Pa. High Court: Concrete Proof Not Needed to Weigh Grounds for Preliminary Injunction Order – CKHS v. Prospect Medical Holdings – Update

Legal Intelligencer article by Aleeza Furman January 22, 2025. Lamb McErlane partner Rocco Imperatrice III is quoted in the article.
According to the justices, the Commonwealth Court had “creat[ed] a new evidentiary standard and misappl[ied] the standard of review” when it reversed a trial court’s grant of preliminary injunction barring Prospect Medical Holdings Inc. (PMHfrom transitioning Delaware County Memorial Hospital from an emergency and acute care hospital into a behavioral health facility.
Plaintiffs seeking to halt a Delaware County hospital’s planned closure did not need to present concrete evidence of irreparable harm to secure a preliminary injunction against the hospital, the Pennsylvania Supreme Court held Wednesday.
Instead, the high court ruled testimony from the plaintiff’s expert on the harm posed by the hospital’s plans, in conjunction with an irreparable harm provision in a contract between the parties, had provided what appeared to be a reasonable basis for a trial court to grant a preliminary injunction.
And according to the justices, the Commonwealth Court had “creat[ed] anew evidentiary standard and misappl[ied] the standard of review” when it reversed a trial court’s grant of preliminary injunction barring Prospect Medical Holdings Inc. from transitioning Delaware County Memorial Hospital from an emergency and acute care hospital into a behavioral health facility.
Duane Morris partner Luke McLoughlin, who represented Prospect, declined to comment.
Plaintiffs CKHS Inc. and the Foundation for Delaware County, represented by Lamb McErlane, had sought the preliminary injunction as part of a breach of contract lawsuit against Prospect. CKHS had sold Delaware County Memorial Hospital to Prospect, and the purchase agreement between the parties placed certain restrictions on Prospect’s ability to shut down the hospital’s services. The purchase agreement also included a clause stating that any breach of the agreement would cause irreparable damage.
When Prospect announced plans to convert the hospital into a behavioral health facility, the plaintiffs sought to stop the transition through a preliminary injunction.
In support of their petition, the plaintiffs presented testimony from a public health expert opining that the loss of the hospital’s acute care services would negatively impact the community’s health. They also contended that the purchase agreement’s “irreparable harm” clause should be weighed heavily in the determination of whether a preliminary injunction was appropriate.
Both the expert testimony and the purchase agreement’s terms informed the trial court’s determination that a preliminary injunction was necessary to prevent irreparable damage. But when Prospect appealed the ruling, the Commonwealth Court agreed with the defendant’s argument that the plaintiffs had presented no concrete evidence that the hospital’s conversion would create irreparable harm.
However, according to the Supreme Court majority, the lower appeals court applied the wrong standard. In an opinion authored by Justice Sallie Mundy, the majority held that “the record contained apparently reasonable grounds to support the trial court’s decision.”
Still, not all the justices were in agreement. In a lone Dissent , Justice Christine Donohue expressed concern about the majority’s conclusion.
“Under the majority’s rationale,” Donohue wrote, “any time a hospital closes, irreparable harm automatically results so long as an expert can testify that this is generally the case—regardless of whether the expert provides any evidence related to the specific hospital. This overly broad framework would dispense with any meaningful standard of review of preliminary injunctions.”
Lamb McErlane partner Rocco Imperatrice III, who represented the plaintiffs, contended that the majority’s ruling simply solidified longstanding standards for appellate review of preliminary injunction rulings.
“An appellate court in a preliminary injunction matter is charged only with examining the record to decide whether there were any apparently reasonable grounds for the trial court’s order,” he asserted.
Another significant element of the ruling, Imperatrice said, was the majority’s conclusion that an “irreparable harm” provision in a contract does not by itself establish the existence of irreparable harm, but rather it should be taken as one factor in the analysis.
Imperatrice said such provisions are very common in Pennsylvania. And in cases that do not involve monetary damages, he said, “the parties to the agreement can now no longer rely on the court’s acceptance of irreparable harm simply because of the inclusion of that provision in their contract.”
The Supreme Court’s ruling remanded the case, captioned CKHS v. Prospect Medical Holdings, to the Commonwealth Court for a review of other injunctive relief factors that had not yet been weighed. However, consideration is on hold for now, as all litigation involving Prospect is currently stayed in light of the company filing for bankruptcy.
Lamb McErlane PC attorneys Rocco P. Imperatrice, III, James C. Sargent, Kathleen O’Connell Bell, and Andrew P. Stafford represent Petitioners CKHS Inc and The Foundation for Delaware County.
Read the article on Law.com here.