Healthcare Conglomerate Associates (HCCA) could receive up to $1.8m from the Tulare Local Healthcare District in an agreement the district’s board will vote on tonight.
If approved, the district’s former hospital management partner would release the Deed of Trust placed on Evolutions Fitness & Wellness Center, deem all promissory notes detailing debts to HCCA as paid, and terminate the 2014 option agreement that gave HCCA the option to purchase or lease the district’s hospital or other buildings.
Both HCCA and Tulare would also release all claims against each other, including any which may have been unknown at the time of signing.
The district won’t have to pay any of HCCA’s legal fees for actions up to the time of the settlement agreement, but the district’s insurance would need to continue to defend HCCA in multiple lawsuits, including malpractice claims and a lawsuit brought by Dr. Rebecca Zulim against the hospital and HCCA.
It would be required to indemnify and defend HCCA even if the district’s insurer declined to.
The district board’s president, Kevin Northcraft, said he does not support the agreement. He said that he wouldn’t, however, be opposed to a settlement that would involve both parties simply releasing their claims and walking away from each other.
“I did not even support beginning the discussion — we probably spent $50k in consultant and attorney’s fees to pursue this,” he said. “We do face a lengthy litigation with HCCA; they have claims against us, and we’ve filed counterclaims, and we could spend quite a bit of money over the next several years in fighting the litigation. Though, I think once criminal charges are made, that may expedite resolving some of these civil matters.”
A carve-out would allow both parties to pursue any potential actions against Baker Hostetler, a law firm previously used by the hospital management company; it would also obligate both sides to cooperate in suits against Baker or any of its current or former attorneys.
Baker was preferred by HCCA and its CEO, Dr. Benny Benzeevi, until the firm chose to sever ties with both in September 2017. The firm also represented the Tulare Local Healthcare and Southern Inyo Healthcare Districts during the time that HCCA managed them.
Tulare’s cooperation could be requested soon: in the Southern Inyo bankruptcy case, HCCA has threatened a legal malpractice suit against Baker and Ashley McDow, Inyo’s bankruptcy attorney. McDow previously worked with BakerHostetler until changing law firms.
How To Attend
Tonight’s meeting will be held at 6:30pm in the Tulare Public Library, 475 N M St, Tulare.
Northcraft says he hopes the public will voice their opinion and that a thorough discussion of the potential agreement will result.
“I think it’ll be the worst mistake that the new board could make, so I’m hopeful we have a thorough discussion and eyes are opened in terms of the ramifications of this proposed settlement,” he said.