Steward's CEO slams AG Kilmartin over Landmark

WOONSOCKET, R.I. (WPRI) - Attorney General Peter Kilmartin is brushing off a scathing letter he received from the would-be buyer of struggling Landmark Medical Center that accuses the state's top prosecutor of "behavior below your status as a prominent elected leader."

In the four-page letter dated Aug. 8 and obtained by WPRI.com, Steward Health Care System CEO Ralph de la Torre slams Kilmartin for the way he's mediated its dispute with Blue Cross & Blue Shield Rhode Island over how much the insurer pays Landmark for medical services.

"Your tone in both ending your efforts in this facilitation and reminding us of your deadline only underscored Rhode Island's unwelcome attitude to Steward," de la Torre wrote. He blasted Kilmartin's staff for acting "biased and intimidating" at a key Aug. 6 negotiating session that Steward abandoned because of what the CEO termed a "ridiculous" offer from Blue Cross.

Kilmartin spokeswoman Amy Kempe dismissed the CEO's harsh comments, telling WPRI.com: "Mr. de la Torre's letter was clearly written by someone not present at the meeting and looking to rewrite history after his staff walked out and walked away from negotiations with Blue Cross Blue Shield, at his demand."

• PDF: Read CEO de la Torre's letter
• PDF: Read AG Kilmartin's letters
• Related: Nee: Letter is unfair to AG

de la Torre's letter is striking for its extremely combative tone considering Steward is attempting to become a major player in Rhode Island health care. The CEO accused Kilmartin of "grandstanding" and told him he was "inaccurate," "misleading," "uninformed," "biased," "truculent" and "intimidating."

The war of words raises new concerns about the status of behind-the-scenes negotiations to save Landmark, with less than two weeks until the attorney general's Aug. 31 deadline for Steward to close on the deal. Blue Cross and Landmark, which has been in receivership since 2008, filed lawsuits against each other in March.

Kilmartin has offered to extend the Aug. 31 deadline to allow Steward more time to negotiate with Blue Cross, but no request has been submitted as of late Monday, according to Kempe, who said the attorney general was trying to save Landmark by stepping in to resolve the bitter dispute between the two firms.

Neither corporation would discuss the situation with WPRI.com. Steward spokesman Chris Murphy said: "We do not comment on private correspondence." Blue Cross spokeswoman Sara Beth Labanara said: "I'm sorry but because we're still in negotiations with Steward we can't comment or answer your questions at this time."

Kilmartin gave conditional approval to Steward's proposed purchase of Landmark on May 25, nearly a year after a judge signed off on the deal. A spokesman for Jonathan Savage, the lawyer who oversees the hospital as its court-appointed special master, said Monday that his "focus remains on working towards solutions that will preserve the long-term operations of Landmark."

de la Torre was even more critical of Blue Cross CEO Peter Andruszkiewicz in the Aug. 8 letter than he was of Kilmartin, writing, "His self-serving defense and the glacial pace and self-aggrandizing nature of his efforts to find a solution are an embarrassment." de la Torre also disclosed efforts by Rhode Island AFL-CIO President George Nee to mediate.

"You know, [Deputy Attorney General Gerald] Coyne knows, and Mr. Nee knows that BCBSRI's monopoly in Rhode Island is driving their indifference to reach a resolution as well as their indifference to help the people of North Rhode Island," de la Torre wrote to Kilmartin. He argued that while Steward has tried to save Landmark, "it appears everyone else in Rhode Island could care less."

Woonsocket Mayor Leo Fontaine echoed de la Torre's critique of Blue Cross recently, saying the situation "looks a lot more like our local nonprofit health insurer is using its dominant position in the marketplace to bully a failing community hospital out of existence."

de la Torre's letter also included a broader critique of Rhode Island's culture. "At every step we have been rebuffed by the public, private and 'charity' sectors," he wrote, suggesting "there is no appetite in the state for constructive engagement and investment by outsiders. ... It is becoming increasingly clear to us that we are unwelcome and frankly [Kilmartin's] recent actions speak louder than words."

Kempe said de la Torre's letter contained "many inaccuracies," including his allegation that Kilmartin told Steward employees they "would have blood on their hands" if they scuttled the Blue Cross talks. Kempe said the attorney general actually told the two sides "neither of you have clean hands," which she said "is clearly different and far less melodramatic."

Kilmartin's office has sent at least six letters regarding the Landmark situation since July 25, including an Aug. 3 letter from Kilmartin to de la Torre and Andruszkiewicz warning them they "both stand to lose professionally" if a deal isn't reached. (de la Torre said Kilmartin reneged on their agreement to only communicate by phone.)

Another letter - sent Aug. 2 letter by a clearly frustrated Coyne - suggested Landmark and Steward have been less than diligent in handling the process, waiting months to provide critical regulatory filings and failing to request extensions in a timely manner despite prodding from the attorney general's office.

"If Steward truly wants to save a community hospital as suggested in the recent persistent media advertisements, it should focus on the remaining items on the Closing Checklist and close this transaction in a timely manner," Coyne wrote.

The attorney general's office "will not allow [Landmark and Steward] to simply ignore this department's authority and possibly jeopardize the future of Landmark Medical Center," he added.

Ted Nesi ( tnesi@wpri.com ) covers politics and the economy for WPRI.com and writes the Nesi's Notes blog. Follow him on Twitter: @tednesi

An earlier version of this story included a subheadline that implied the talks between Steward and Blue Cross are over; the negotiations are still in progress, according to the insurer.