District’s Legal Fees Mount; Supporters Say Continue

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.

POLITICS HOMEGROWN eastbaycitizen.com

15 thoughts on “District’s Legal Fees Mount; Supporters Say Continue

  1. Sutter's motivation is to shut down San Leandro Hospital and send all the profitable referrals to Eden – just as Dr. Lui – and many other Docs have stated. San Leandro hospital could make a profit, and stay open as is – just keep Sutter's mitts off it!


  2. Dear John,

    It is against the state bar's rules of conduct for an attorney to advise a party that is already represented by counsel. Sorry.


  3. Well Mel you finally said something that I can agree with it is concerning lawyers, not necessarily the one representing ETHD, but the ones I have encountered in my lifetime, as a matter of fact I have one representing me as I write this, while I sometimes agree with him there are other times I dont, if you ask me the only lawyers that have the will to fight and really represent their clients are in the movies or on TV shows, if Dr Rico would hear me out, I would like to have him give me his advice on my case, because while we dont agree on many things I do respect him for both his Medical care and also his willingness to help people in legal, so Dr Rico should you read this and if you would consider giving me some advice I would appreciate it, I wouldnt blame you for not helping me however I could use some advice from someone who is not afraid to speak his mind and who I am sure would fight for his clients. So Mel now if you would just dont worry so much about the not-for-profit billion dollar Sutter and maybe, ( since I dont know where you live ) try and help the other people in the east bay communities, and save their emergency room. I wish you all well. PAPA JOHN


  4. Location , location , location. Sutter is more comfortable in Castro Valley.Also it's a good thing the employees at SLH aren't public sector employees otherwise the wrath of the anti- city employee coalition would be screaming a blue streak.


  5. sutter made right under 1 billion dollars in profit last year. not bad for a not for profit hospital but here is some very interesting info to chew on. SLH on it's worst month loses a million dollars and that's according to sutter's cooked books. Alta Bates Summit Medical Center loses close to 60 MILLION A YEAR. with that being said, it obviousely didn't stop sutter from making money hand over fist; in fact they're building a brand new medical center in Oakland for ABSMC so they can ensure that they lose more money for years to come.

    so can someone please tell me why it's ok for one medical center lose 60 million in a year but it's down right scandalous for little old SLH to lose 10 in one year?


  6. Rational, you sound like you must have been a big fan of John Palau and his plan to plant cherry trees. Good idea then and still a good one. Maybe use Redevelopment Money? Mel


  7. If there was a Court of Public Opinion, the lawyers would be found guilty. Just talk to the person who has used one or been used by one. Eden's long term strategy is well known, what is obvious however is that the hubris has resulted in the loss of more than two million dollars to lawyers, their staffs and whoever has been bribed. Mel


  8. I think it's foolish to view what the lawyers are or are not doing in public. We don't know the District's long term strategy. I believe the lawsuit has merit, but there are other ways to fight this, too. The court of public opinion is where the lawyers should be fighting this case.


  9. The ultimate outcome is that the district will lose the litigation and be liable to Sutter in excess of $15 million dollars plus court costs and legal expenses. Even if matter is appeale to the Supreme Court, the court will not take it up. Mr. Coffey is not giving the district proper advise. but for his fees, the case would end now. district must throw in the towel and negotiate an end to its madness and it is time for Rogers to join her husband in Palm Springs.


  10. Frank, once again you have nailed the issue. Steve's writing is nothing more than an effort to do something novel and has no journalistic value at all. He is manufacturing an issue from that of gossip. The only story is that more than two million dollars is wasted on lawyers. Dr. Rico thank you for your leadership in this valley of blight. Mel


  11. Steven, A writ of mandate is an order from a court to a lower court, government official or government agency ordering them to do something they are obligated to do by law or to refrain from doing something they are prohibited from doing by law.(Look it up) It does not address errors by the judge. The appeal from judgment addresses the errors that might have been committed by the lower court, but not the factual merits of the case. Those were decided by the summary judgement at the trial court.

    As for being “named” in the suit, you are misusing the legal terminology. I am NOT named. My name appears in mere allegations made by the District that the District has failed to prove by evidence. Hence the summary judgement for Sutter/EMC. In fact, if I were named, then the District would be obligated to pay for my defense. (Ask Mr. Coffey)

    Public opinion in this matter is currently irrelevant as it has been since the District decided to lay the dispute in the arms of the courts. The judge is constrained to ignore public opinion and to base his decisions solely on the evidence presented to the court. People who think I am part of some PR campaign don't understand this. In fact, too much public arousal would be grounds for seeking a change of venue.

    Finally, no matter who is authorized to sign the checks, all major expenditures must be reviewed and approved by the District Board. Get your facts straight. Ask Dev. Your writing is deteriorating into mere gossip. Why don't you do some serious research so you can understand what is really happening.


  12. 1. Dr. Liu's presentation bordered on incoherence. Please explain why any hospital company that has two profitable hospitals would want to close one. Yes, Dr. Liu, $2 million IS nothing when it's not your money. Also please explain how the District loses money when SLH loses money. The District does not share in the profits or losses from SLH, only Sutter does. Liu doesn't know what he is talking about. Diverting the flow of revenue from one to the other is like stealing from your right hand pocket to put it in your left hand pocket. What nonsense!


  13. Two million dollars and what has it benefitted? Lawyers and their staff. The community, no, not really. Dr. Chaplin Lui is a joke. Two million dollars is not nothing. Dr. Rico's point about grants and help to the community are fallin on deaf ears. Pray that the judges finally put this critter down. Mel


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