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El Paso Children’s Hospital gives details it says shows it agreed to UMC deal

El Paso Children’s Hospital is disputing University Medical Center’s (UMC) assertion that Children’s did not accept the terms of UMC’s term sheet.

This morning, the Children’s board asked for representatives of UMC and El Paso County Commissioners Court to explain the rejection of Children’s acceptance of an interim proposal that the parties have been negotiating for nearly two weeks, according to a statement by Children’s.

“We were only given a couple of hours Monday morning to respond to UMC’s counter proposal. We gave approval to the terms as explained by UMC’s counsel. We still don’t know why they think we changed any terms. The interpretation of this last issue was first discussed between counsel last Thursday when UMC surprised us with a totally new term in its counteroffer,” Children’s board chair Rosemary Castillo said in a statement released early Tuesday morning.

UMC announced Monday afternoon that a deal was not reached between the two hospitals because Children’s let three deadlines pass without acceptance of the initial terms of UMC’s term sheet.

“We have gone as far as we can go in our efforts to reach a resolution with Children’s Hospital,” James N. Valenti, President & CEO of UMC said in a statement on Monday. “We want to bring this bankruptcy to closure, and we remain resolute in our determination to ensure the vision of El Paso to have a Children’s Hospital is available to all. We intend to protect the mission and vision and the successful operation of the Children’s Hospital for years to come.”

“We still have litigation ahead and a plan to submit to the U.S. Bankruptcy Court that we intend to present in the coming weeks,” Valenti added.

Children’s says it gave a timely response to UMC’s Thursday offer of an interim agreement with two alternative proposals, including one that would have resolved the litigation completely.

Children’s says it gave UMC three days to consider and respond to the opportunity to end the litigation.

“We wanted to show them that we are more than willing to drop the litigation if they recognize that the obligations to UMC have to be modified to reflect the market place for the children’s hospital to thrive,” said lead litigation attorney Patricia Tomasco, a partner with Jackson Walker in Austin. “Despite discussions between counsel all weekend, UMC has yet to even respond to EPCH’s global offer. Rather, UMC went back to its prior offer delivered on Thursday and then rejected EPCH’s attempt to accept it.”

Tomasco reiterated that, “We offered to talk at 11 p.m. last night and again at 6 a.m. this morning.”

UMC says it welcomes Children’s assistance in the development of a joint plan to save Children’s. UMC intends to submit a plan for consideration by the U.S. Bankruptcy Court and its fellow creditors.

Castillo expressed frustration with UMC’s and Commissioners Court’s actions.

“It certainly looks like they don’t want to settle. We make a global offer and they don’t even respond. We accept their interim proposal and they say ‘no you didn’t!’ It makes no sense,” Castillo said in the statement.

Timeline of Recent Offers/Counter Offers According to El Paso Children’s Hospital

Thursday, September 24th

UMC adds totally new term to counter-offer: Children’s gets 45 more days to find a strategic partner, Children’s postpones lawsuit till January

Friday, September 25th

10:00 am – EPCH presents UMC with counter-offer (Plan A and Plan B) to UMC
Commissioner’s Court indicates…”want the weekend to review”
Escobar says Commissioner’s Court will convene with UMC Board of Managers at 8:30 am Monday in a special session before the Commissioner’s Court regular meeting

Monday, September 28

10:00 am – UMC sends EPCH counter-offer rejecting abated rent, requires approximately $5 million Disproportionate Share payment EPCH expects to receive in December to go to UMC
11:00 am – EPCH agrees to terms of counter-offer, says, “Yes” to concessions.
12:00 noon – UMC Board of Managers and Commissioner’s Court respond rejecting EPCH plan which includes EPCH’s agreement to concessions requested two hours earlier.

Tuesday, September 29

Emergency hearing in U.S. Bankruptcy Court in Austin. UMC will ask Mott to allow UMC to submit its own plan and end EPCH exclusivity.

Monday, October 22

Trial set to determine whether the Children’s hospital has been overcharged for rent and/or services by UMC.



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