Highmark Inc. sued West Penn Allegheny Health System on Monday seeking to stop the health system from starting acquisition discussions with other companies and to protect the insurer’s investment in the financially ailing health system.
Highmark, the state’s largest health insurer, is asking Allegheny County Court of Common Pleas to issue a temporary restraining order to prohibit West Penn Allegheny from talking to other companies and to declare that the health system’s claims that Highmark violated their agreement are “improper, unjustified, and of no effect.”
Highmark also is demanding, in addition or as an alternative, that West Penn Allegheny be forced to immediately repay $200 million in grants and loans provided by Highmark, the lawsuit states.
West Penn Allegheny agreed in November to be acquired by Highmark for $475 million. But the deal broke down on Friday when health system officials said Highmark violated their agreement by demanding West Penn Allegheny restructure $1 billion in debt and pension liabilities through a bankruptcy proceeding.
“Although a financial restructuring is one option that must be considered to meet these objectives, Highmark is open to considering alternative WPAHS proposals that would sustain the system’s long-term financial soundness,” the insurer said in a statement.
Because Highmark had broken their agreement by changing its terms, West Penn Allegheny officials alleged, the health system was free to be acquired by another company and to keep Highmark’s $200 million.
“In a flight from reality, WPAHS has chosen to take over $200 million of Highmark’s money and the expectations of an entire community and run from its obligations to negotiate in good faith and exclusively with Highmark,” the insurer’s lawsuit states.
This article was written by Channel 11’s news exchange partners at TribLIVE.