Court will allow Eden Township Healthcare District
to pay $19.7 million in damages to Sutter Health over
the next 10 years rather than all at once.

Chan wants Eden Township to provide hospital with additional financial help

SAN LEANDRO HOSPITAL | An Alameda County Superior Court judge has granted a hardship request by the Eden Township Healthcare District to pay the $19.7 million in damages it owes to Sutter Health over the next decade instead of a lump-sum payment that threatened the district’s financial viability.

In the ruling issued last week, the court sided with the district’s petition to pay the $19.7 million over ten years plus interest based on the one-year Treasury bill rate. Eden Township Healthcare District CEO Dev Mahadevan said the elected board of directors is ready to make its first payment on June 30. Sutter Health could still appeal the hardship decision, but it is unlikely.

After the healthcare district, which covers much of Southern Alameda County, sued in 2009 to block a bid by Sutter Health to gain control of San Leandro Hospital and close its emergency room, a state court ruled in Sutter Health’s favor four years later. Damages from the estimated losses to Sutter Health, incurred at the hospital during the legal fight, were set at $19.7 million. The district, however, maintained that being forced to pay that amount all at once could force the public agency into bankruptcy.

In a side deal, Sutter Health had pledged to donate the $19.7 million to San Leandro Hospital’s new owner, Alameda Health Systems, along with $22 million to operate the hospital’s emergency room. The judge’s ruling, thus, raises questions about the hospital’s financial viability, since it will not be receiving the $19.7 million right away.

Stacey Wells, vice president of communications and public affairs for the Sutter East Bay Medical Foundation, said the organization was disappointed with the court’s decision. “The district has assets that can and should be liquidated to resolve this judgment instead of its continued efforts to avoid payment.”…