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City of Prague v. Cah Acquisition Co. 7, LLC

United States District Court, W.D. Oklahoma

March 8, 2019

THE CITY OF PRAGUE, OKLAHOMA et al., Plaintiffs,
CAH ACQUISITION COMPANY 7, LLC, et al., Defendants.


          CHARLES B. GOODWIN United States District Judge

         On March 4, 2019, the Court granted Plaintiffs'[1] oral request for the temporary appointment of a receiver over Defendant CAH Acquisition Company 7, LLC, and appointed Cohesive Healthcare Management Consulting, LLC (“Cohesive') to serve in that role. See Order of Mar. 4, 2019 (Doc. No. 47). Plaintiffs have also moved in writing for the appointment of a receiver and for injunctive relief. See Doc. Nos. 12-1, 13-1; see also Doc. Nos. 29, 30, 37, 38, 46.

         Having considered the parties' arguments and evidence presented through filings and in two hearings in open court, the Court concludes that ordering the continued appointment of a receiver, as well as associated preliminary injunctive relief, is warranted to ensure proper oversight over the Hospital and safety of its patients. Specifically, the primary purpose of the receivership shall be to achieve an orderly transition of the operations of the Hospital to a succeeding lessee/operator or, absent appointment of a succeeding lessee/operator within a reasonable time, to achieve an orderly conclusion of the Hospital's operations. See Order of Mar. 4, 2019; Fed.R.Civ.P. 65, 66; Cox v. Sullivan, No. 14-CV-206-TCK-FHM, 2015 WL 5040039, at *1 (N.D. Okla. Aug. 26, 2015); Star Fuel Marts, LLC v. Sam's E., Inc., 362 F.3d 639, 651 (10th Cir. 2004); Schrier v. Univ. of Colo., 427 F.3d 1253, 1258-59 (10th Cir. 2005). See generally SEC v. Vescor Capital Corp., 599 F.3d 1189, 1194 (10th Cir. 2010) (noting that “the district court has broad powers and wide discretion to determine relief in an equity receivership” (omission and internal quotation marks omitted)); 28 U.S.C. § 959(b) (prescribing that a receiver appointed by a federal court “shall manage and operate the property in his possession” “according to the requirements of the valid laws of the State in which such property is situated”). Plaintiffs' motions (Doc. Nos. 12-1, 13-1) are therefore GRANTED to the extent outlined below. The Extended Temporary Restraining Order previously entered by the Court (Doc. No. 40) shall expire as outlined therein. The terms of this Order shall remain in place until further order of the Court.


1. Effective immediately, Cohesive is appointed as receiver (the “Receiver”) of (a) CAH Acquisition Company 7, LLC (“CAH 7”), (b) all real and personal property of CAH 7 of any kind or nature, including all government-issued permits, certificates, licenses, and other grants of authority (the “CAH 7 Assets”), as well as (c) all personal property located upon and within the property and facilities described as the “Hospital Premises” in the Emergency Application (Doc. No. 12-1) (the “Other Property”).
2. The Receiver shall post a bond and file an executed oath as outlined in the Court's Order of March 4, 2019.
3. Defendant CAH 7 and its agents are ordered immediately to surrender complete control of CAH 7, the CAH 7 Assets, and the Other Property to the Receiver and its agents, to provide the Receiver with all necessary keys, passcodes, passwords, and all other methods of access to computers, equipment, and other devices used for the benefit of the Hospital, to provide uninterrupted access to and control over all email and other IT systems currently used at the Hospital, as well as all books, records, accounts, and documents relating to the Hospital and the operations thereon, and to remit to the Receiver all funds currently in possession of CAH 7 and its agents that are income, revenues, rents, or other proceeds of CAH 7, as well as all other CAH 7 Assets and Other Property.
4. CAH 7 and its agents shall pay to the Receiver, or agent appointed by the Receiver, all funds received after the date of this Order that constitute income, rents, revenues, and other proceeds, including without limitation security deposits and all funds of CAH 7 in any way related to the operations of the Hospital.
5. CAH 7 and its agents shall immediately turn over to the Receiver and its agents all electronic medical-record information, books, records, security deposits, escrows, leases, contracts, computers, and access to all IT, financial, and other information relating to CAH 7, the CAH 7 Assets, the Other Property, and the operations of the Hospital maintained in any form, including electronically, and further including information regarding computers and software programs used by the Hospital or by CAH 7, including its agents, and as well as all administrator access codes, user names, passwords, and other information or authorization necessary to give the Receiver full access to all such information relating to the Hospital.
6. Any and all other persons and entities in possession of or having custody or control over any documents, books, or accounting records relating to the operation of the Hospital, including, but not limited to CAH 7 and its agents, shall deliver them to the Receiver forthwith, and shall account for and pay over to the Receiver any income, revenue, rents, or security deposits related to services performed by or at the Hospital in his/her/its possession. Included within these records shall be all service contracts and utility bills, any and all current or past operating statements related to the Hospital, and any other documents maintained by CAH 7 or its agents pertinent to the management and/or operations of the Hospital.
7. Until further order of this Court, CAH 7 and its agents, on notice of this Order, are hereby restrained and enjoined from interfering in any way with the Receiver's access to the Hospital, CAH 7, the CAH 7 Assets, the Other Property, or with the Receiver's management of the Hospital or its operations, and from terminating or cancelling any licenses, National Provider Number, or Medicare Participating Provider Agreement.
8. CAH 7 and its agents, on notice of this Order, are hereby ordered to reasonably cooperate in the completion and filing of such changes of information and other notices and filings requested by the Receiver pertaining to the Hospital's Medicare and Medicaid agreements, certifications, enrollment, and licensure, including without limitation notices and filings necessary to remove the current managing, controlling, authorized, and delegated parties, officials, and representatives relating to the Hospital, and substituting the Receiver and its designees.
9. The Receiver is granted, without limitation, the power to:
a. take control and possession of CAH 7, the CAH 7 Assets, the Other Property, and the Hospital, and to perform all acts necessary and appropriate for the operation and maintenance thereof;
b. take and maintain possession of all documents, books, records, papers, and accounts relating to CAH 7;
c. exclude owners, agents, servants, and employees of CAH 7 wholly from the Hospital, including by changing ...

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