Catholic Healthcare Giant Trinity Faces $12 Million Lawsuit Over 2019 Acquisition Deal with New Jersey Hospital

Trinity Health, a Catholic healthcare organization based in Livonia, Michigan, is facing a lawsuit filed by Virtua Health in New Jersey federal court. The dispute centers around a transaction that occurred in 2019 between the two nonprofit health systems, where Virtua acquired the two-hospital Lourdes Health System from Trinity.

The litigation with Deborah Heart & Lung Center in Browns Mills was resolved in September 2019, but now Trinity is refusing to pay the $12 million owed to Virtua, according to the complaint. The amount is a small fraction of Trinity’s litigation budget considering its $21.6 billion revenue in fiscal 2023.

The lawsuit against Trinity stems from Virtua’s acquisition of Lourdes Health System from Trinity in 2019, which was challenged by another South Jersey hospital, Deborah Heart & Lung Center in Browns Mills. Deborah claimed that the sale to Virtua would violate a contract they had with Lourdes regarding cardiology services in Burlington County. With the anticipation that Deborah would take legal action, Virtua refused to finalize the deal unless Trinity agreed to indemnify Virtua for any losses resulting from Deborah’s lawsuit.

Virtua declined to comment on the ongoing litigation while Trinity did not respond to requests for comment. This is not the first time a South Jersey health system has taken legal action against Trinity over the sale of Lourdes; Cooper University Health Care previously backed out of a deal in 2017 and attempted to recover $15 million it had put in escrow. The case was decided by a federal jury in 2022 and went to Trinity.

In conclusion, this lawsuit highlights how disputes between nonprofit health systems can have significant financial consequences and result in prolonged legal battles. It also raises questions about indemnification clauses and their impact on transactions involving nonprofit entities.