CHICAGO — Cleveland has sued the Cleveland Clinic over its decision to close a hospital on the city’s east side, arguing in part that the prestigious clinic’s acceptance of tax-exempt funding from the state requires it to provide equitable services to the city.
The Cleveland Clinic announced the decision to close Huron Hospital, a facility that serves the city’s east side as well as the largely minority municipality of East Cleveland. The clinic has spent eight months negotiating with the cities over the closure of the trauma center, which has seen severe volume drops over the last several years.
City lawyers said the nonprofit clinic had promised it would not close the hospital until the parties had reached an agreement on how to replace trauma services. When the clinic recently said it would close Huron within the next 90 days, Cleveland Mayor Frank Jackson announced the federal lawsuit, filed in the U.S. District Court Northern District of Ohio Eastern Division.
The city’s complaint argues that the clinic’s acceptance of Medicare and Medicaid funding, its tax-exempt status, and its acceptance of tax-exempt money from the state obligates it to continue operating Huron.
It maintains that the clinic’s acceptance of more than $1.4 billion of tax-exempt financing from Ohio — money that was used for maintenance and construction of the clinic’s facilities, including Huron Hospital — also requires continued services.
“The Cleveland Clinic Foundation’s acceptance of such funding constitutes a contract between the Cleveland Clinic Foundation and the citizens of the state of Ohio,” the complaint says. “The Cleveland Clinic Foundation’s acceptance of such funding requires the Cleveland Clinic to continue to provide for the fair and equitable delivery of essential medical services to the citizens of the cities of East Cleveland and Cleveland.”
Closing the hospital amounts to a breach of contract, according to city officials.
The clinic said it will build a new $25 million primary care clinic in East Cleveland, and that emergency patients would be sent to the next-closest hospitals.
As part of the closure, the clinic agreed to pay East Cleveland $8 million over the next five years to make up for lost payroll taxes. It will also cover the estimated $12 million of demolition costs and donate the land to the city for green space.
The double-A rated clinic said in a statement that it was disappointed the city has sued. “Unfortunately, the city of Cleveland has chosen to litigate rather than have dialogue that may have led to a more productive outcome,” its statement said.