The sale of the Eden Township Healthcare District’s share of the San Leandro Surgery Center sought by Sutter Health is still up in the air, but the nagging appearance of a conflict of interest among certain boardmembers was again raised in a legal question with wide-ranging implications for the fight to keep San Leandro Hospital open.
The District’s lawyer Colin Coffey recommended at Wednesday night’s meeting three current boardmembers recuse themselves from voting on the sale of the District’s partnership in the San Leandro Surgery Center to Sutter for over $1 million. Coffey of the law firm Archer Norris, replaced the fired Craig Cannizzo last December, said Directors Dr. Bill West, Dr.Vin Sawhney and Dr. Rajendra Ratnesar posed instances of conflicts of interest from income derived from business transactions with Sutter in the past 12 months.
West and Ratnesar were deemed to have a conflict of interest due to since terminated directorships at Eden Medical Center. Sawhney, according to Coffey, has received income from services provided to San Leandro Hospital for indigent care in the last year.
The legal question brought forth by Coffey could have game-changing ramifications for a board that has quickly become far more offensive in their tactics comfronting Sutter’s bid to turn the hospital over to the Alameda County Medical Center to become an acute care rehabilitation facility without emergency room services. It is not yet clear whether one or all of the recused boardmembers could also be excluded from participating in any dealings between the District and Sutter over the fate of San Leandro Hospital.
“The board and the District have been endeavoring in the past month or so to explore a variety of conflict of interests issue arising both from the past and past experiences that have made some controversy of conflict of interest that have been pursued through special counsel to bring some expertise in the area of public official conflict of interests laws and that review has also reflected current board potential conflicts of interest,” said Coffey.
Afterwards, Coffey again confirmed legal counsel was investigating additional conflcits of interest if and when they arise. When asked if the legal implications of three boardmembers recusing themselves for a possible transaction with Sutter and the surgery center and whether that could be applied to conflicts of interest with the same boardmembers and San Leandro Hospital, he said, “It could part of everything or nothing.”
The trio of boardmembers were notified earlier in the day Wednesday, while Sawhney said he only learned of the potential conflict of interest as he walked in the door. For this reason, the board voted 4-1 to postponed a decision on the surgery center for second consecutive meeting.
In addition, postponing the vote sidestepped a potentially old-fashioned method of gaining a quorum since the dismissal of three members would have left only two voters. Under these circumstances, which could still return to discussion, Coffey said under the legal theory of the “rule of necessity” the three excluded members would draw straws to secure one member to regain voting rights and gain a quorum.
Despite, the odd turn of events, the Director of the San Leandro Surgery Center Shelia Cook said the District needs to close the deal soon. “We have already been put off,” said Cook. I feel this is just another ploy to put this off again.”
Cook also attempted to quell fears by many in the audience that Sutter’s potential partnership in the center would damage San Leandro Hospital economically and said the hospital conglomerate is still interested in making the deal. “We are not looking to take any business away from San Leandro Hospital,” said Cook. “Sutter Health is not going to change any decision they have made in the action to become a partner of San Leandro Surgery Center. By delaying this, you are punishing the surgeons, not Sutter Health.”
Yet, many still sport a strong antipathy towards anything Sutter. Labor representative Mike Brannan of the California Nurses Association thinks dealing with Sutter sends the wrong message. “A move to sell the surgery center–something that Sutter Health wants–would be a signal to the community that the board is not serious about the bigger picture and fighting to keep San Leandro Hospital open.”
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