Pittsburgh-based West Penn Allegheny Health System has filed a countersuit against health insurer Highmark, urging the court to lift an injunction that prevents West Penn from talks with other suitors, according to a Pittsburgh Post-Gazette report.
In its filing, the hospital system says Highmark is "holding West Penn Allegheny hostage" to an affiliation agreement from October 2011 that included a no-shop provision, which prevents West Penn from discussing affiliations with other parties.
On Sept. 27, West Penn said Highmark breached that 2011 affiliation agreement by planning to have the system file for bankruptcy — a measure West Penn would consider only as a last resort. The system consequentially called off the pending $475 million merger.
Highmark officials have since denied any breach. Shortly after West Penn killed the merger, Highmark asked the court for a restraining order to prevent West Penn from engaging in other merger talks. A ruling on that restraining order is expected late next week. West Penn's recent court filing is in response to that suit.
In its filing, West Penn also accuses Highmark of delaying the Pennsylvania Insurance Department's review of the affiliation agreement to drive West Penn into bankruptcy, according to the report. "Highmark's misrepresentation to West Penn Allegheny that the bankruptcy requirement originated from the [insurance department] has destroyed further the trust necessary for the parties to work together to obtain the affiliation agreements' regulatory approval," according to the filing.
West Penn says that without additional funding, the health system will have to discontinue service lines and lay off employees before year's end, and it may potentially declare bankruptcy, according to the report.
Highmark officials did not comment in the report.
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In its filing, the hospital system says Highmark is "holding West Penn Allegheny hostage" to an affiliation agreement from October 2011 that included a no-shop provision, which prevents West Penn from discussing affiliations with other parties.
On Sept. 27, West Penn said Highmark breached that 2011 affiliation agreement by planning to have the system file for bankruptcy — a measure West Penn would consider only as a last resort. The system consequentially called off the pending $475 million merger.
Highmark officials have since denied any breach. Shortly after West Penn killed the merger, Highmark asked the court for a restraining order to prevent West Penn from engaging in other merger talks. A ruling on that restraining order is expected late next week. West Penn's recent court filing is in response to that suit.
In its filing, West Penn also accuses Highmark of delaying the Pennsylvania Insurance Department's review of the affiliation agreement to drive West Penn into bankruptcy, according to the report. "Highmark's misrepresentation to West Penn Allegheny that the bankruptcy requirement originated from the [insurance department] has destroyed further the trust necessary for the parties to work together to obtain the affiliation agreements' regulatory approval," according to the filing.
West Penn says that without additional funding, the health system will have to discontinue service lines and lay off employees before year's end, and it may potentially declare bankruptcy, according to the report.
Highmark officials did not comment in the report.
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West Penn Willing to Resume Talks with Highmark