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Hospital group seeks compensation

By Christine Haines 3 min read

The operators of the former Brownsville General Hospital Inc. are seeking more than a half-million dollars from the nonprofit owner of the hospital building in compensation for improvements made to the structure. The motion seeking $590,870.79 from the Brownsville Property Group was filed in Federal Bankruptcy Court by attorney Lawrence Bolla on behalf of the former hospital. Bankruptcy Judge M. Bruce McCullough recently ruled in favor of the property group, terminating the lease between the nonprofit group and the for-profit investors who had closed the hospital and declared bankruptcy in January, less than a year after taking over operations of the hospital.

Bolla contends his client has made improvements to the building, including expansion of the psychiatric unit, renovation of the roof, conversion of various parts of the building for business purposes and other renovations and that those improvements have enriched the nonprofit property group.

“They have benefited to the tune of a half-million dollars. The debtor and the creditors group don’t think they should be enriched in that way,” Bolla said.

Bolla said that if his client had exercised its right to purchase the building after leasing it as a hospital for three years, the cost of the capital improvements would have been deducted from the purchase price.

“I think it is ill-advised and I have asked Mr. Bolla to reconsider and withdraw his complaint. His claim has little if any merit,” said John P. Vetica, the attorney for the Brownsville Property Group. “This is a waste of his time and the scant resources that the nonprofit group has.”

Since reacquiring the property, the Brownsville Property Group has been seeking new tenants interested in providing selected services at the former hospital. According to Frank Ricco, president of the nonprofit group, medical laboratory services should resume at the former hospital in the near future.

Bolla’s motion indicates that the property owner is obligated to reimburse the former tenant for the improvements under the provision of the lease that gave it the option to buy the building.

“The debtor had a legitimate expectation as to the continued use and enjoyment of such capital improvements in the event that it became the owner of the real property,” Bolla wrote in his motion.

Vetica does not dispute that.

“Absolutely they would have been enriched and benefited from the improvements if they had remained in business. The fact that they have not is none of our doing,” Vetica said.

A list of construction projects at the hospital was attached to the motion, showing bills totaling $590,870.79, with $537,713.29 paid. Wally Corp., the primary contractor for the work, is also listed among the hospital’s creditors, with outstanding debts listed at $69,196.97.

A hearing date on the motion has not yet been set.

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