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Published on 06/19/1996 All articles from this issue

Hospital District budgets $1.28 million for lawsuit

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By Clyde Noel / Town Crier Staff Writer

The El Camino Hospital District may be spending "as muchfor litigations as we are for health care," as one boardmember put it last week during a budget review for fiscal year1996-1997.

The District board approved a $4.35 million budget last week,with the assumption that its lawsuit against El Camino Hospitalmanagement practices will continue to intensify. The Districtsued the hospital's Camino Healthcare system last October allegingparties involved in the 1992 restructuring were operating undera conflict of interest and knowingly profited from the proceedings.

A court hearing is set for July 16 in Santa Clara County SuperiorCourt.

The hospital district budget estimate for 1996-1997 consists oftaxes collected from the district and interest earned on investedcapital. Included is the land lease rental from Camino Healthcarefor $53,500.

For the fiscal 1995-1996 annualized actual, $765,000 was spentfor litigation and legal fees. For the coming year, $990,000 isbudgeted for outside legal consul. This, plus the legal fees of$190,000 for staff legal consul, makes the total $1.28 millionin legal fees for the coming year.

"This is hard to believe, but we are spending as much forlitigation as we are for health care," board member DianaAdair said.

These litigation expenses will be paid from taxes collected fromthe district, and do not include litigation fees paid by the non-profitcorporation Camino Healthcare.

Funding will continue for administrative support for the boardof directors. Interim chief executive officer Richard Warren willcontinue to work on a part-time schedule, with a salary budgetedat $78,000 for the year.

The board appointed chairperson Paul Hoar, board member PeterPollock and Warren to evaluate the dialysis center and to considerimproving conditions in the emergency room of the hospital.

"If something is not done in the near future, the hospitalwill not be a prize for anyone," Hoar said. "Historyknows we waited to file our lawsuit, and we had meetings withCamino Healthcare during Christmastime and to this day we can'teven get basic information. In the past months, Camino Healthcareprovided severance pay to staff members for over $2 million. Asettlement has to be reached quickly if anything is even survivable."

Pollock said Camino Healthcare is losing money faster this yearthan it did last year when it was losing an estimated $350,000per week, and that the best solution is to return the hospitalto the board.

In other actions, the District Board agreed to stipulations placedon a $30 million loan to Camino Healthcare provided by First InterstateBank. With First Interstate being taken over by Wells Fargo Bank,new security interest stipulations were placed on the loan. CaminoHealthcare is responsible for repaying the $30 million to thebank, but in view of the continuing lawsuit, Wells Fargo wantsto include the district board as secured interest. Should thehospital go broke, district taxes will be the used to repay theloan.

The board also approved the election cost of $75,000 to pay thecounty for services provided for the Nov. 8 election. Nominationperiod will be between July 15 and Aug. 9. The filing date willbe extended to Aug. 14 if an incumbent does not file a declarationof candidacy. The terms of Dr. Dominick Curatola, Dr. Paul Hoarand Peter Pollock end this year.