HUMC Sale – Top 10 Details
Top 10 things Zimmer doesn’t want you to know about the HUMC Sale
On April 20, 2011 the Hoboken Municipal Hospital Authority signed an agreement with HUMC Holdco, LLC. In a move that spits in the face of transparency and open government, Mayor Dawn Zimmer and her allies have refused to release any details of the sale contract for Hoboken University Medical Center.
But in this EXCLUSIVE, Hoboken411 will provide insight into all the details the Zimmer Administration doesn’t want you to know. Below, see the top ten things City Hall is hiding from you. After reading the sale contract, it is pretty obvious Zimmer has plenty to hide!
#10 – Is a “shell company” the best choice?
The potential buyer, HUMC Holdco, LLC, is a shell company with no assets. Other potential buyers, namely the Jersey City Medical Center were real entities. However, rather than sell to a successful medical provider the Zimmer Administration used this process to exact revenge against Dr. Jonathan Metsch’s old foil.
#9 – “Deposits” don’t mean much in Hoboken
HUMC Holdco, LLC put down a deposit of $1 million for the purchase of the hospital. If it walks away from the deal, the most it can lose is the $1 million deposit. That means the taxpayers of Hoboken are on the hook for the $52 million in bonds (plus interest) and $40 million in outstanding debt owed to the creditors. But do keep in mind the City recently returned the $2.5 million deposit for the Hoboken Municipal Garage to SHG Urban Renewal Associates after the potential purchaser walked away from the deal. So even if the hospital buyer walks away, it may still get its $1 million deposit back!
#8 – No coverage for you – but city officials get sweet discounts!
It has long been known that the new owner will drop all existing insurance contracts and charge patients out-of-network rates. However, in the contract the buyer promises to charge in-network rates for City Employees. While this great for our police, firemen, nurses, and other hardworking city employees – don’t be disillusioned. This is a huge benefit for Zimmer, Bhalla, and Marsh who will all benefit from the in-network rates as well. A trend you will continue to see in this contract is that it benefits to the Mayor and her allies, even if it hurts Hoboken taxpayers and residents.
#7 – Hospital racked up bills knowing bankruptcy was coming
The Hospital Authority agrees that the new owner will only be responsible for giving creditors five cents on the dollar for outstanding debts. This means the new owner will only pay $2 million of the $40 million owed to everyone from doctors and nurses to utility companies such as PSE&G and Verizon. Even some small Mom and Pop shops are getting stiffed by “Diamond Dealer Dawn.”
Keep in mind this agreement was signed in April, but Hudson Healthcare, Inc., the hospital’s management company, did not file for bankruptcy until August. For at least four months, the Hospital Authority knowingly ran up bills it had no intention to pay. It is pretty obvious now why Zimmer and friends were willing to ignore Tom Greaney’s bankruptcy when they backed him for City Council in May!
#6 – Stiff creditors, but pay steeply to cover your own butts?
Even though creditors are being asked to settle for pennies on the dollar, Zimmer and Toni Tomarazzo are sure to cover themselves from future litigation. According to the sale contract, they are requiring the buyer to purchase a $4 million “tail insurance policy” to cover member of the Hospital Authority from any future litigation. That’s right – the cost of Zimmer and Tomarazzo’s insurance policy is more than twice the amount they are willing to pay creditors.
#5 – Will “blanket protection” even fly?
The above insurance policy came at a cost, though. Zimmer and company are asking the U.S. Bankruptcy Court to provide “blanket protection” for the buyer from any legal action brought to collect unpaid remainder of the $40 million owed to creditors. Experts say this goes against 200 years of bankruptcy law and the request will likely be denied. If that’s the case, the new owner probably walks away leaving taxpayers holding the bag.
#4 – Downplaying bankruptcy – but buyer can abandon ship? Really?
Toni Tomarazzo repeatedly down played Hudson Healthcare filing for bankruptcy stating it was an “important step” in the sale process. The sale contract proves this is just more spin meant to mislead the public. According to the sale contract, the buyer is permitted to walk away from the deal if Hudson Healthcare files for bankruptcy! Now the buyer has license to walk and even though Tomarazzo signed off on it she never shared it with the public.
#3 – No iron-clad commitment to improve anything
The Zimmer spin machine has repeatedly touted the buyer’s commitment to “invest $20 million in improvements” for the hospital. Yet the contract states the $20 million commitment is “the buyer’s “sole and absolute discretion (but without any obligation to do so)”. In other words, the buyer doesn’t have to invest a penny. Do you feel warm and fuzzy yet?
#2 – Seven non-guaranteed years is acutely painful
The Zimmer Administration claims the hospital will remain an acute care facility for “at least seven years” after the sale. Except the contract gives the buyer an out by stating this provision is “subject to changes in governmental policy.” In other words, there is no guarantee the hospital will remain open for seven years after the sale. In fact it is looking like a bonafide real estate deal more than a hospital purchase. As lopsided as this deal seems, Hoboken is prime to have one less hospital and a lot more luxury condos in the not so distant future…
And the Number One thing they don’t want you to know is….
#1 – Can you say TAX ABATEMENT?
That’s right, the contract states that the seller (i.e Zimmer and her Majority on the City Council) will use its “best efforts” and “cooperate with and assist” the Purchaser, or its assignees, to obtain a property tax abatement. It is well known that the buyer will be selling the property to an out-of-state developer in order to get financing for the purchase. During her Mayoral Campaign, Zimmer called for a moratorium on tax abatements, but she is now agreeing to use her “best efforts” to help an out-of-state developer get a tax abatement! Got Transparency?
But wait, there’s MORE!
HUMC Bonus Round!
Here are three extra bonuses that the Zimmer Administration doesn’t want you to know:
- The Creditors being stiffed by the Hospital Authority are seeking to sue the HMHA members, such as Zimmer, Tomarazzo, Metsch, Kurta, etc. for fraud.
In fact, subpoenas have been issued to depose several members of the board. Also, sources tell Hoboken411 that the former CEO of Hudson Healthcare, Spiros Hatiras was also subpoenaed and is going to blow the lid on Zimmer’s and Tomarazzo’s plot to intentionally bankrupt the hospital. Wonder why he took the $600k golden parachute?
- The politically connected law firm of Lowenstein Sandler, which is home to disgraced former Attorney General Zulima Farber, is representing the Hospital Authority as part of the sale process. Sources tell Hoboken411 they are being paid close to $800 per hour and may very well walk away with well over $2 million in legal fees when all is said and done. It’s clear that Zimmer thinks it is “okay” for doctors and nurses to be paid five cents on the dollar, but has no problem paying a premium prices to her political friends.
- Hoboken Corruption University Medical Center. The Zimmer administration is always quick to deem anyone that disagrees with them as “corrupt.” Yet Zimmer herself is always willing to “look the other way” when corruption is an issue for a political bedfellows such as Angel Alicea or Rudy Garcia. This hospital sale is no different.
The contract is signed by Vivek Garipalli, one of the owners of Bayonne Medical Center and a registered agent of the HUMC Holdco, LLC shell company. You may remember when Vivek’s father, Laxmipathi Garipalli, made headlines a few years ago after pleading guilty to embezzling $840,000 from UMDNJ.
When the Zimmer Team tries to give you the argument about “the son not being responsible for the father,” think about how many times they have tried to tie Councilman Michael Russo to his father for political gain. Just another instance of the “situational ethics” exhibited by Zimmer and company throughout the Accidental Mayor’s career in public deception.
According to Star Ledger, the elder Gariaplli is now a cooperating witness for the U.S. Attorney’s Office and FBI.
Makes you wonder if the U.S. Attorney and FBI are keeping a close eye on this sale doesn’t it?