Banking & Finance Law Report

Archives: Health Care Lending

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Roundup: Recent Business Developments

The first six weeks of 2014 have been abundant with news and cases that provide insight for financial institutions (and other businesses) that need to be aware of regulatory, legislative and judicial developments and how they affect the U.S. business environment.

Porter Wright attorneys have written several alerts and articles about recent cases and best practices; we offer a summary below.

A merger for better healthcare…no problem, right? Wrong, says the FTC

By now, you likely are accustomed to hearing about the federal government challenging the merger of two hospitals or health systems. More often than not these days, the federal government wins. That is true even in the face of claims by the parties the merger is necessary to reduce costs and/or improve the quality of health care provided — the very foundation for the Affordable Care Act.…

Banking & Finance Law Report Top 10: News and Trends from 2013

2013 was an active year for the Banking & Finance Law Report. Our authors covered a wide range of topics — from legislative and regulatory changes to court opinions to financing and bankruptcy matters in the healthcare, agricultural and oil and gas industries. To offer a glimpse into the news and trends of the past year, following is a synopsis of the 10 best-read articles of 2013.

1. Major Changes to Affirmative Action Requirements Become Effective March 24, 2014
by Mike Underwood

In just two months, financial institute and other types of employers will need to comply with new affirmative action rules that:

  • Require employers to gather and retain data showing the results of their recruiting and hiring efforts and to set numeric targets for hiring veterans and disabled persons
  • Include significant additional obligations for reviewing, analyzing and documenting good-faith efforts and results
  • Specify that employers must offer applicants the opportunity to self-identify as a covered veteran or disabled person before a job offer occurs

Many employers may face a real challenge identifying and networking with recruiting sources that can refer qualified candidates for their businesses. They also will likely need to adjust data collection, retention, and analysis processes. Read

Health Care Lending: In re Altercare of Stow Rehabilitation Center


In mid-September, an Ohio appellate court rendered a decision in a long-pending dispute that raises an important issue for health care lenders: the impact of a contested certificate of need application. The impact of such a contest should be carefully considered by health care lenders.

On September 18, 2012, the Ohio Tenth District Court of Appeals rendered a decision in In re Altercare of Stow Rehabilitation Center (091812 OHCA10, 12AP-29). The parties to the appellate case were Schroer Properties of Stow, Inc. (“Schroer”) and Kent Care Center (“Kent”). At issue was Schroer’s decision to relocate 31 nursing home beds from 3 other Stark County, Ohio, nursing facilities and to a new facility, Altercare of Stow Rehabilitation Center (“Altercare Stow”), to be constructed in Stow, Summit County, Ohio.

Schroer submitted its Certificate of Need (“CON”) application in July, 2007, but the Ohio Department of Health (“ODH”) did not declare the application “complete” until February 28, 2011, nearly 4 years after Schroer’s initial submission.…

Supreme Court Ruling on Health Care Reform

Financial institution executives of all sorts should consult a recent entry on our sister blog which summarizes the high court ruling on the Affordable Care Act, the name of the federal health care reform that was passed about two years.  There will be more to come, but this is a good place to start for an in-depth understanding of the implications of the decision.  Here is the link:

Health Care Facility Financing-CHOW Requirements Impact Deal Timing

Banks and other financial institutions need to understand how federal and state laws may impact closing a lending transaction in connection with a change of ownership ("CHOW") of a health care facility ("HCF"). Various laws implicated in a CHOW frequently include federal Medicare laws and state licensing, certificate of need, and Medicaid laws.

Under Medicare regulations, a CHOW is defined as any of the following: (a) in a partnership, the removal, addition or substitution of a partner, unless the partners expressly agree otherwise as permitted by state law; (b) in a sole proprietorship, the transfer of title to property to another party; (c) in a corporation, the merger of the corporation into another corporation, or the consolidation of two or more corporations, either of which results in the creation of a new corporation; or (d) a lease of all or part of the HCF. Commonly encountered CHOW transactions include asset sale and purchase transactions and lease transactions where the purchaser/lessee agrees to accept assignment of the current operator’s Medicare provider agreement and number. (Note: It is possible for Medicare and Medicaid purposes for a purchaser/lessee to enroll as a new provider and not accept assignment of the Medicare and Medicaid provider agreements. However, that process …