FBI raided hospital Thursday and carried out records, mayor says

The entrance to Ellwood City Hospital

A Lawrence County judge wants to know the status of an escrow account formed when the Ellwood City Hospital was formed in 2017.

An agreement at that time required buyers Grant White and Americore Health LLC to deposit $4 million in the U.S. Bank National Association account.

Common Pleas Judge David H. Acker set a public hearing for 10 a.m. Tuesday in his courtroom and invited the county commissioners, Ellwood City borough officials and others to attend and provide information they may have about the standing of the account.

Acker issued an order for the hearing on July 22. On Sept. 22, 2017, the court approved the sale of the hospital and its assets as a nonprofit, non-stock corporation to Americore Health LLC at Ellwood Medical Center, LLC, on certain specified conditions.

One of those conditions was the requirement that the escrow agreement be entered into between Ellwood City Hospital, Ellwood City Health Organization Inc., Outreach Care Group and Apple Occupational Health Services, as the sellers, and Americore Health LLC, and Ellwood Medical Center LLC, with U.S. Bank National Association as the escrow agent.

According to the terms, no money was to have been withdrawn from the escrow account without the approval of the buyer and a local advisory board consisting of the seven Ellwood City Hospital board members at the time, the Ellwood City mayor, a representative from Ellwood City’s borough council and police department and Dan Vogler, a designated county commissioner.

Money in the account, subject to their approval, was not to have been disbursed until all liability associated with the hospital employee’s retirement/pension plan was fully satisfied according to the the Federal Pension Benefit Guarantee Corporation, and upon a joint written direction from both the buyers and the sellers to the escrow agent, the judge noted in his order.

The court order approving the sale in 2017 states the Pennsylvania Office of the Attorney General will have continuing standing to sue for monetary damages or to enforce the provisions of the affiliated agreements.

“In prior proceedings before this court, it was made clear that the buyer did not satisfy its obligations to fund the pension plan under the asset purchase agreement,” Acker wrote. “The court has not heard from any of the parties, the Pennsylvania Attorney General’s Office or the escrow agent as to the current status and proposed distribution of the $4 million in escrowed funds.”

The judge’s order names the attorney general’s office, Grant White and Americore Health LLC as the buyers, and Ellwood City Hospital/Medical Center Corp., U.S. Bank National Association, the three commissioners, Ellwood City Mayor Anthony J. Court, and past and former members of the Ellwood City Borough Council as parties to be served with the order.

County solicitor Jason Medure said he strongly advised the commissioners to attend the hearing. They have canceled their regular meeting Tuesday scheduled at the same time.

The Ellwood City hospital closed a month after the buyer and new hospital owner Americore Health, of Florida, filed for Chapter 11 in the U.S Bankruptcy Court Eastern Kentucky District on Dec. 30, 2019.

The case is now coming out of bankruptcy, and the building that formerly housed the hospital is being acquired by Pelorus Equity Group Inc. Pelorus as part of the purchase process negotiated with the county, Ellwood City Area School District and Ellwood City Borough to pay half of the back real estate taxes due on the property.

Pelorus has been the holder of the mortgage for the property. Now that the bankruptcy case is being resolved, Pelorus is acquiring the property from all of the other lien holders in the case.

Ellwood City had liens on the property not only for back taxes, but also for borough utilities.

Pelorus is expected to pay the borough more than $400,000 in its back costs, or 75 percent of the amount owed.

dwachter@ncnewsonline.com

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Debbie's been a journalist at the New Castle News since 1978, and covers county government, police and fire, New Castle schools, environment and various other realms. She also writes features, takes photos and video and copy edits.

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