reconsideration during the Certificate of Need review process.  This normally would prelude [sic] the granting of reconsideration.  However, due to the serious nature of the allegations, particularly the quality of care issues, the Authority finds that a hearing is warranted and that a full discussion of the issues is in the public's best interest.

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    The New York Times reports that the Department of the Interior tomorrow will issue a regulation drafted by its Office of Surface Mining, which will allow the coal mining method of mountaintop removal to continue and expand.  in the article, Joe Lovett, executive director of the Appalachian Center for the Economy and the Environment, calls the regulation the administration’s “parting gift to the coal industry.” 

    Mountaintop removal has generated an enormous amount of litigation, and Lovett holds open the possibility of challenging this new regulation in court.

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