November 23, 2011
Mayor Gray and Attorney General Announce Settlement that Allows the District Clear Title to United Medical Center
The settlement of a lawsuit in D.C. Superior Court will give the District clear, undisputed title to the property.
FOR IMMEDITATE RELEASE
WASHINGTON, D.C. -- Mayor Vincent C. Gray and Attorney General Irvin B. Nathan announced that the District of Columbia has settled the complex litigation brought by Specialty Hospitals of Washington (“SHW”), former owner of United Medical Center in southeast Washington, which challenged the foreclosure of the hospital in 2010 by the Fenty Administration. Under the settlement, the District will pay SHW and certain affiliates $6 million and forgive an outstanding indebtedness of $900,000. The settlement of a lawsuit in D.C. Superior Court will give the District clear, undisputed title to the property.
The settlement will allow the District, if it so determines, to sell the 184-bed hospital, at Southern Ave. and 13th St., S.E. A Superior Court ruling this year questioned the validity of the foreclosure, which created uncertainty about the title of the hospital. The settlement requires SHW and its affiliates to cooperate with a forensic audit to ensure that there was no improper conversion of funds received from the District and preserves for the City claims against the principals of SHW for any conversion of funds uncovered by the audit, which is expected to commence early next year.
SHW initiated the litigation last year, claiming that the District lacked the right to foreclose and asserting that SHW was deprived of assets appraised at $65 million and precluded from receiving more than $14 million in Medicaid reimbursements and other valuable components of the hospital operation. The settlement does not concede any legal liability. Settlement of the claims and dismissal of the suit provides the District with full and clear ownership of the hospital.
Mayor Gray praised the Office of the Attorney General for securing an end of the litigation, noting that the settlement was “necessary and in the public interest to clear title to the Hospital and allow the District a free and unfettered hand going forward in dealing with the hospital.”
Attorney General Nathan called agreeing to the settlement “a difficult decision that avoided lengthy and costly litigation with the hospital’s clear title in doubt. The settlement resolves all issues between the parties and allows the hospital to be sold to a qualified buyer, if that is the choice the City makes.”