Judge Rules Against Eden Township Countersuit

By Steven Tavares

An Alameda County Superior Court judge has ruled against the Eden Township Healthcare District’s countersuit alleging a Sutter Health hospital official and former District boardmember possessed a financial conflict-of-interest when they negotiated the 2008 agreement to rebuild Eden Medical Center in Castro Valley. The suit also hoped to stave off the closure of San Leandro Hospital.

Superior Court Judge Marshall Whitley found neither Eden Medical Center CEO George Bischalaney and former District boardmember Dr. Francisco Rico stood to financially gain by the 2008 Memorandum of Understanding which held Sutter responsible for the $300 million rebuild of Eden while keeping San Leandro Hospital open for two years until it became financially viable. Sutter moved to exercise its purchase option of the hospital last summer in advance of closing it down until the District filed suit in March of this year.

The ruling is a significant defeat for the District, which had moved towards an aggressive legal strategy to fight Sutter in the courts in hopes of keeping the community hospital in operation. Alameda County and Sutter have maintained the facility is better served to the local hospital system as an acute rehabilitation facility instead of the current full-service general hospital.

The District,which has run a legal bill into the millions over litigation with Sutter now sits at crossroads. In an email from District CEO Dev Mahadevan, he says lawyers will advise the board of its remaining legal options by this Wednesday. The District holds its monthly meeting Wednesday, 5:30 p.m. at the H.A.R.D. office on E Street in Hayward. As of Monday night, there is no mention of the ruling on the board’s agenda.

The fight by doctors, nurses and community activists to keep the hospital afloat over the past two years had encouraged the elected District board members to reconfigure their ranks in opposition to Sutter, which critics contend has traded increased profits from the rebuilt Castro Valley hospital over San Leandro Hospital. Local health officials and Sutter says the hospital, located on East 14th Street lacks a financial durable “payment mix” due to a large number of uninsured patients, a number of whom come from Oakland. For this reason, many have charged Sutter with “medical redlining” over the possible closure, something advocates have also alleged at Sutter’s St. Luke’s Hospital in San Francisco.

More on the court’s ruling coming shortly….