The Tulare Local Healthcare District (TLHCD) will file a countersuit against its former management contractor, its attorneys announced Wednesday night.
The district will also file a professional complaint with the California State Bar against Bruce Greene and the BakerHostetler firm, entities which both previously represented the Tulare Local Healthcare District.
The board also voted to replace a member of the Evolutions Oversight Committee to ensure that at least one woman was part of the committee, which was previously all male, and received an update on the reopening of its hospital — which still lacks a solid reopening date.
New Action, Old Figures
The district will file a counterclaim to a lawsuit filed by Healthcare Conglomerate Associates (HCCA) in Los Angeles County Court. HCCA’s suit came on September 15 — while the company was still advising the district’s board to pursue a loan, and before the district filed bankruptcy.
In the lawsuit, the management company stated that the district had violated the Management Services Agreement, one of multiple contracts between the district and HCCA, in multiple ways.
HCCA previously managed the Tulare Regional Medical Center.
HCCA’s suit claimed that the district had been unable to reimburse the company for operating expenses, and that the company had advanced “over $7,000,000 in funds” to the district through a series of promissory notes.
Those notes later formed the basis for the company to, on September 27, use its authority to sign a Deed of Trust on Evolutions, requiring the repayment of those promissory notes. The only signature on the Deed of Trust was Dr. Benny Benzeevi, CEO of HCCA.
It also claimed that the district was unable to reimburse the company for payments to HCCA’s employees. Under the Management Services Agreement, the employees working at Tulare Regional Medical Center were transferred to HCCA’s employment — and the district would then reimburse the company 130% of each employee’s salary.
The full Los Angeles County lawsuit is available at the end of the article.
The district’s separate complaint with the California State Bar against Bruce Greene and BakerHostetler relates “to California Rules of Professional Conduct Rule 3-700 to obtain the district’s records.”
Those rules state that any attorney whose employment has been terminated must:
“(1) Subject to any protective order or nondisclosure agreement, promptly release to the client, at the request of the client, all the client papers and property. “Client papers and property” includes correspondence, pleadings, deposition transcripts, exhibits, physical evidence, expert’s reports, and other items reasonably necessary to the client’s representation, whether the client has paid for them or not; and
(2) Promptly refund any part of a fee paid in advance that has not been earned. This provision is not applicable to a true retainer fee which is paid solely for the purpose of ensuring the availability of the member for the matter.“
Newly elected TLHCD board members Senovia Gutierrez, Kevin Northcraft and Mike Jamaica had voted to formally engage McCormick Barstow as the district’s new law firm in July — but Greene and HCCA stated that the vote wasn’t valid, as Gutierrez wasn’t formally recognized by the former board.
Throughout July and August, Greene stated the meetings held by the three members weren’t valid, and continued to conduct business on behalf of the district. It’s unclear when Greene stopped conducting work in the district’s name.
On September 29, Greene and his firm signaled the end of their relationship with Dr. Benny Benzeevi and HCCA, according to court filings.
“The Baker Hostetler firm has determined that we must commence termination of our representation of you personally as well as our representation of HCCA, and all entities affiliated with you and HCCA,” Greene wrote in a letter.
“Finally, we again request that you settle your outstanding accounts with the firm forthwith,” the letter ends.
Mandy Jeffcoach, an attorney representing the district, stated the district wasn’t able to provide additional detail on either case.
“No further details are available at this time, as to provide additional details would jeopardize the district’s ability to prosecute its claims,” her statement read. “Additional information will be provided as soon as possible.”
Moving Closer – But No Target Date Yet
Larry Blitz, the interim CEO of the Tulare Regional Medical Center, updated the board on the reopening of the hospital.
There’s still no concrete reopening date yet — but Blitz and Daniel Heckathorne, the hospital’s interim CFO, continue to make progress.
Blitz stated, his group is holding weekly meetings with the California Department of Public Health, and continues to make financial progress, in addition to re-evaluating the hospital’s contracts.
“We finally established 95% of the bank access,” Blitz said, “and we’re finding other accounts we didn’t even know about.”
“We’re making excellent progress on potential funders, and that looks extremely positive right now,” he added.
Evolutions Oversight Solidified
During the meeting, board member Stephen Harrell noted that the board hadn’t appointed any women to the Evolutions Oversight Committee.
Initially, he sought to expand the five-person committee to seven, before the district’s legal counsel noted that the amount of board members was codified in the contract the board signed with Evo Management Company — an expansion would require a new round of negotiations with the entity.
Ed Henry, Harrell’s nominee for the committee, stated that he’d be willing to resign to allow a woman to join the committee. Harrell nominated Linda Crase to take his place.
The board also voted to approve a resolution officially creating the Evolutions Oversight Committee and designating its chairperson, Derek Jackson.
Paul Atlas, one of the managing members of the Evo Management Company, chafed at a provision allowing the board to inspect financial data twice a month
“They have the option of having this [financial] information twice a month,” Atlas said. “That information — to get a [profit-and-loss] and a balance twice a month — is an onerous job for someone to do.
“To ask the person that’s doing this, who has a lot of duties going on right now in that gym to get this thing going, to have twice-a-month financials is not fair to her, and not fair to the Evo Company,” Atlas said. “I have no problem once a month, but twice a month, it’s not valid.”
Northcraft, the hospital district board’s chairman, said he didn’t believe it would be a problem.
“I hope not — because that could be a deal killer,” Atlas said.
The Evolutions Oversight Committee’s board meetings would be held after the fifteenth of every month, but before the hospital board’s — and report monthly to the board.
The board’s next meeting will be held December 20 at 6:30pm.
The Voice has reached out to Dr. Benny Benzeevi and Bruce Greene for comment; comment was not received by publication time. This article will be updated when a response is received.