Sutter Denies District’s Conflict of Interest Allegations

The Citizen 

SUTTER vs THE DISTRICTSutter Health denies the chief executive officer of Eden Medical Center participated in negotiations with the Eden Township Healthcare District in 2008 while serving in the same capacity with the government body, according to court papers filed Wednesday in Alameda County Superior Court.

The Sacramento-based health care provider denies Eden Medical Center CEO George Bischalaney participated in the negotiation and execution of the deal at the center of the dispute over the fate of San Leandro Hopsital, and specifically says he recused himself from the discussion. The filing includes a signed affidavit by Bischalaney. Sutter operates both San Leandro Hospital and Eden Medical Center.

The court documents are the response to the District’s counterclaim filed March 10 against Sutter maintaining two members of the previous board, along with Bischalaney, had a conflict of interest under state law due to negotiations of the 2008 Memoradum of Understanding while concurrently serving both the District and employment with Sutter.

Sutter also denies the District’s claim current Director Dr. Rajendra Ratnesar and former Director Dr. Francisco Rico maintained a conflict of interest in brokering the 2008 agreements. The District alleged in their countersuit Ratnesar held the position of medical officer at Eden while Rico received “substantial income” from a doctor’s group contracted to Eden Medical Center.

The filing charges the District is not in compliance with its own mission to enhance health care opportunities in the region saying they have not “properly conducted itself in the interest of public health” and describe the events surrounding the hours after the District approved moving forward with their counterclaim in mid-February.

Sutter alleges Director Dr. Harry Dvorsky’s request to change his vote against additional legal action was silenced by Board Chair Carole Rogers. The letter from Dvorsky to the board, first reported in The Citizen March 17, was delivered to District CEO Dev Mahadevan within the day of the board approving, 2-1, the filing of a counterclaim against Sutter hoping to void the 2008 agreements on the grounds of conflicts of interest.

Mahadevan passed Dvorsky’s intention to change his vote to “no” to Rogers and asked for a re-vote. Mahadevan said Rogers “immediately refused the request,” according to court papers. Last month, Rogers told The Citizen the District’s lawyers had communicated to Dvorsky no action could be made until the item was placed on the agenda and that the counterclaim had already been filed in Superior Court. Sutter says Rogers refusal to allow the re-vote led to current stand-off.

Sutter also alleges Rogers only moved to void the 2008 agreements after an arbitrator ruled in Sutter’s favor regarding the legality of its right to initiate its purchase option for San Leandro Hosptial. “After finding that it had no defense to the Sutter’s exercise of its option to void the 2008 agreements, and had no right to damages from Sutter, Carole Rogers decided to attempt to void the 2008 agreements.”

The issue of conflict of interest among certain board members continues to highlight both legal arguments. Sutter alleges Rogers and Director Dr. Vin Sawhney were informed of their current conflict of interest blocking their inclusion in any negotiating group before initiating the counterclaim. In addition, Sutter alleges former District counsel Craig Cannizzo informed Rogers and Sawhney of conflict in June 2009. At the time, both had raised the beginnings of significant doubt over Sutter’s plans to close San Leandro Hospital and successfully voted against Sutter’s plan to close the hospital.


Categories: Carole Rogers, Craig Cannizzo, Eden hospital, Eden Township, Francisco Rico, George Bishelany, Harry Dvorsky, S.L. Hospital, Sutter, Sutter Lawsuit, Vin Sawnhey

2 replies

  1. Paragraph 22: “SH and EMC admit that Sutter plans to lease SLH to ACMC, but denies all other material allegations of paragraph 22 of the cross-complaint and specifically deny that SH “stands to receive substantial and unwarranted benefits” if the 2008 Agreements are not invalidated, on the grounds that it has already been determined and agreed by ETHD and memorialized in the Final Partial Arbitration Award herein, that the purchase price is properly $0 based on the financial losses that SH and EMC suffered throughout the term of the 2008 agreements, and mitigating losses does not constitute a benefit, let alone “substantial and unwarranted benefits.”
    My reply: I remember that the District said they paid $35 million for SLH in 2004; and that it was profitable at the time! Sutter made a planned closure of SLH so that they could get it for $0, cooking their books to make it look like our hospital was losing money. Prime Health said in their presentation last year that there was no reason why our hospital could lose money and they could make a profit and keep it open as it is. They even offered to let ACMC operate the 4th floor as acute rehab. What is wrong with this picture?
    signed by x RN at San Leandro Hospital


  2. Where's the affidavit from Rat and Rico? I guess Sutter is saving it's own and leaving the other two in the lurch. And Dvorsky, nobody in their right mind believes he could have written any letter. I think it's sickening that Sutter is stooped to taking advantage of an elderly man. Sick!


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