HMA completed negotiations with the Saint Joseph board in December, 2005, to transfer the 231-bed facility for $75 million. Although HMA issued press releases announcing the pending sale, installed its computer system and trained hospital employees on its procedures, it never signed the asset-sale agreement.
HMA's new president, who came on board the next month, grew leery of the purchase. He killed it one day before the Georgia attorney general was to hold a public hearing on the transaction necessary for its approval.
The hospital eventually sold for $37 million, prompting the Saint Joseph board to sue HMA for the difference.
After losing the lawsuit in federal district court, the board sought relief from the 11th Circuit U.S. Court of Appeals in Atlanta. However, a three-judge panel on the appellate court also ruled against the board Thursday.
Although no trial was held, the board argued in court filings that HMA executives had signed a letter of intent and made public statements that an agreement had been reached. Board lawyers say that agreement was breached when HMA backed out of the deal.
But the appellate decision written by Judge Gerald Tjoflat doesn't agree because of the conditional wording of documents the hospital and HMA submitted to the Federal Trade Commission and the U.S. Department of Justice.
"The Letter of Intent, coupled with (the hospital board's) representation in the premerger notification filed with the FTC and the DOJ—that the parties would not execute a 'binding Asset Sale Agreement' until the Georgia attorney general approved it—establishes as a matter of law that (Saint Joseph) could not reasonably rely on HMA’s 'promise' to purchase its hospital assets," Tjoflat wrote.