A $4-million escrow account created after the sale of the former Ellwood City Hospital was set aside for specific purposes, which was the focus of a special hearing Tuesday.
The hearing in the courtroom of Lawrence County Common Pleas Judge David H. Acker was held to find details on spending from that account, which was set up only for current employee wages, operating costs for the hospital and pension contributions.
The court-approved sale of the hospital and its assets to Americore Holdings occurred on Sept. 22, 2017, when the escrow account was created.
According to the terms of the agreement, no money was to have been withdrawn from the account without the approval of the buyer and a local advisory board consisting of the seven Ellwood City Hospital board members at the time, the Ellwood City mayor, a representative from Ellwood City’s borough council and police department and Dan Vogler, a designated county commissioner.
During Tuesday’s hearing, it was revealed that over a five-month period starting on Oct. 25, 2017 — after the sale of the hospital — to March 27, 2018, funds were spent on other items, according to a receipt document.
By March 27, 2018, a balance of $0 was in the account. Much of the payments went to payroll, lab services and referrals, anesthesia services, roof repair work, pharmacy assistance for payroll, accounts payable, lab work and $1 million for “capital projects.”
Alan Dambach, chairman of the local advisory board for the escrow account, testified during the hearing. When asked, Dambach said the advisory board would go over every payment request for the escrow account and approve the expenditures.
“We would go over what the need was,” Dambach said.
Eugene Herne, senior deputy state attorney general, asked if he remembered who the escrow agent was through the U.S. Bank National Association, which Dambach said he couldn’t remember. Dambach also said whenever the advisory board approved a payment, they would notify then-hospital CEO Beverly Annarumo, who would report to Americore and its then-owner Grant White, directly.
Dambach, when asked about the $1 million spent for capital projects, said a separate $70,000 payment was spent for “critical” roofing repairs.
He said he was unsure what the $1 million was spent for specifically on capital projects. Dambach told Acker the escrow checks were not made to White directly, but he didn’t recall who the payroll checks were sent to and didn’t remember if any payments went to the hospital’s retirement fund.
No one representing Grant White or Americore attended the hearing.
It was noted only one payment from the escrow account went into the retirement fund.
Following the hearing, Herne said Attorney General Josh Shapiro filed a petition and lawsuit against Americore Health LLC, Americore Health Solutions LLC, Ellwood City Medical Center Operations LLC, Ellwood City Medical Center LLC, and White, in December 2019.
The lawsuit was filed to have the hospital’s owners pay wages, unemployment taxes and pension contributions due to approximately 150 hospital workers who weren’t being paid.
The lawsuit said White agreed to purchase the hospital, have Americore operate the facility for at least 10 years, obey all federal and state laws and fully fund employee pensions. However, Shapiro’s lawsuit said workers were eventually not being paid, and workers were ultimately laid off without notice.
Herne said the lawsuit has been on hold due to the ongoing bankruptcy case involving Americore and the pending sale of the hospital property to California-based Pelorus Equity Group Inc.
All three county commissioners — Morgan Boyd, Dan Vogler and Loretta Spielvogel — were in attendance at the hearing, as well as county Solicitor Jason Medure, Ellwood borough council President George Celli, council Vice President Jim Barry, council members Brad Ovial and Jan Williams and borough Solicitor Ed Leymarie.
Also in attendance were E. William Matthews, Arthur Smilek and Mark Tomaszewski, the executive director, treasurer and president respectfully of the Ellwood City Community Health Foundation, the non-profit formed from the former Ellwood City Hospital Foundation, which raised funding for the facility.
Ellwood City Borough Manager David Allen said the sale of the hospital property to Pelorus is expected to close by late-October.