The Tulare Local Healthcare District has struck three of its former board members — and its prior legal counsel — with a lawsuit.
The Baker Hostetler law firm, attorney Bruce Greene, Dr. Parmod Kumar, former board president Linda Wilbourn, and former board member Richard Torrez were all named in the suit, filed Wednesday, April 24 by attorney Michael Lampe.
Kevin Northcraft, the district board’s president, announced that night that the board voted unanimously to file suit against the five parties.
Greene and the firm have been accused of breaching their fiduciary duty to the district and putting their own interests, and the interests of Healthcare Conglomerate Associates (HCCA) CEO Dr. Benny Benzeevi, above those of the district. Greene and Baker Hostetler represented HCCA and Benzeevi while simultaneously representing the district.
They’ve also been accused of professional negligence, and the district claims Greene committed fraud while attempting to deny Senovia Gutierrez a spot on the board after she won a recall election.
The suit also accuses the former board members of breaching their fiduciary duties to the district when they approved a resolution that gave HCCA the power to borrow up to $22m in the district’s name, with the approval to use district property as collateral, without requiring further approval from the board.
HCCA would later sell some of the district’s property for in $3m in a leaseback deal with Celtic Leasing. The deal has come under scrutiny by the Tulare County District Attorney’s office, which claims that Benzeevi used the funds from the deal to enrich himself.
Gutierrez controversy allegedly dragged out to get loan funds
Greene is accused of drafting the resolution with the knowledge that the funding would be a way to repay his firm $500,000 in past due legal fees. Greene took part in efforts to deny Gutierrez a seat on the board so HCCA could execute the loan and repay the past due amount, the suit claims.
Although Gutierrez was elected to replace Kumar in a special recall election on July 11, 2017, certified on July 18, and sworn in July 25, Greene advised Wilbourn to refuse Gutierrez her seat on the board at a meeting on July 26.
At the time, Wilbourn said that an agenda item declaring her election had been placed on the agenda improperly.
“Because this was a special recall election, not a regular election, there is a question as to whether we have to certify this as a regular board agenda item — where it is on your agenda today is #2, as a chair announcement, it’s not in the body of the agenda,” Wilbourn said at the meeting.
Greene knew Gutierrez was likely to vote with Northcraft and board member Mike Jamaica to rescind the resolution, risking the $500,000 repayment, the suit claims.
“In instructing Wilbourn to refuse to seat Gutierrez as a Board member, Greene breached his fiduciary duty to the District by placing his own financial interests above the interests of the District and the general public,” the filing states.
Although Gutierrez had not been seated, she, Northcraft, and board member Mike Jamaica held board meetings through the summer that Greene contended were illegal.
During those meetings, they voted to terminate the district’s contracts with Greene and the Baker firm; Greene continued to act on the district’s behalf after those votes. The district also rescinded the loan resolution.
Later, Wilbourn informed Greene that she was resigning from the board effective at 12pm on August 23, 2017; the district’s board had a meeting scheduled the same day at 4pm. At this point, Gutierrez’ status had still not been resolved.
Wilbourn’s resignation letter, and notices from the district, were taped to the doors of Evolutions Fitness & Wellness Center.
Via email, Greene notified the board of her resignation less than an hour before the meeting. He also advised the board that Torrez would be unable to make the meeting — meaning the board would lack a quorum, and necessitating the cancellation of the meeting.
One problem for Greene, the suit alleges — there was a quorum.
With Wilbourn’s fresh resignation, and under Greene’s assertion that Gutierrez was not a board member, the only board members left would be Torrez, Northcraft, and Jamaica. Northcraft and Jamaica were both at Evolutions, creating a quorum.
Greene would later send a follow-up at 4pm stating that Wilbourn had actually meant to resign the next day, adding that “there is no quorum possible” because she could not attend the meeting.
According to separate court filings, Wilbourn would later tell investigators with the Tulare County District Attorney’s office that she had always meant to resign on the 23rd; later, she claimed that a private investigator working for HCCA had showed her a text message from her phone stating she wished to delay her resignation.
She told investigators that she didn’t remember sending the text. Greene’s claim that Wilbourn delayed her resignation is also the basis for the district’s fraud claim.
The opinion letter and the check
Although Gutierrez, Northcraft, and Jamaica had voted to rescind the loan resolution, Greene wrote an Opinion of Counsel Letter dated August 28, 2017. It served to assure Celtic Leasing that Benzeevi and HCCA were authorized to execute the loan on the district’s behalf.
It didn’t mention the trio’s vote to rescind the resolution giving HCCA those powers, the suit claims.
Three days later, the money was wired to HCCA, and on September 10, 2017, Baker Hostetler received a $499,727.93 check. On September 14, the firm received an additional $10,000 through a cashier’s check.
On September 29, Greene and Baker moved to terminate their relationship with HCCA.
“…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,” a letter sent by Greene reads.
Days later, alarm bells rang out in Southern Inyo, according to prior Voice reporting.
Another Baker attorney would strike against HCCA in an emergency motion on October 11, acting on behalf of the Southern Inyo Healthcare District. She claimed that HCCA, which managed the Southern Inyo district’s hospital, had presented false financials and mixed funds between Southern Inyo and Tulare.
“On or about Thursday, October 5, 2017, I obtained copies of the bank statements and transactional records for the [Southern Inyo] District’s bank accounts. Upon analyzing the Bank Records, I noted several inconsistencies with certain reports and representations previously provided by HCCA and numerous transactions not authorized by the District Board,” the attorney, Ashley McDow, stated in a declaration at the time.
Could HCCA join the fray?
Even though some of the conduct at the center of the case revolves around HCCA, the Tulare district and HCCA have already executed a settlement agreement.
The only exceptions allowed are for legal malpractice claims that either party have against Baker Hostetler and its attorneys; as part of the agreement, each side agreed to assist the other if they brought a malpractice case.
HCCA recently — and successfully — petitioned a bankruptcy court judge to disqualify McDow from representing the Southern Inyo district, stating that during her time at Baker, she had performed legal work for HCCA, including work on the contract between the district and HCCA. McDow left Baker for a different firm in April 2018, but HCCA attorneys stated that she could not take positions adverse to HCCA after having represented them.
In that case, HCCA hired legal malpractice counsel, and says that it considers all options on the table.
“As to potential affirmative claims against Ms. McDow, Mr. Bruce Greene, and Baker Hostetler, my clients have suffered immense losses and prejudice and are evaluating their rights and available options,” Hagop T. Bedoyan, an attorney for HCCA, told the Voice.
Read the full suit below:
7 thoughts on “Tulare hospital district sues former counsel, board members”
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I hope that the role of Mr. Kumar in the financial disaster of the hospital will be investigated through this law suite and if he is found guilty of malfeasance, he should be appropriately punished. Currently he works in Visalia, including the Sequoia surgical center, carrying on his practice as if non of this ever happened. Justice for Mr Kumar!!
Will a criminal case ever be filed against Benny?
Don’t forget the Chief Financial Officer, Alan Germany. He is as guilty as Benzeevi. I believe he is the one that moved the money around like a con artist shell game.
Still Wondering —
Don’t forget Resolution 852 of the Board of Directors of the Tulare Regional Medical Center, https://bak.ourvalleyvoice.com/2017/06/20/tulare-hospital-board-approves-22m-loan/ which clearly laid a contract which provided HCCA, therefore Benzeevi and/or Germany, to move money around… you know… to cover hospital payroll and other financial obligations. Hardly con artistry, as you malign.
On the surface this Complaint appears a weak suit, if not a sign of a certain desperation and arse covering by The Tulare Local Health Care District; an irony as TLHCD appears to be looking out for its (and its board members’) own interests, the same accusation it pejoratively claim of others.
Interesting, is in this suit, The Tulare Local Health Care District has established HCCA’s, and therefore Benzeevi’s, actual legal right to move funds as Benzeevi did.
The Tulare Local Health Care District suit, as paraphrased by this Our Valley Voice reporter’s article (by Tony Maldinado), says,
“The suit also accuses the former board members of breaching their fiduciary duties to the district when they approved a resolution that gave HCCA the power to borrow up to $22m in the district’s name, with the approval to use district property as collateral, without requiring further approval from the board.
HCCA would later sell some of the district’s property for in $3m in a leaseback deal with Celtic Leasing. The deal has come under scrutiny by the Tulare County District Attorney’s office, which claims that Benzeevi used the funds from the deal to enrich himself.”
The Tulare Local Health Care District has itself now established the lack of criminal INTENT for moving funds by Benzeevi, which the DA apparently incorrectly claims as a felony misappropriation of funds. ‘Fraid not. The Tulare Local Health Care District just established otherwise. This suit, as filed by The Tulare Local Health Care District, clearly establishes its provided permission, and thus LEGAL right as provided to HCCA, and thus as provided to Benzeevi, to move funds in a manner as performed by Benzeevi.
This professional negligence suit is apparently The Tulare Local Health Care District trying to look good, reaffirm its validity, clean house, put a new face on, yet it will be better served for it to in fact meet its mandate to place it’s community it serves first, its own Tulare Local Health Care District board members’ interest second, if placed at all, and simply move on. This in the best interests of everyone.
Better yet, the District Attorney should likewise move on and stop its harassment of Benzeevi. It’s been how long now, and yet, no criminal charge. The DA got re-elected, move on. There is and was no felony intent to defraud the Tulare Local Health Care District. TLHCD itself in written contract established Benzeevi’s legal right to move funds as he did, and it is now taking issue with its previous board members about its own internal decision and representation.
The DA in fact seems to be making it up. What’s that about?