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Published on 04/22/1996 All articles from this issue

Judge postpones ruling on El Camino Hospital

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By Clyde Noel / Town Crier Staff Writer

A potentially momentous decision that could affect the future of El Camino Hospital operations was put on hold last week when a Santa Clara County Superior Court judge said he needed more information.Judge Jeremy Fogel said April 16 he needed more facts to proceed with a summary judgment stemming from an October 1995 lawsuit filed by the El Camino Hospital District Board of Directors against Camino Healthcare, the hospital's management. The district seeks to dismantle Camino Healthcare by claiming two central figures in the 1992 agreement to restructure hospital operations financially profited from the deal.Fogel rescheduled the hearing for July 16 and also granted the 150-physician Camino Medical Group's motion to intervene in the lawsuit against the District board. Camino Medical Group, a hybrid of Sunnyvale Medical Clinic and Shoreline Medical Group, allied with Camino Healthcare in 1994.Lawyers for Camino Medical Group claim district board members have their own personal interests in returning the hospital to district control. El Camino had operated ¯ and profited ¯ as a public hospital until the 1992 agreement to transfer all $250 million in hospital assets to the non-profit, public benefit corporation, Camino Healthcare.Jan N. Little, San Francisco attorney for Keker & Van Nest and representing Camino Healthcare, said under the re-organization of the district, the case is framed as a public contract. "Camino Healthcare's position is this case should not be here. Nothing happened on section 1090." Section 1090 of the state government code forbids public agencies to make contracts in which an officer or employee of the agency has a financial interest.Fogel rejected Camino Healthcare's motion to dismiss the District's complaint that the 1992 contract violated the state's conflict of interest law. "There is a fair amount of discovery that has to be done here," said Charles Breyer, San Francisco attorney from Coblentz, Cahen, McCabe & Breyer and representing the Camino Medical Group. "You need enough facts to develop the determination and we need more time."Stephen Mayne, attorney for the hospital District board, agreed that Camino Medical Group's intervention into the lawsuit was appropriate. Fogel also rejected efforts by attorneys from Camino Healthcare and Camino Medical Group to postpone the summary judgment hearing indefinitely in order for them to develop their discovery of additional facts. "I am not disappointed with the legality of the case," Mayne said. "It's the delay factor that I am discouraged with. They bought 120 days of delay and that action is inconsistent with the chair of Camino Healthcare's public pronouncement of a desire for a speedy resolution of its dispute with the District."Last week's court action is the latest in a series of developments arising from changes in hospital management as El Camino tries to adapt to an increasingly competitive health care industry. Proponents of the hospital's current integrated delivery system (IDS), which streamlines and economizes operations, say the IDS is the only way of surviving in an era of declining insurance reimbursements, fewer and shorter patient stays, and a surplus of physicians. Opponents say the current system is losing money for the first time in the hospital's history and is benefiting a minority of physicians at the expense of the majority.At an informal community meeting in the Town Crier building April 10, Jim Wilson, vice chairman of Camino Healthcare, said, in his opinion, the hospital's IDS may be dismantled soon in the wake of the district lawsuit. He also noted in hindsight that the Camino Healthcare board did not communicate effectively, to the district nor to the public."Mistakes were made and our initial vision was not perfect," he said. "Our board (Camino Healthcare) did not pay enough attention to the district in the beginning. We should have declared an open door policy and provided more information to the elected board. Knowing what we know now, we admit and acknowledge changes should have been made."It is my personal view we are close to breaking up the integrated delivery system and return it to the hospital. The Camino Medical Group expects the hospital to be returned and are already looking for new opportunities," Wilson added.Members of the study group said the lack of information is what bothers the public. Camino Healthcare chairwoman Lynn Briody said she doesn't consider the District board an adversary. The district created a friendly entity in 1992 and the contracts should be lived by, she said. "We can't give you full disclosure. We were created as a non-profit board and our function is to create a policy for the marketplace," Briody said. "The (state) attorney general will start examining our records at the end of April and the Internal Revenue Service will get full disclosure of our records. We didn't create the board we sit on and we have to live by the contract."