(KNOX) -The Polk County District Court has ruled that the city of Fosston and Essentia Health will return to arbitration because the city’s has a dispute over an affiliation agreement with Essentia.
Fosston and Essentia have gone through the arbitration process before. The dispute stems from the 2009 affiliation agreement between the city and Essentia and First Care Medical Services, a nonprofit who runs the hospital. That agreement established a permanent seat on First Care’s board for a representative of the city while maintaining the nonprofit under Essentia’s control.
Fosston pursued arbitration with Essentia in 2024 following the closure of the labor and delivery services at the Fosston hospital. That moved the labor and delivery services to St. Mary’s-Detroit Lakes. Fosston’s opinion was that labor and delivery services count as core services at the hospital, and closing them is a breach of the affiliation agreement. Essentia disagreed with that opinion.
In September 2024, a three-judge arbitration panel ruled 2-1 in favor of Essentia and that it didn’t breached the affiliation agreement. The health system was allowed to continue operating the hospital, clinic, assisted-living and long-term care facilities in Fosston, as well as the clinics in Bagley and Oklee.
Fosston sent a letter on November 26, 2024 notifying Essentia that the city intended to terminate the affiliation agreement on January 1, 2026. Both parties met to resolve their dispute several times in 2025, and one meeting included a mediator from Fargo.
The next step involves selecting arbitrators and setting a schedule for the proceedings. There are no exact dates, but the city is hoping to resolve this conflict next year.
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