The Third Circuit Court of Appeals has upheld a lower court's ruling that Franklin, Tenn.-based Community Health Systems was in compliance with licensing requirements when it sold Pottstown (Pa.) Hospital to Tower Health.
West Reading, Pa.-based Tower Health sued CHS alleging the for-profit system breached an asset purchase agreement the parties entered into in 2017 for the sale of five Pennsylvania hospitals. Tower alleged that one of those hospitals — Pottstown Hospital — was in a noncompliant condition.
In 2022, a Pennsylvania federal court ruled after a 19-day trial that the hospital, which was sold in "as is" condition, was "in compliance" with CMS conditions of participation and relevant Pennsylvania licensure requirements prior to the closing of the agreement.
The three-judge appellate court panel unanimously affirmed the Pennsylvania court's decision Aug. 20.
"The hospital's compliant status from 2005 through 2017 bolsters the court's determination that the evidence did not support Tower's claim that the fireproofing costs that it ultimately incurred were a 'liability, indebtedness, commitment, or obligation' of CHS on the relevant dates," the appellate court's ruling said.
Tower Health did not immediately respond to Becker's request for comment.