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Judge Rules for District in United Medical Center Foreclosure Dispute

Tuesday, April 15, 2014

Judge Rules for District in United Medical Center Foreclosure Dispute

CONTACT:  
Ted Gest
Public Information Officer
202-727-6283

WASHINGTON, D. C. -- A judge has ruled for the District of Columbia in a suit brought by Capital Behavioral Health, LLC (CBH), which contended that the District’s foreclosure on United Medical Center (UMC) in 2010 interfered with CBH’s right to occupy space at UMC, the only full-service hospital in the District east of the Anacostia River, D.C. Attorney General Irvin B. Nathan said today. CBH argued that it had a lease with UMC’s former owners to operate a psychiatric unit within the hospital and had a memorandum of understanding that it could purchase UMC from the former owners.

On April 11, D.C. Superior Court Judge Frederick H. Weisberg granted summary judgment in favor of the District and a co-defendant, the Not-For-Profit Hospital Corporation (NFP).  After a detailed examination of the record in the 2011 lawsuit, the court found that CBH lacked legal standing to pursue all but one of its claims against the District and NFP and that the remaining claim lacked any merit.  CBH had sought more than $100 million in damages.

Because CBH lacked a valid and enforceable lease, Judge Weisberg found that the District’s foreclosure on UMC could not have harmed CBH’s leasehold interests.

The court said that CBH could not buy UMC without prior written approval from the District or from the public/private partnership through which a large portion of the loans used for the purchase were made. The MOU expired on July 1, 2010, before the foreclosure on July 9, 2010.

CBH could not force the District to pay a judgment CBH had obtained against CMC LLC, a private, non-District entity that was formed to own and operate the hospital, the court found. CBH previously had settled a judgment it had against CMC LLC.

Mayor Vincent C. Gray applauded the outcome and the Office of the Attorney General work that led to it. He said, “This significant decision should allow the District to move forward with transitioning away from UMC and towards our new planned modern hospital facility at Saint Elizabeths.”

Attorney General Nathan praised Judge Weisberg’s careful, thorough opinion and said he was “delighted that the judge vindicated the District’s work in defending against these meritless claims throughout nearly three years of long and arduous litigation.” The Attorney General praised Assistant Attorneys General Thomas Koger, Melissa Baker, and Robert Rich, working with Deputy Attorney General Ellen Efros of the Office of the Attorney General’s Public Interest Division, for their work on the case.