After a two-day closed session, the El Camino Hospital District Board filed suit last week to overturn arrangements the Board made in 1992 because of a conflict of interest status.
In a lawsuit filed Oct. 30 in Santa Clara County Superior Court, the board maintained hospital administrators had a financial interest in the contracts that transferred the public El Camino Hospital in Mountain View and its assets to the private non-profit Camino Healthcare.
The suit asks that the court declare void the Dec. 17, 1992 ground lease agreement, the building sale agreement and the asset transfer agreement between the hospital district and Camino Healthcare. It also requests an injunction that will prevent Camino Healthcare officials from selling off any hospital assets or incurring extra debt.
The board's action led to the resignation of long-time board member Dale Brown. In a statement, Brown said, "Events of the past few days demonstrate very clearly to me that I can no longer participate as a Board member in a productive way. I am convinced by the dialogue of some of the board members that a majority of the Board is not truly motivated to find solutions without litigation."
The decision to file the legal challenge was based on the findings presented by San Francisco based attorney Stephen S. Mayne whom the board hired in September.
Board members Mark O'Connor, Dr. Paul Hoar and Dr. Dominick Curatola voted to file the suit, while board member Dianna Adair voted against and Brown resigned.
Mayne was hired to determine the legality of the 1992 "de-districting" that approved the transfer of El Camino Hospital assets to the private, non-profit Camino Healthcare. He looked into allegations concerning whether the hospital's former chief executive officer, Richard Pettingill, had a conflict of interest when he helped to de-district the hospital and then become head of both the new non-profit Camino Healthcare organization and the El Camino Hospital District.
Mayne concluded that various Camino Healthcare officials who were district employees at the time had a financial interest in the 1992 contract transfer. He referred to the contract being in violation of Government Code 1090, but did not name any individual employees.
In a statement, Mayne said the district would not have to show the officials had improper motives, simply that they had a financial interest in the conversion. If a judge agrees there were conflicts, Mayne said the district would reorganize itself and go from there. The original Oct. 31 1992 vote to reorganize the system would still be valid.
Camino Healthcare was formed in 1992 to take over the management of the public hospital because it was losing money from provider payments and a lower patient bed count. By eliminating the public status control, proponents claimed, Camino Healthcare would be able to form partnerships with private physician groups and compete more effectively for patients in a managed care position.
However, the hospital has come under controversy recently by doctors and patients who claim the quality of care has deteriorated. Last month, the budget was cut by $22 million and employees were laid off.
Before the Oct. 27 board meeting, Dr. Elizabeth Vilardo, chairwoman of the Camino Medical Group, cautioned the board against seeking litigation. "Camino Healthcare is dedicated to the health of this community. Any action that is detrimental would make it difficult to continue with good patient care. Think carefully about this community before you make any decisions to file suit."
In a statement, the hospital board expressed a desire to meet with Camino Healthcare officials and work toward "a speedy resolution of the matters in the best interest of the community."
"Our intent is not to unwind the system," board member O'Connor said. "The public shouldn't see it that way. The hospital is not going to shut down, but we found conflicts of interest. If we didn't do something about it we would be breaching our responsibility to protect the community's best interest."
O'Connor began his challenge to Pettingill's position as head of the non-profit Camino Healthcare system and the El Camino Hospital immediately after being elected to the hospital board. In September, Pettingill resigned as chief executive officer of Camino Healthcare.
Retiring member Brown had doubts about the board's motives. "I am concerned that some of the board has been motivated by a small group of people who want to resist the changes taking place in health care today. A better plan for El Camino Hospital's success in the future was never put forward during all of the discussions."