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Eastern Niagara Hospital in Lockport.

Eastern Niagara Hospital has filed a lawsuit against the U.S. Small Business Administration and administrator Jovita Corranza regarding the hospital’s inability to obtain funding from the CARES Act Payroll Protection Program.

ENH has fewer than 500 employees, but the PPP application put forth by the Small Business Administration disqualifies applicants that are in the process of Chapter 11 reorganization, according to hospital spokeswoman Carolyn Moore.

According to Barclay Damon, the law firm representing the hospital, the Coronavirus Aid, Relief, and Economic Security Act that was signed into federal law on March 27 does not disqualify businesses that are in Chapter 11 proceedings. The intent of the PPP is to assist struggling businesses, it points out.

The hospital's lawsuit claims the SBA application did not differentiate between businesses in the process of a Chapter 7 liquidation and those in the process of a Chapter 11 reorganization. ENH was in the process of implementing a sustainability plan, in pursuit of reorganization, when the COVID-19 pandemic hit and the hospital was forced to cease revenue-generating elective and outpatients procedures, according to Moore.

ENH is still moving working toward implementing its sustainable model to achieve long-term viability and argues that it needs the PPP funding to succeed.

“The SBA stated the Payroll Protection Program was established to provide immediate economic relief for small businesses and their employees for eight weeks. The hospital met the criteria stated in the CARES Act and has continued to provide critical hospital care for patients during the pandemic. We have incurred additional costs while at the same time losing revenue from elective procedures that we were required to temporarily stop," hospital President and CEO Anne McCaffrey said in a Wednesday statement. "We have continued to fulfill our obligation to meet the health care needs of the community and will fight for funding when it is wrongfully withheld and critical to the hospital.”

“It is inconceivable that ENH would be denied this funding when we meet the CARES Act criteria and are critical to the health and well-being of 100,000 residents in the community,” McCaffrey added.

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