Monday, April 21, 2014
A lawsuit against Sutter Coast Hospital has been filed by the widow of the donor of the land where it was built, saying that plans to convert the facility to a Critical Access Hospital violates the donation contract stating Sutter must maintain an acute care hospital.
The lawsuit filed by Beverly Hussey also claims that three hospital board members who are also employees of Sutter Health violated the obligations of a charitable trust by not recusing themselves from votes to convert to Critical Access and to “regionalize” (merge the local hospital with a Bay Area-based Sutter corporation). By voting, the board members were acting in their own interest and not the community’s, according to the suit.
“The board members violated their respective duties against self-dealing because they stood to benefit from bonuses paid to employees of Sutter Health,” states the lawsuit filed March 26 by a Los Angeles-based law firm known for prominent anti-trust cases against large corporations. Since Critical Access status would increase revenue for Sutter Health, “the board members stood to benefit financially from their votes,” the suit states.
Michael Duncheon, Sutter Health’s regional legal counsel, said in an email that “Sutter Coast Hospital is and will remain an acute care hospital. Critical Access does not change that reality,” he said.
“The allegation that employees on the Board stood to benefit from regionalization is false and libelous” and could result in a countersuit, Duncheon wrote.
In 1988, Francis “Sonny” Hussey donated several acres on Washington Boulevard to Sutter Coast Hospital on the condition that the property “shall be used primarily for healthcare related purposes. Permissible uses shall include, but not be limited to, acute care hospital, medical laboratories, medical offices, trauma centers, convalescent care and similar uses,” states the 1988 contract.
According to the suit, Sonny Hussey was motivated to improve health care in Del Norte County after a car accident in 1959 sent his loaded gasoline truck hurtling 150 feet down a mountainside.
“For approximately eight hours Mr. Hussey lay undiscovered until a passing logger by chance saw the wreckage. The logger clambered down the steep cliff and found Mr. Hussey only semi-conscious with a crushed chest,” the lawsuit states. “Mr. Hussey’s near death experience triggered Mr. Hussey to donate an unprecedented and substantial amount of his real property to Sutter in order for Sutter to develop and maintain an acute care hospital.”
Sutter Coast Hospital, which was operating the old Seaside Hospital building on A Street via a lease through the Del Norte Healthcare District, agreed to build the hospital on the donated property, opening its doors in 1992.
“The old facility leaked and we had a lot of problems,” said Gerald Cochran, who as chairman of Sutter Coast Hospital in 1988, signed the agreement with Hussey.
The lawsuit states that Sutter Coast violated the contract for the donation on Dec. 5, 2013, when the Board of Directors “voted to change Sutter’s designation from a full service acute care hospital to a critical access facility.”
The plaintiff’s lawyers said that if the implementation of a Critical Access hospital continues during the lawsuit, they might seek a temporary restraining order and/or a preliminary injunction blocking the conversion.
“We definitely think there are strong grounds that would prevent the downgrade by looking at the contractual language and intent of the agreement,” said Majed Dakak, an attorney for the law firm handling the case, Blecher Collins Pepperman and Joye P.C. “What Sutter is doing is really putting the community in peril.”
According to California state law, a “general acute care hospital” is a facility that “provides 24-hour inpatient care, including the following basic services: medical, nursing, surgical, anesthesia, laboratory, radiology, pharmacy, and dietary services.”
Sutter Coast Hospital has no plans to eliminate any of those services, according to Duncheon.
Since Sutter Coast is already qualified as a “rural general acute care hospital,” the facility is not required to provide surgery and anesthesia services, according to state law. Duncheon said that there are no plans to eliminate or even reduce surgical or anesthesia services.
The suit states that there is no incentive to maintain or expand services as a Critical Access hospital, “which is contrary to the language and intent of the (contract).”
In information provided by Duncheon, Sutter Health states that all services will remain under Critical Access designation, including: in- and out-patient surgery, OB services, “24/7/365 MD in the hospital for the Emergency Department” and “24/7/365 hospitalist,” lab services, radiology services, respiratory therapy services, rehabilitation services, 24/7 case management, and a pharmacy for inpatients.
State law clearly states that Critical Access hospitals are also considered general acute care hospitals:
“Every hospital designated by the department as a critical access hospital and certified as such by the United States Department of Health and Human Services shall be deemed to be a general acute care hospital.”
The state could waive certain acute care requirements for Critical Access hospitals if “it is in the public interest to do so” and “the waiver would not negatively affect the quality of patient care,” according to state law.
Asked how the plaintiff’s case would reconcile with the state law saying Critical Access hospitals are acute care hospitals, Dakak said “that’s going to get into legal strategy so I can’t comment on that.”
The lawsuit states that if Sutter Coast converts to Critical Access as planned it will be “creating a tremendous burden on and at times a complete barrier to acute care treatment at Sutter.”
Since Critical Access facilities have a cap of 25 in-patient beds, there is likely to be an increase in patient transfers to other hospitals. The lawsuit says that a patient could be forced to wait for several hours while an acceptable facility is located to accept the patient.
Sutter Coast interim CEO Linda Horn recently wrote in a Triplicate Coastal Voices piece that “if we were already a Critical Access hospital ... in the last 12 months, we would have had to transfer approximately 40 additional patients out.”
Horn said this would be a 6 percent increase in patient transfers while acknowledging that “I understand that if you are one of those patients, it doesn’t matter to you if it’s one or 40.”
Beverly Hussey, who has had to go to Sutter Coast several times but has never been air-ambulanced to another hospital, was less not impressed, saying of Horn’s writing:
“She’s telling everyone how wonderful it’s going to be while encouraging everyone to join Cal -Ore Life Flight.”
Besides the claims based on Sutter Coast not maintaining an acute care hospital, the lawsuit ‘s other claim is based on certain Sutter Coast board members acting in their own self interest, violating the hospital’s charitable trust status.
“These board members, who stood to benefit directly or indirectly, by virtue of transferring hospital ownership and governance, should have recused themselves but instead participated and voted for regionalization” and to “downgrade the hospital’s status,” the lawsuit states.
Sutter Coast officials have stated that converting to a Critical Access hospital, which receives cost-based Medicare payments, is necessary to stay financially afloat, but the lawsuit alleges that the conversion is being pursued out of “corporate greed” in an attempt to “game the system.”
The lawsuit states that Sutter Coast was profitable every year from 1985 until 2010 (Sutter officials said that the hospital has had financial losses since 2009). In 2011 the hospital started operating without a chief financial officer (illegally, according to the lawsuit).
“Thus, the decision to convert to Critical Access was based on claims of financial losses during the only period in Sutter’s history when the hospital was illegally operating without a Chief Financial Officer,” the lawsuit states.
This was the also the time that the hospital was moving toward regionalization, and the lawsuit claims that the votes for regionalization and Critical Access violated the obligations of a charitable trust, including “its duty to avoid self dealing.”
Duncheon responded that the hospital has always operated with the “requisite financial staff” and that when the locally-based CFO, Jim Strong, stepped down, his duties were fulfilled by John Gates a Sutter CFO based in San Francisco.
“There is no merit to the claim that an alleged lack of CFO had anything to do with the losses,” Duncheon said.
In February, Mrs. Hussey and her attorneys sent a letter to Sutter Coast demanding that the hospital retract the decision to downgrade, as the contract gives Sutter 30 days to correct violations of the contract.
“Sutter has refused to alter its decision to downgrade the hospital status,” the lawsuit states.Reach Adam Spencer at firstname.lastname@example.org.
Saturday, April 19, 2014
Today's newsletter is a guest editorial by Dale Bohling, a former railroad employee of 37 years who served his local labor union as an in-shop representative, and a current resident of Crescent City, CA, where the Sutter Coast Hospital Board of Directors (at the recommendation of Sutter Health executives) has voted to take the following actions:
(1) Dissolve themselves as the hospital's governing body.
(2) Transfer ownership of the region's only hospital from within the community to a corporation in San Francisco which is controlled by Sutter Health.
(3) Downsize the hospital by 50% in order to qualify for higher Medicare payments.
Steps (1) and (2) are on hold "for the time being" due to public outcry.
Sutter Health executives state these moves are needed for financial reasons, claiming Sutter Coast Hospital ("SCH") has not been profitable since 2008. A quick fact check reveals otherwise. SCH's IRS Form 990 shows a net revenue of $6.5 million in 2010. In 2009, profits were $759,000. (source: Guidestar.com)
Sutter Health's net profits in 2012 were $735 million. (source: http://www.
bizjournals.com/sanfrancisco/ blog/2013/03/sutter-healths- net-income-soars-to.html) Sutter Health executives doubled their own salaries between 2007 and 2012, including Sutter Health CEO Pat Fry, whose compensation increased from $2,287,163 in 2007 to $6,393,883 in 2012 (source: Sutter Health IRS Form 990).
SCH CEO Linda Horn claims the hospital is closing beds which "are empty every day--and have been for years." That statement is false. Read on to see the facts . . .
There's no sugar-coating in-patient bed reduction by Dale Bohling
Why does the story of Little Red Riding Hood come to my mind as I read Sutter Health executive Linda Horn's latest attempt to assuage community trepidations over Sutter Health Corporation's dual decisions to convert Sutter Coast Hospital to Critical Access and to move the governing board hundreds of miles away from the community? ("Same services offered under Critical Access", published 4/4/14 in The Del Norte Triplicate).
Maybe it was the wolf's cloaking of his evil intentions as well as his ravenous appetite that sparked the comparison. It may also have been the vulnerability of Little Red Riding Hood as she began to realize that appearances can be deceiving which is seemingly what emerges within our community with each sugar coated apologetic presented to the community by Sutter Health.
While taking four whole paragraphs to set the stage for her intended splurge, Ms. Horn painted the canvas with images of hospital staff being awarded for their dedication to their patients and recognition of career tenure by their employer. Along the way she sprinkled flowers of good will with her sharing of Sutter Health's magnanimous philanthropy in the community. An altogether rosy picture emerged of a community and the beneficent corporation that built and maintained the local full service hospital. That is, of course, an idealized picture of how things SHOULD be and seemingly HAVE been. Enter the cloaking:
"It is our commitment and desire to continue being a full service hospital and an active community partner", Ms. Horn wrote. She avoids explaining how to reconcile that statement with the fact of intent by Sutter Health to reduce that hospital by half. How does dividing something by half allow it to remain the same as before the division?
If the answer lies in the simple closing of doors, with beds that are "empty every day--and have been for years", as Ms. Horn asserts, I see little cause for concern. But Ms. Horn's assertion is simply NOT TRUE. Here are the facts:
(1) The beds have NOT been empty for years. According to Sutter's own website, there were 62 days in the period 1/1/12 to 6/30/13 when the hospital census exceeded 25, including multiple days within the last year. (source:
Remember, Critical Access hospitals begin shipping adult, non-maternity patients when the census is just 22, so the impact is even worse than it at first seems.
How can Ms. Horn's statement be viewed as anything other than a deliberate deception or ignorance of Sutter Coast's own data which was released to the Camden Group to be used in their study?
(2) Closing doors is not what actually takes place. The rooms are not just closed, they are locked. Permission to remove the locks must be obtained from some unspecified government agency, in the event of a declared emergency or disaster, when time is of the essence.
(3) The concomitant evisceration of the attendant staff whether highly skilled or ancillary, top to bottom, cannot be reversed by declaration of the state or anyone else.
People will lose their livelihood as their training and skills are stripped away from the full service setting owing to Critical Access designation. Yet this loss of dedicated hospital staff is presented by Ms. Horn as being instantly replaceable at the time of an extraordinary event involving a mass influx of casualties, like merely opening doors and dusting off sheets.
Is Ms. Horn saying that a flood of volunteers will come to the fore to fill in the gaps? Volunteers will do what they are trained to do, but what of medical skills?
Does Sutter Health expect us to believe they can muster a fully trained staff with a snap of the fingers?
Equally inexplicable is the concept of being an active (caring?) community partner while simultaneously removing any semblance of local governance 300+ miles distant where any meaningful input would be negligible. A good community partner does not cause members of that community additional grief by shipping them off to distant hospitals for care, leaving them devoid of the support of loved ones and the additional financial burden of getting a 2nd mortgage on their homes to finance transportation back home while in a recumbent state. Woe to he who falls ill under the shadow of Critical Access.
As a sedative to a concerned community, Linda Horn offers this choice parsing of words: "Remember that a viable full service hospital will sustain real estate values, jobs and services in our community. We are offering the same services after our CAH designation as we offer today". Yes, Ms. Horn, the same services, only HALVED.
Dale L. Bohling
Here's how you can help:
If you wish to retain local ownership of a full service, non-Critical Access hospital in our region, please write to the Board of Supervisors, 981 H. St., Crescent City, CA 95531. Our Supervisors have asked Sutter to reconsider their actions and release their data to the public. Sutter refuses to comply. But our elected leaders have the authority to end this conflict with Sutter Health by exercising their right of eminent domain, to hold Sutter accountable to the promises they made to this community when they were invited here--to provide expanded services and improved quality of care. GJD
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