The North Carolina Attorney General's Office and HCA Healthcare have offered competing interpretations of a 2019 merger agreement in their efforts to secure a pretrial win in the state's compliance case involving the purchase of an Asheville hospital system.

Attorney General Jeff Jackson argued Monday that evidence unearthed in discovery proves that the sale of Mission Health System was always contingent on HCA continuing to offer the services available at the time of the deal for at least the next 10 years, according to his motion for partial summary judgment. But HCA countered in its own motion, also filed Monday, that it only had to continue providing support for those listed services, which HCA alleged it has.

The attorney general pointed to term sheets, emails, pre-transaction statements and post-transaction internal documents that he said prove Mission's board and HCA were on the same page about the continuation of emergency and oncology services at Mission's flagship facility, Mission Hospital in Asheville.

"In contrast, there is no support for HCA's novel view that to continue the provision of services, all it must do is keep its hospital doors unlocked and offer ancillary staff — whether or not Mission actually provides care to patients," Jackson said.

But HCA said the language of the asset purchase agreement clearly limits its obligations to merely providing support for emergency and oncology services and "nothing more."

The purchase contract likewise did not impose any "quality or quantity standards," HCA said, yet Jackson has harped on "cleanliness, wait times, and bed shortages" in his complaint. HCA alleged that the attorney general's office was given every chance to review the transaction and raise objections before the merger went through and did not.

"Accordingly, since he did not seek to impose his desired interpretation upon the parties during his review, he is estopped from doing so now," HCA said.

The North Carolina Business Court case dates to December 2023, when the attorney general's office accused HCA of breaching a 2019 asset purchase agreement for Mission Health, a six-campus hospital system in western North Carolina. Jackson has specifically alleged that HCA allowed the standard of care to languish in violation of certain assurances made when HCA bought the Mission Health system.

Jackson took over the case from his predecessor Josh Stein, who is now the North Carolina governor, in January.

The dispute centers in large part on a provision of the purchase contract known as Schedule 7.13(a), which contains the list of services HCA allegedly promised not to discontinue until at least 2029.

Jackson claimed that HCA is in violation of that provision by failing to maintain adequate levels of emergency, trauma and oncology services. As a result, patients have complained of unsanitary conditions, overcrowding and long wait times, according to the complaint.

Judge Julianna Theall Earp rejected HCA's bid for a partial win in April regarding the language of 7.13(a), finding the contract does not define its key terms or lay out what the parties meant when they wrote it. She said more discovery was needed to flesh out its true meaning.

Discovery is now over, and Jackson argued that it bolsters his office's interpretation of 7.13(a). In his motion for summary judgment, the attorney general cited a term sheet attached to Mission and HCA's letter of intent regarding the sale, which stated that "HCA will not discontinue the provision of any of the health care services" offered at the time of the transaction's closing.

The attorney general also said emails between Mission's then-president and CEO and HCA's counsel confirm that understanding, in which the CEO "made clear" that the board would only agree to the sale if "services available today at Mission Hospital are going to be here for at least 10 years," according to the motion.

If HCA's interpretation of the language were correct, Jackson argued that HCA would still be in clear breach of the agreement because Mission had "zero medical oncologists on staff" at the end of 2023, such that it was unable to provide any inpatient complex hematology services.

"Even under an overly cabined interpretation of Section 7.13(a) that simply requires HCA to provide any modicum of the listed services at Mission, this breakdown in services constitutes a breach of the APA," the attorney general said.

HCA countered that it did not pause or cease oncology services. According to its motion, HCA provided space at Mission Hospital for community oncologists to offer complex hematology care. Mission allegedly still offers the same support for those services, but the providers chose in September 2023 to stop sending patients to Mission to receive that care.

"Mission has continued to provide the resources, equipment, space, technology and other items to support required services, but it is up to physicians and patients whether Mission is where the services actually are rendered," HCA said.

A spokesperson for the attorney general's office declined to comment. Counsel and a representative from HCA did not immediately respond Friday to a request for comment.

The North Carolina Attorney General's Office is represented by Jeff Jackson, Danielle Wilburn Allen, Brian Rabinovitz, Llogan R. Walters, Daniel P. Mosteller and Marc D. Brunton of the North Carolina Department of Justice.

HCA is represented by Nathan A. Sandals, Chase A. Chesser, Caroline F. Clarke and Alexandra M. Gersdorf of Latham & Watkins LLP, Phillip T. Jackson, John Noor and David Hawisher of Roberts & Stevens PA and Allen M. Gardner of Kirton McConkie.

The case is Jackson v. HCA Management Services et al., case number 2023CVS5013, in the North Carolina Business Court.