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Norwood Hospital remains shut 18 months after damaging rain burst; owner sues insurers for not paying enough to replace it

Steward Health Care System yesterday sued its insurance companies for allegedly dragging their feet and trying to cheap out on payments to build a brand new Norwood Hospital to replace the one the hospital network says was essentially destroyed by an intense amount of rain one day in June, 2020.

In its lawsuit, filed in US District Court in Boston, Steward alleges that its insurers claim most of the damage was done by a "flood" - basically from a water body overflowing its banks or bursting out of a main - rather than from the effects of 5.75 inches of rain in just 90 minutes on June 28 of that year. The difference is that the insurance policies issued to Steward and to Medical Properties Trust, Inc., the company that owns the hospital buildings and leases them to Steward, have a limit on how much the insurers will pay out for flooding damage while the policies have no set limit for rain damage.

Steward says rain from the storm damaged every floor on all six buildings on its 10.6-acre campus, so much so that the 215-bed hospital has been unable to re-open and will have to replace all the buildings, rather than try to rehab them. "Approximately 369,341 of the 399,833 total square feet of space was damaged," the system alleges.

On June 28, 2020, a weather event produced approximately 5.75 inches of rainfall in 90 minutes, causing catastrophic flood water to penetrate the basement and ground levels of the Hospital. ...Water also immediately impacted the roof systems and envelope of at least two buildings in the complex, catastrophically crippled critical mechanical and electrical systems, and destroyed floors, walls, ceilings, fixtures and finishes throughout the Hospital. Essential patient care systems including the nurse-call communication system and medical gas and vacuum systems were critically damaged, as was diagnostic imaging equipment and other major patient diagnostic and treatment equipment which cannot be placed back into safe and consistently reliable service. In short, every single floor of the Hospital was damaged in some way. As a result of the devastating damage, the Town of Norwood issued a Cease-and-Desist Order restricting all operations on the Hospital campus, which is still in effect.

The hospital and local ambulance services managed to get roughly 160 patients to other facilities.

But from the beginning, Steward charges, American Guarantee and Liability Insurance Co. and Zurich American Insurance Co. tried to evade helping pay the several hundred million dollars reconstruction of the hospital will take.

During an initial visit to the Hospital after the Rain Event, for example, one of Zurich’s representatives commented that "it looks like a dry out and paint job."

Steward says its losses to date from the storm - both to replace damaged equipment and loss of revenue - total $220 million but that the insurers have remitted only $57.5 million. It says that the insurers have paid Medical Properties Trust $27.6 million even though the cost of rebuilding the hospital buildings will total some $180 million.
Medical Properties Trust is not part of the Steward suit, but Steward says the two are inextricably linked - Norwood Hospital cannot resume treating patients without buildings to put them in.

Steward adds the losses go beyond its own - it had to furlough more than half its employees and already stretched Massachusetts hospitals now have to accommodate patients who once would have gone to Norwood:

The Defendants' refusal to effectuate a prompt and reasonable resolution of the claims has needlessly protracted the closure of the Hospital, which has had unquantifiable effects on the Norwood community and surrounding areas resulting in, without limitation: much longer trips for local residents to receive medical services; Emergency Medical Services needing to now bypass the Hospital and transport patients much longer distances; a severely disrupted physician network that will continue to deteriorate over time as physicians and other staff depart for employment opportunities elsewhere; furloughed and relocated employees (of which there are almost 1,000) no longer buying goods and services in the local communities; the Hospital no longer purchasing supplies or other materials locally; the Hospital not consuming water and sewer service from the municipal utility, nor electricity and gas from the local private utilities; and the continued suspension of the Hospital's community benefits program. In addition, the drastic reduction in spending attendant to the Hospital's continued closure has had a multiplier effect on the local economy.

Prior to the Rain Event, and even the pandemic, the Hospital was a critical and necessary component of the overall health care infrastructure in Norfolk County. Steward and MPT have done everything in their power to expedite the adjustment process and restore the Hospital to its previous stature, but they cannot do so alone, especially not when being stonewalled by the Defendants in direct violation of [state consumer-protection and fair-business laws].

PDF icon Complete complaint153.13 KB


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When Norwood and the surrounding towns need to transport their patients to Milton or a hospital in Boston because their patients who could normally be treated at Norwood cannot go there, it's a much longer round trip for that ambulance to be available for the next emergency.

Of course, Quincy Medical would have been another option to transport to had the same hospital owner not decided to close that, leaving Quincy the largest city in the Commonwealth without a hospital. We sure could have used that extra hospital capacity the past couple of years, too!

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In what metric is Quincy the largest city in the Commonwealth? Not that your points are not valid I am just curious.

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It is, however, the largest city in the state that does not have a hospital

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Purchase a policy with a lower flood sublimit? Looking at the site it not in a flood zone which is typically why a policy would include a flood sub-limit.

Also FEMA includes this a part of the definition of a flood event. "Unusual and rapid accumulation or runoff of surface waters from any source; "

Time to fire your risk manager Steward.

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Speculation... This court case will further delay repairs. When the case is eventually thrown out of court or they lose they will say that they do not have enough funds to rebuild and will walk away. Save the link to this post.

Further examination of building inspection records may show that the reason the building was closed after the flood was not all due to flood damages but issues existing elsewhere in the building. Records for floors above the flood level will be an interesting read.

When COVID hit they held a short window option for employees to be vaccinated free. If you were out sick that day, or out on vacation (out of state) or on some other personal leave, there was no follow-up. You had to get vaccinated on your own, often at cost, and wait in line until your age group was approved. Some staff came down with the bug as a result.

Steward is a for-profit institution owning hospitals in several states. Ask anyone that works for them if they are happy.

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Don't pin this on Steward - this is insurance company fuckery. The insurance company is claiming that they can write a policy for a building not in a flood zone and then pretend that it was in a flood zone after all. They can't have it both ways just because honoring the policy they wrote is expensive.

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Beth Israel in Needham is slammed because of this, seems like half the patients are being routed there. Had to bring my mother into the ER and it took hours to be seen, and a bunch of people in the waiting room with us got so fed up they left, despite having clearly broken bones and other injuries that need medical intervention to resolve.

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If you know how hospitals work. The systems they call out (medical imaging or medical gas, as examples) are almost always on lower floors or in the basement due to weight or for delivery access (i.e. gases get delivered by tanker trucks). I don't doubt that everything in the basement or ground level was completely ruined but the insurer is going to say those losses were caused by flooding if they're because the rainwater didn't drain away from around the building.

If I had to guess, the amounts offered by the insurers will cover the damage to the upper levels/roof as well as whatever the flooding maximum was. But the hospital's own press release from June stated "Norwood Hospital was destroyed by a catastrophic storm and flood." And the stuff that's really expensive to repair or replace is the stuff that's in the basement.

In the end I think a loss in this suit will be the excuse for Steward to close the hospital and disclaim responsibility. After a year-and-a-half, I can't imagine there are any employees left who haven't moved on.

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Some were offered positions in other Steward holdings such as Carney, St Elizabeth, Good Sam, and Morton. However there were not enough openings to retain all of the Norwood staff so many were just let go.

Rather concerning that this for-profit owns and operates so many hospitals in this part of the state. If they decide to walk away we may be in deep doo-doo.

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There are some huge reasons that the insurer is trying to worm out of this.

If you are not in a flood zone, your insurance is different than if you property is sited in a location covered by a FEMA designated flood zone. Properties in flood zones have specific rules for flood insurance, damage limits, etc.

You might not understand the distinction, but it is a serious climate damage consideration and a very fraught topic as the unexpected components of climate change progress. The insurance company is very clearly trying to worm out of a situation where they are required to pay for the covered damages, pretending that this is the same as if the hospital were on a river and covered by an X or A zone. They are also trying to get some judge, somewhere, to agree to their determination and set a precedent that flooding anywhere is the same non-covered or limited damage event as flooding in a flood zone. Such a ruling would also open up their policies to surcharges to cover such flooding events as if the property were in an X or A zone.

But the hospital was not in such a flood zone, that isn't the way policies and laws are written, and the coverage should apply.

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Any responsibility on the Town of Norwood?

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