Before suffering problems that now threaten to kill it, a new hospital built by Suffolk Construction in Norwood, Massachusetts, was shaping up to be a recovery story.
The existing hospital at the site had been forced to shut down most local operations since devastating rain and flooding in 2020.
Hospital president Salvatore Perla, who in April 2023 stood in front of a landscape of soil, concrete foundations and steel delivery trucks to videotape a cheerful progress report on the project building replacement, he acknowledged that everyone in Norwood is “super anxious about the schedule.”
But after Suffolk Construction and its subcontractors broke ground on the new building last January, another tragedy struck when the hospital’s owner, Dallas-based Steward Health Care, defaulted on the work and the He declared bankruptcy in May.
Medical Properties Trust, an Alabama-based real estate investment trust that owns hospital buildings leased by Steward, took over the hospital’s architecture and construction management contracts and began paying to keep the work going .
But after the Massachusetts Department of Health refused to extend the deadline for the new hospital operating license requested by the trust, it expired last month.
The project remains in legal limbo with the trust now suing the department in state court in Boston over the licensing issue. The trust is seeking an injunction to prevent the state from withholding the operating license, saying the decision was arbitrary and detrimental to its large investment in the project.
Suffolk Construction has a four-person crew completing winterization and conditioning, a spokesman says. “We’ll probably be out of a job in the next few months, April at the latest,” he says.
In its lawsuit against Massachusetts, the trust alleges that its property insurer had paid only $36 million of a $200 million claim. The dispute centers on the insurer’s claim, in a separate lawsuit in Boston, that the policy payout cannot exceed a sublimit of $100 million for flood damage, the trust says.
The court timetable to resolve the dispute remains uncertain, the board also says, noting that it “depends on these insurance payments to help cover the cost of construction and move the project forward.”
Steward initially estimated the cost of the new hospital building in 2021 at $325.7 million, but costs have increased, the trust alleges.
Another Steward construction project, the Wadley Regional Medical Campus in Texarkana, Texas, has fared better than its Boston-area counterpart.
Main contractor Robins & Morton halted project work at the new facility for several weeks earlier this year after Steward stopped paying. But the trust also took over that project, and in September, CHRISTUS Ark-La-Tex, another hospital chain, bought the medical facility and is operating it.
