Appellate Court Sides With Sutter Over Ownership Of San Leandro Hospital


Dec. 21, 2011 | The end of San Leandro Hospital as a general acute care hospital with emergency room services may be near.

A state appellate court ruled Wednesday in favor of Sutter Health’s right to secure title to the San Leandro community hospital. The opinion affirmed a similar decision issued bt an Alameda County Superior Court judge in November 2010.

The unfavorable ruling for the Eden Township Healthcare District represents a third legal defeat in its bid to maintain services at San Leandro Hospital. An arbitrator handed down a similar decision also in 2010.

The three-judge appellate court found former members of the District in 2008 did not possess a financial interest in the controversial agreement that paved the way for the current legal entanglement.

The court agreed the current adminsitrator at Sutter’s Eden Medical Center in Castro Valley did not possess a financial conflict of interest under state law. Bischalaney concurrently held the same position at the District from 1998 to 2008.

“The District has not shown that the contracts at issue here have any direct or indirect nexus to Bischalaney’s compensation,” said the appellate opinion.

Similarly, former District board member Dr. Francisco Rico, the court found, did not stand to benefit from the agreement. The District had asserted Rico’s stake in a doctor’s group that provides exclusive anesthesiology services to both Eden and San Leandro Hospital also did not violate the same government code.

The District had hoped a violation of Government Code 1098 would invalidate the 2008 agreement that, in hindsight, chose a rebuilt Eden Medical Center over a tenuous future at San Leandro Hospital.

The ruling also disputed the District’s contention the ongoing dispute with Sutter centered around the alleged conflicts of Bischalaney and Rico. Instead, they found it actually revolves around community fears of losing access to emergency services in San Leandro.

“Sutter was not seeking to render services to the District, nor to secure any public money or benefit,” it reads. “The District does not claim it will be adversely affected, from a financial standpoint, if the SLH sale is completed. Indeed, as best as we can discern,, the District’s main issue with the transaction is based on public policy concerns regarding the loss of emergency room, and not public finances.”

An amicus brief filed by Attorney General Kamala Harris’s office supporting the District’s argument also did not sway the judges. They faulted the attorney general’s broad view of the government conflict of interest code, while referring to their argument as “not persuasive.”

The court also found an addition amicus brief filed by the City of San Leandro supporting the District did not contain materials decided by the earlier superior court case and “irrelevant to the specific issues on appeal.”

What happens next in the over three year fight to keep San Leandro Hospital is unclear. Once Sutter gains title to San Leandro Hospital it could enter talks with the District and county on how to proceed or, more likely, maintain its initial plan to convert the facility to an acute rehabilitation center without an emergency room and other services currently provided at San Leandro Hospital. Sutter would then allow the Alameda County Medical Center to run the reconfigured facility.

Although, the appellate court referenced Sutter’s acceptance for paying for the hospital, the exact price tag, according to the county, would be zero. Through capital improvements made to building along with equipment upgrades, Sutter was able to deduct the sale price down to where technically the county would owe Sutter for taking the hospital off its hands.

As the county continues to lose an alarming number of hospital beds along with higher numbers of residents demanding more social services amid a stubbornly stagnant economy, the loss of San Leandro Hospital would put further strain to the system, according to health officials.

Although a vocal group of community activists in San Leandro have long fought hard to keep the facility open despite Sutter’s stated plans, the dilemma is actually a regional problem likely to hurt the indigent and uninsured in surrounding cities. According to the hospital’s census, a majority of patients come not from San Leandro, but poorer sections of neighboring Oakland.

16 thoughts on “Appellate Court Sides With Sutter Over Ownership Of San Leandro Hospital

  1. A couple of comments on replies to my description of negotiations referencing SL Hospital while I was Mayor. I was not privy to any of the District's closed sessions; everything I did was done openly. many groups and individuals contacted me to get the city involved in keeping SL Hospital open. I met with Dr.'s Adler, Sawney, West, Ratnesar and even Carole Rogers, Alec Briscoe, Alice Lai Bitkar, Ellen Corbett and others, including reps from CNA. All was above board. I had a meeting in my office on August 17, 2009 with all the involved parties, sutter was also present. I did not learn until later that Sutter and ACMC had reached an agreement to operate the hospital earlier that month. There were many more discussions leading up to the December 17, 2009 contact from the District's Attorney. Everyone up to that time was looking for a possible solution. Finally, majority users of SL Hospital are Oakland residents and not San Leandro. Tony Santos

    PS: I sign these ane then use Anonymous to post.


  2. Steven:
    I think you should look into the facts about the “majority” use of SLH. I believe Dr. Huber (Chief of ED) wrote a letter last year with these statistics? The majority of the users are San Leandro residents, according to her letter.


  3. To the comment at 6:31 pm: paying more taxes is a good point. It's never been discussed, though, by any pol or county official. I would say that fact shows how much your local government cares about SLH. To say the least, not very much. In 2009, I wrote an opinion saying, lets get into the hospital business. My position was it worked at Alameda Hospital, why not San Leandro? But, who do you tax? San Leandrans might not be cool to being taxed for saving a hospital that a majority of patients from Oakland use.


  4. Does anyone realize that the new Kaiser Hospital in San Leandro is a replacement hospital for Kaiser Hayward. There are no additional emergency room beds being built. And the new Eden hospital has less beds available than the old hospital. Sutter is going to close the inpatient psychiatric service at Eden. There is talk that they will close Obstetrics and make all baby deliveries go to Alta Bates. Just what we need. Sutter is only concerned with making bigger profits, not the well being of our community. I hope they lose their non profit status.


  5. How is it ex-mayor Tony Santos that you are so well informed about what went on In Closed session between Sutter and the District? How is it you were in on “discussions” between the parties? You did not represent the District nor Sutter and had no place at any table. In fact, I don't remember any time when you came out in favor of saving San Leandro Hospital. Maybe that's why you are no longer Mayor.


  6. If people feel there is such a need to keep the hospital open then why not have the residents pay more taxes? The fingers point every which way except back at themselves. There has also been comment here about the impact on ERs if the hospital closes – there is not one mention of Kaiser's ER. Kaiser is bound by law to treat anyone that walks through its doors – as I recall, there is a brand new hospital going up right by Marina. Lastly, the Township District has put a hold on all its grant funding due to them pouring all their money into legal fees – that money should be for the community – what a shame that the organizations that could have benefited from those grants are not able too any longer.


  7. one more comment; sutter has wone; neither county nor city have anything to do with future of facility. will sutter do what it agreed to do in summer of 2009? ask sutter for oonly sutter can address the question. Tony Santos


  8. Not true; you don't have and don't know the facts. I was in the middle of discussions on keeping SL open. You may not believe it, but Canizzo was on verge on issuing a “term sheet” when he was canned. After his firing, all discussions stopped. The district has spent over $2.5 million dollars prosecution what has turned out to be a loser. One possible offer was to have the parties, Sutter, district and county to contribute $4.5 million dollars toward keeping the facilty open for a year and see if a more permanent solution could be found in that time. I was asked if City could contribute $500,000 toward the proposal; my answer was that was for Council to decide; I advised all I would call for a “special session ” to discuss the matter, but again with Counsel being fired and Carole not wanting to deal with Sutter, we have what we have. One thing: if any one wants to know what my position was call me; don't make assumptions on facts you don't have. Tony Santos


  9. part 2:

    Alameda County and the City of San Leandro needs to stick to its guns (or lawyers) and force Sutter to do the right thing as a competent and supposedly caring “non-profit” corporate citizen it likes to advertise itself. County needs to state that it is interested in receiving the building only in as is, status quo condition, i.e. as a fully functioning hospital. County should then turn the hospital over to Eden Township who needs to join forces with St. Rose Hospital and proceed with the plans of securing the federal financing, mentioned in the past, in order to become a fiscally viable entity supported by the community. The two hospitals can supply more than enough rehab beds county needs.

    And then? Everybody will be happy—including Sutter (in the long run).


  10. San Leandro and Alameda County needs to realize that SLH is a strategic community asset that needs to be protected. The loss of SLH will be permanent and it will drastically affect the health care in the San Leandro proper and beyond. The needs of Sutter “ownership” of SLH should be subjugated to the needs of the community similar to, say, eminent domain, where community comes first and private ownership second for the benefit of all.

    Furthermore, Sutter needs to finally get through its head that spun-off, functioning SLH is a valuable asset to them as well because it will siphon off all the patients Sutter doesn't want to see “occupy” their brand new spanking EMC ER. Sutter needs to hire experts to supply them with statistical analyses of adverse patient flow scenarios unfolding the day SLH has closed its doors. The data will be a sobering hangover after the wild, Moet cork popping “we finally closed that bitch” party Sutter is quietly planning for.

    The combined number of patient visits for both SLH and EMC ERs stands at about 50,000. Sutter can only hope that the redliners will go to Highland Hospital or elsewhere. They won't. EMC ER will be a 24-hr, 3rd world war zone with surly, overworked staff, causing deadly med errors, and bringing in plentiful lawsuits for botched care or lack thereof. Needless to say, the influx of patients seeking treatment at EMC ER will be double of what Sutter expects—or shall we say it again?—hopes for.


  11. Could it be that it is Christmas? People are home with families. Maybe they just found out that the Grinch who stole Christmas also took their hospital, and 400 jobs. I look to the District to appeal.


  12. The District spent less than 2.5 million in legal fees, according to statements made at recent meetings. The attorney was fired because he was negotiating for Sutter and the District at the same time and lied to the Board about their legal position, I was told. Where were you Tony Santos when the residents of San Leandro were looking to you as the Mayor to stand up and fight for us to keep the hospital open? Asleep at the wheel.


  13. I am surprised at lack of comment. I thought SL Hospital was hottest issue in town. Why the quiet? Fact is district screwed up and lost. the district has spent near $5 million dollars to prosecute a loser. board needs to be recalled. all could have been settled in 2009; I know because I was in middle of discussion. All the board did was fire its attorney and here we now are. Tony Santos


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s