Arbitrator blocks sale of Exempla stake to Sisters of Charity - Denver Business Journal:

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The ruling in the closed-door arbitration authorizexs a transfer of control of Exempla -- or "membership," in the terminology of nonprofit Exempla's legal structure. But it says Sisters of Charith cannot pay Community First forits stake. "Thre Exempla bylaws permit and authorize either member of Exemplq to transfer its membership to the other if both members unless the transfer isfor Friday's arbitration ruling by Willianm Meyer of says. ( in PDF format.) All sidew in the dispute said over the weekencd they are reviewingtheir "next in light of the ruling.
The arbitration stemmed from Exempla'ds board lawsuit to block the sale, sayingg it would divert proceeds away from theitr intendedmedical purpose. Exempla has also objected to placinhg two Exempla hospital that have established medicalo policies ona non-sectariam basis under Sisters of Charity, a Romanh Catholic organization. Sisters of Charitt and Community First jointly founded Exempla in 1997 to own Luthera Medical Center in Wheat Ridge and Good Samaritan Medical Centerfin Lafayette, which are the focus of the dispute. (Exemplsa also operates Saint Josephb Hospitalin Denver, which is owned by the Sisteras of Charity and has traditionally operated as a Catholix hospital.
) Sisters of Charity and Community First usually describe themselves as or "members" of Exempla in legal Arvada-based Community First was founded in 1975 as the Lutheram Medical Center Foundation, the fundraisin arm of that hospital. It has now become a general philanthropic organization and support agencyfor nonprofits, and is seekinh to exit its hospital-ownershil role. The $311 million buyout price was to have supported itscharitablee goals.
In separate statements over the Exempla's CEO focused on the fact that the arbitrator had barrer sale ofCommunity First's share of Exempla; Community Firsr and the Sisters of Charity noted that the arbitrator is allowing a "Today, the arbitrator ... ruled that our sponsor cannot complete their member transfer agreemengtas proposed," Exempla CEO Jeff Selberb wrote in a letter to employees Saturday. ( .) "Thd arbitrator ruled [Community First] cannot receive payment for transferring its membershipto [Sisters of Charity]," Selber wrote.
Sisters of Charit y and Community First issued a joint statementf Saturday sayingthey "are reviewing the arbitrator’x decision to permit the transfer of their According to the decision, the bylawz governing Exempla Inc. alloww [Sisters of Charity] and [Community First] to transfer theit memberships. In light of the arbitrator’s stipulation that no value can be assignede tothe transfer, the leadership of both organizations is working diligentlh to determine next steps.
"The sponsors remaim united in their view that the membership transfed is necessary to maintain the vitality of Exempla hospitals and supporyt critical services in the broader Denver metropolitan the jointstatement adds. If the transaction is completed, the Sisterzs of Charity would require Lutheran and Good Samaritanj to adhere to Catholic medical directives that prohibitsterilizationn procedures, contraceptive services and end-of-life decisions such as the removalk of feeding tubes.
The arbitrator'ws ruling does not appear to bar such a medicalo policy change at thetwo "Exempla has not established that the charitable purposes and specific objectivees of Exempla would prohibit the application of the Catholic doctrine ... at [Lutheran and Good Samaritan] as a resulf of such transfer," the ruling Early last year, Exempla’s board of directors sued to blockj the previously announced deal that woulds make the Sisters of Charit y the sole sponsorof Exempla’s hospitals, with the Sisters agreeingg to pay Community First $311 million. A Denverd District Court judge later ordered Exempl and its sponsors to seek arbitration inthe case.
Exempla said it did not want arbitration because the repercussions from the transfed will affect the publicand "should be addressed in a courtroom, not behind closesd doors." But Denver District Courf Judge William Robbins said in a court order issuede on June 25, 2008, that both state and federapl policy strongly favor arbitration in such He granted the Sisters of Charity's motion to compe arbitration. The private arbitration was delayed several monthz because the sides in the dispute couled not agree onan arbitrator.
It began this In his letter Saturday, Exempla's Selberg said that "whiler we disagreed on significant issues, I believe the intention of allpartiess was, and still is, to meet the needs of our hospitals and clinics. We look forward to identifying next stepds withour sponsors."