THE VILLAGES, Fla. – The sale of a large health care provider in The Villages is another step closer to happening.
Court documents published Monday confirm CenterWell won the auction to buy The Villages Health System, as part of the company’s Chapter 11 bankruptcy proceedings.
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CenterWell, a senior health care provider owned by health insurer Humana, will pay $68 million in cash for TVHS, as well as the assumption of any cure costs and liabilities.
On Tuesday, a federal bankruptcy judge in Orlando approved the sale after The Villages Health System made changes requested by federal officials to the sale language.
Attorneys for the U.S. government last week asked that part of the contract be narrowed, or clarified.
The U.S. government is the largest creditor for The Villages Health System, which owes the government more than $360 million, much of it stemming from overbilling Medicare.
The trustee for the federal government objected to the language because it was concerned that it was too broad and protected the buyer from any liability.
Meanwhile, an attorney for the U.S. Justice Department objected to the breadth of the language, claiming it could prevent the government from pursuing any civil or criminal liabilities against insiders for The Villages Health System.
The winning bid
CenterWell originally put in a stalking horse bid of $50 million.
However, The Villages Buyer LLC, which is an affiliate of private equity firm Kinderhook Industries, also entered a bid for the company.
In addition to the $68 million in cash, CenterWell will pay up to $1 million for any cure costs, plus any assumed liabilities. The company also agreed to shorten the closing date to no earlier than Oct. 31, 2025, and remove some closing sale contingencies, including requiring that at least 85% of current employees agree to CenterWell’s employment offer, and requiring agreements with United Health Care.
As part of the deal, CenterWell would acquire The Villages Health’s assets, including personal data and patient records, transferred contracts, inventory, tangible personal property, intellectual property rights, assumed plans, and regulatory licenses.
CenterWell will not get any real estate property interests, organizational documents, payroll and personnel records, or the seller’s Medicare and Medicaid provider numbers.
If the sale falls through, The Villages Buyer and Kinderhook is the official backup buyer.
[READ CenterWell’s purchase agreement for The Villages Health System]
Overbilling Medicare
The Villages Health System is the largest health care provider in The Villages, with 55,000 patients, eight primary care centers, and two specialty care centers.
In December, TVHS announced that it had self-reported a Medicare overbilling issue to the federal government.
On July 3, TVHS filed for Chapter 11 bankruptcy and noted it owed more than $360 million to the government.
Court documents show $350 million stemmed from overbilling Medicare.
Attorneys for TVHS said the bankruptcy was part of the process of selling the company to CenterWell.
There have been objections to the sale.
Blue Cross Blue Shield of Florida and United Healthcare both filed objections to aspects of the deal, including costs to creditors and financing for TVHS as it goes through the bankruptcy and sale.
On Tuesday, a judge said the parties had agreed to deal with the objections after the closing.
Florida Blue accused TVHS of falsely adding diagnostic codes to patient files, leading to millions of dollars in overpayments. Florida Blue wanted TVHS to settle its contract defaults with the company before the sale.
UHC also said erroneous billing from TVHS led to Medicare overpayments, and said the bankruptcy plan allowed TVHS to hide insider dealings. UHC said it was blindsided by the bankruptcy announcement, even though it is one of the largest providers of Medicare Advantage plans to patients.
United Healthcare also accused TVHS of distributing some $183 million, from 2022 to 2024, to the Morse family, to pay down a line of credit.
The Morse family controls The Villages through several companies.
Last week, U.S. attorneys filed an objection to the sales language, saying it could prevent the government from pursuing civil or criminal proceedings against The Villages Health System insiders.
The objection also mentioned the line of credit and debt to the Morse family.
On Tuesday, those attorneys said they were satisfied with the changes TVHS made to the sale language.