The Coastal Post - November 1999

The MGH Lawsuit Updated

By Norman Carrigg, M.D.

On September 11, the IJ told its readers: "The Marin Healthcare District wants $504,000 more cash and higher rent payments than Marin General Hospital offered last month in a proposed settlement to end a two-year legal battle between the two." There is more to the litigation than that article indicated.

In the suit to void the lease by which Sutter Health of Sacramento controls Marin General Hospital, the elected hospital directors made certain demands of Sutter/MGH. The district board has many patient care concerns. Four of the five elected board members are strong consumer advocates. The district board, by terms of the lease, gets its operating expenses from Sutter/MGH. The board does not have the ability to raise funds by the tax route. All of this is important, but is not the crux of the suit.

The crux of the suit is simple. The district alleges that California Government Code, Section 1090, prohibits what happened in 1985 when the five elected directors permitted the MGH administrator and MGH attorney to lease the hospital to themselves. Both were public employees at lease inception. The law is that public employees cannot make contracts to benefit themselves. The lease was acquired by Sutter Health, Sacramento, in 1996.

A preliminary ruling by a Sacramento Superior Court judge is that the statue of limitations has expired and judicial relief is impossible. Not so, according to district lawyers who point out that the statue of limitations does not apply to public properties, based on case law.

The lawsuit has become incredibly expensive for both sides based on frivolous defense motions and sideshows such as the claim that Director Diana Parnell, a sub-leasee in a building leased by MGH, has a conflict of interest. So finally, after this goes to press, the crux of the case will be heard in Sacramento.

Voiding the lease does not necessarily mean Sutter cannot have a presence. But it would put an end to such excesses as the $2 million annual Sutter "affiliation fee" and the "excess cash transfer" policy. Sutter has the right to claim MGH monies in excess of the amount needed for 14 days operations. Monies currently siphoned to Sacramento easily would fund Level II trauma care at MGH. Certainly this is a preferable use for MGH patient revenue.

The well-meaning civil Marin Grand Jury recently recommended that both sides submit to binding arbitration. Sutter Health is entrenched. Not only is MGH a Sutter cash cow, Sutter's control is overwhelming. Every person employed at MGH has to be acceptable to Sutter Health. Every person on the privatized hospital board has to be acceptable to Sutter. It's unlikely that Sutter voluntarily will relinquish any of this. Voters in 1996 and again in 1998 made clear that they want their hospital back in community control. If the elected district board loses in Sacramento, the lease does not expire until 2015.

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