MOVE COULD HEDGE DISTRICT'S BET AGAINST POSSIBLE ARBITRATION LOSS NEXT MONTH
By STEVEN TAVARES
The CitizenTHE DISTRICT v. SUTTEROne sentence, albeit--quite a long one at that--has signaled the Eden Township Healthcare District is taking its most ambitious step towards crowding out Sutter Health's claim to San Leandro Hospital and possibly keeping its emergency room intact.
"The Eden Township Healthcare District Board voted to initiate litigation to challenge the validity of the 2008 agreements with Sutter Health as a result of a conflict of interest analysis performed by a highly qualified, independent legal expert on local government conflict of interest law," said the one-page press release.
District Directors Dr. Harry Dvorsky and Carole Rogers voted to approve the board's newest strategy, with Dr. Rajendra Ratnesar posting the lone opposition. Boardmembers Dr. Bill West and Dr. Vin Sawhney recused themselves from the discussion again because of potential conflicts of interest as did Ratnesar. Eden Township Healthcare District CEO Dev Mahadevan said the lack of quorum which also arose last week allowed one recused member to rejoin the voting bloc after drawing blind lots, which chose Ratnesar. During the Feb. 17 meeting, District lawyer Colin Coffey referred to the arrangement known as the "rule of necessity" as only pertaining to the potential sale of the San Leandro Surgery Center to Sutter, but Mahadevan said Thursday the current roster of voters will steer the board from hereon regarding the hospital situation and the District.
The move is the District's latest offensive attempting to poke holes in the 2008 Memorandum of Understanding (MOU) at the heart of the over year-long fight to save San Leandro Hospital. The MOU stipulated San Leandro Hospital had two years to improve its disputed monthly losses of $600,000 a month. Critics say Sutter has used a collection of bookkeeping schemes to divert assets away from the hospital to allow the Alameda County Medical Center to convert the hospital to a much-needed acute rehabilitation facility without emergency room services. The agreement also gave Sutter an option to purchase the hospital, which they invoked last September and subsequently has led to the current legal wrangling between the Sacramento-based health provider and the District.
The legal chess move the District is attempting hopes to nullify the MOU by proving the group that negotiated the agreement posed similar conflicts of interest as the current board with compensation derived from their positions at Sutter. In 2008 the board consisted of Rogers, Dvorsky, Ratnesar and former members Dr. Walter Kran and Dr. Francisco Rico. Both Ratnesar and Rico both earned paychecks from Sutter, as they do now.
Very little is known on the specifics of the District's legal maneuverings, but a source connected with the county say there is a belief the District's argument Sutter was in breach of contract of the MOU when they failed to remodel the vacant fourth floor at San Leandro Hospital does not meet the legal threshold to void the contract. It is likely, said the source, the District will lose its Mar. 8 arbitration case, making the current burgeoning legal question regarding a conflict of interest a strong hedge against such a scenario.
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