By Steven Tavares

Legal fees for the Eden Township Healthcare District’s lawsuit against Sutter Health has reached $2 million following a minor setback in court last week.

The District’s denial of writ of mandate in appellate court was called “a procedural defeat” by legal counsel Colin Coffey, Wednesday. The filing was intended to “fast-track” the case before the court, said Coffey. “It does not reflect on the substance of the appellate case,” he said. A writ on mandate asks the appellate judge to rule on any errors possibly made by the Superior Court judge. This was denied Jan. 11 by the appellate court.

The District incurred $114,000 in legal fees last December, according to staff, raising the total expenditure to $2,054,000. The rising cost of the District’s legal fees has attracted the attention of a few who have been critical of the District in the past. Dr. Francisco Rico, who is a former District boardmember, has been its most vocal. He is also named in the countersuit against Sutter for allegedly having a conflict of interest between his duty as a member and his anesthesiology practice at Sutter-operated Eden Medical Center. “Now that the writ has been rejected you will be faced with a decision whether to mount an appeal against Sutter,” Rico told the board, but urged, “the damages are expected to increase as time goes by.”

Money spent on lawyers would be better spent on funding the District’s many philanthropic endeavors, said Rico, while noting San Leandro’s Davis Street Family Resource Center has applied for a grant of $500,000 over the next 5 years. “I dare say that just a portion of the money spent on legal fees would easily fund it.” The board also voted Wednesday night to postpone procuring bids for its Community Grants Program for another three months from March to the end of June. Board Director Dr. Rajendra Ratnesar, another who is named in the District’s countersuit against Sutter, advocated spending their remaining dollars on grants before utilizing them on court fees.

Those in favor of scrapping the District’s aggressive legal path still comprise a small minority. A few in attendance, believe the mounting speculation over the cost of the legal challenge by Rico and others is a concerted effort by Sutter to divide public opinion on the issue of closing San Leandro Hospital.

“We talk about $2 million in legal fees, to me, that’s nothing,” said Dr. Chaplin Lui, who practices at San Leandro Hospital. “A lot of money is at stake. It has nothing to do medical care.” Lui reiterated a common complaint made by supporters of San Leandro Hospital saying Sutter’s operation of the hospital along with Eden in Castro Valley allows them to control the flow of revenue to one over the other.

“San Leandro Hospital cannot make money because Sutter controls it,” said Lui. “All our assets, which is elective surgery, is moved over to Eden Medical Center for their profit. So every time a San Leandro Hospital patient gets admitted to Eden, the Eden Township District loses money.”

Roxanne Lewis, a nurse at San Leandro Hospital, said she and her colleagues support the District’s current strategy. “I think it’s worth every penny,” she said. The counter argument to those who believe mounting legal fees are bound to bankrupt the District has always been a rationalization to view it as a cost-saving measure. “The hospital has remained opened for how many months in excess of what we thought last year and has helped a whole lot of people–indigent and otherwise,” said Carol Barazi, also a nurse at San Leandro Hospital.

The closing of the hospital was originally slated to occur in June 2009 before the board moved to block Sutter’s attempt to purchase the hospital and lease it to the county for acute rehabilitation services. Legal maneuvering that followed has lengthened the hospital’s life, but has also put many residents and employees in a state of stressful uncertainty over the facility’s future. There is now renewed concern that highly qualified nurses and doctors will leave the hospital for more stable jobs outside the area and further diminish San Leandro Hospital’s ability to increase revenues.

Sutter recently told employees the facility would remain open until this June, but also strongly hinted they should begin searching for other means of employment. Others have said the June deadline is doubtful and arbitrary. Sutter and the District signed an agreement calling for the hospital to remain open at least until their dispute is resolved. Once an appeal is filed by the District many believe, short of a settlement, the case could languish in the appeals process for up to two years.

NOTES: The District Board of Directors unanimously re-elected Carole Rogers to another year as chair…Lester Friedman made his debut on the board Wednesday after his election last November. He replaces long-time member Dr. Harry Dvorsky…Just to show how much Sutter once had a strong hold on the District’s business. The board voted on a resolution to authorize a new signer for one of its investment accounts. Who was the previous signer? Eden Medical Center CEO George Bischalaney, who is the center of the District’s conflict of interest claim against Sutter. Bischalaney once simultaneously held the position of CEO at both Eden and District…The CEO of Hayward’s St. Rose Hospital Michael Mahoney was in attendance for Wednesday’s meeting.