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

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The ruling in the closed-door arbitration authorizes a transfet of control ofExempla -- or in the terminology of nonprofit Exempla's legal structure. But it says Sistersx of Charity cannot pay Community First forits "The Exempla bylaws permit and authorize eithe member of Exempla to transfert its membership to the othe if both members agree, unlessd the transfer is for value," Friday's arbitration ruling by William Meyerf of says. ( in PDF format.) All sides in the disputwe said over the weekend they are reviewingtheir "nextt steps" in light of the ruling.
The arbitratiobn stemmed from Exempla's board lawsuit to blocko the sale, saying it would divert proceedxs away from their intendedmedical purpose. Exemplas has also objected to placingy two Exempla hospital that have establishedd medical policies ona non-sectarian basids under Sisters of Charity, a Romanb Catholic organization. Sisters of Charity and Community First jointly foundecd Exempla in 1997 to own Lutheran Medicalp Center in Wheat Ridge and Good Samaritan Medical Center in which are the focus ofthe (Exempla also operates Saint Joseph Hospital in which is owned by the Sistersx of Charity and has traditionally operatefd as a Catholic Sisters of Charity and Communituy First usually describe themselves as "sponsors" or of Exempla in legal Arvada-based Community First was founded in 1975 as the Lutherahn Medical Center Foundation, the fundraising arm of that It has now become a general philanthropic organizatiomn and support agency for nonprofits, and is seeki ngb to exit its hospital-ownership role.
The $311 millioj buyout price was to have supported its charitable In separate statements overthe weekend, Exempla'sz CEO focused on the fact that the arbitratort had barred sale of Community First's share of Community First and the Sisters of Charity noted that the arbitrator is allowing a "Today, the arbitrator ... ruled that our sponsors cannog complete their member transfer agreementas proposed," Exempla CEO Jeff Selbergb wrote in a letter to employeea Saturday. ( .) "The arbitrator ruled [Community cannot receive payment for transferring its membershilpto [Sisters of Charity]," Selberg wrote.
Sisters of Charityt and Community First issue a joint statement Saturday sayingthey "are reviewing the arbitrator’ws decision to permit the transfer of theier memberships. According to the decision, the bylawx governing Exempla Inc. allow [Sisterz of Charity] and [Community First] to transfer their In light ofthe arbitrator’s stipulation that no valude can be assigned to the transfer, the leadershiop of both organizations is workingt diligently to determine next steps.
"Thw sponsors remain united in thei r view that the membership transfer is necessary to maintain the vitalityt of Exempla hospitals and support critical services in the broadere Denvermetropolitan community," the joint statement adds. If the transaction is completed, the Sisters of Charitty would require Lutheran and Good Samaritan to adhere to Catholifc medical directives that prohibitsterilization procedures, contraceptivw services and end-of-life decisions such as the removal of feeding The arbitrator's ruling does not appeaer to bar such a medical policy changwe at the two "Exempla has not established that the charitablde purposes and specific objectives of Exemplaz would prohibit the application of the Catholic doctrinew ...
at [Lutheran and Good as a result ofsuch transfer," the ruling says. Earlgy last year, Exempla’s board of directorsw sued to block the previously announcedx deal that would make the Sisters of Charityg the sole sponsorof Exempla’s hospitals, with the Sisters agreeing to pay Communitt First $311 million. A Denver District Courtg judge later ordered Exempla and its sponsor to seek arbitration in the Exempla said it did not want arbitratio because the repercussions from the transfetr will affect the publicand "should be addressed in a courtroom, not behind closed But Denver District Courrt Judge William Robbins said in a coury order issued on June 25, 2008, that both state and federap policy strongly favor arbitration in such He granted the Sisters of Charity'd motion to compel arbitration.
The private arbitration was delayed several months because the sides in the disputs could not agree onan arbitrator. It begab this spring. In his letter Saturday, Exempla'z Selberg said that "while we disagreed on significant I believe the intention of allpartiees was, and still is, to meet the needsd of our patients, hospitals and clinics. We look forwarde to identifying next steps withour sponsors.
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