Feb. 17, 2012 | California State Attorney General Kamala Harris’ office filed an amicus brief Thursday with the State Supreme Court urging the high court to accept the Eden Township Healthcare District’s petition to continue its legal challenge involving Sutter Health over San Leandro Hospital.

The filing is the second time her office has offered support for the District and its lawsuit against Sutter over title to the community facility. The first being the District’s unsuccessful attempt at the State Court of Appeals level to overturn an earlier decision in Alameda County Superior Court over a government code used to bar public officials from negotiating deals while maintaining a conflict of interest.

“In the present matter, the parties’ relationship spans several years and involves a number of complicated transactions, but the facts pertinent to the section-1090 issues are straightforward,” said the brief. “The District is a public agency whose contracts are governed by section 1090. Sutter Health and Eden Medical Center, two private entities, executed a group of related contracts for the operation of certain healthcare functions. Two District officials who derived income from Eden Medical Center actively participated in negotiating those contracts.”

At issue is the District’s charge that a memorandum of understanding signed in 2008 by two officials alleged to have financial interests in the rebuilding of Eden Medical Center in Castro Valley and the demise and possible closure of San Leandro Hospital. Attorneys for the District contend the participation of a former District board member and an executive who concurrently served as CEO of both the District and Eden Medical Center were violations of section 1090.

Dr. Francisco Rico, who maintained a partnership in an anesthesiology group possessing exclusive contracts with both San Leandro Hospital and Eden Medical Center at the time of the 2008 deal was cited in the District’s suit along with Sutter-run Eden CEO George Bischalaney, who maintain the same position concurrently as the District’s top administrator.

Sutter has long maintained the right to the title of San Leandro Hospital as described in the 2008 agreement. Two courts have also agreed.

But, the attorney general’s brief asserts the Court of Appeals decision focused too narrowly on the “financial interest” element of the section 1090.  Instead, it posits a financial benefit under the code is not required to prove a violation. The two lower courts found neither Rico nor Bischalaney received monetary gain from the agreements. Previous decisions also found Bischalaney did not directly participate in the negotiations between the two sides in 2008.

“A grant of review in this matter will help ensure that judicial decisions regarding section 1090 remain consistent and minimize the potential for confusion,” according to the current amicus brief. After the appellate court’s decision was handed down last November, city attorneys in both San Leandro and Hayward issued public and private concerns over whether or not it had set a new precedent for public officials in potential conflict of interest cases. Typically, state courts have used a broad standard of interpretation when deciding cases using section 1090.

In the meantime, the State Supreme Court has not decided to accept the District’s petition filed Jan. 30. The high court has between 60-90 days to issue a decision. In either case, as the court of last resort, the nearly three-year legal battle over San Leandro Hospital will end here.

On the agenda for the city’s Feb. 21 council meeting is a proposal to create an Ad-Hoc committee charged with discussing the future of San Leandro Hospital and the overall outlook for health care in the city.