Trinity Health Refuses to Pay $12 Million in Indemnity Fees to Virtua Health System: The Ongoing Battle Over Health Care Mergers

In 2019, Virtua Health filed a lawsuit against Trinity Health in New Jersey federal court seeking reimbursement for legal fees and other costs totaling over $12 million related to a transaction that occurred between the two nonprofit health systems. The dispute stems from Virtua’s acquisition of the two-hospital Lourdes Health System from Trinity, which was challenged by another South Jersey hospital, Deborah Heart & Lung Center in Browns Mills.

Deborah claimed that the sale to Virtua would violate a contract they had with Lourdes regarding cardiology services in Burlington County. With the anticipation that Deborah would take legal action, Virtua refused to finalize the deal unless Trinity agreed to indemnify Virtua for any losses resulting from Deborah’s lawsuit, which Trinity accepted as evidenced by an added indemnity clause in the sales agreement.

The litigation with Deborah was resolved in September, however, Trinity is now refusing to pay the $12 million owed to Virtua, which the complaint states is a small fraction of Trinity’s litigation budget considering its $21.6 billion revenue in fiscal 2023. Trinity, a Catholic health care organization based in Livonia, Michigan, operates 101 hospitals across 27 states.

Virtua declined to comment on the ongoing litigation while Trinity did not respond to requests for comment. This is not the first time a South Jersey health system has taken legal action against Trinity over the sale of Lourdes; Cooper University Health Care previously backed out of a deal in 2017 and attempted to recover $15 million it had put in escrow, which was decided by a federal jury in 2022 to go to Trinity.