A lawsuit against past members of the Tulare Local Healthcare District board and the district’s former legal counsel has a trial date, nearly two years after the suit was filed. Documents in the case additionally reveal that the Tulare County District Attorney’s office served a warrant on the district seeking documents related to its former counsel in January 2020.
The case, filed in Tulare County on April 4, 2019, is set to ultimately be heard by a Kern County jury on March 8, 2021, after multiple defendants in the case stated they didn’t believe an impartial jury could be found in Tulare County.
The district alleges that the Baker Hostetler law firm and attorney Bruce Greene — both previously used for the district’s legal needs — and former district board members Richard Torrez, Dr. Parmod Kumar, and Linda Wilbourn breached their fiduciary duties to look out for the district’s best interests.
Torrez, Kumar and Wilbourn allegedly did so when they approved a resolution giving the hospital’s former management company, Healthcare Conglomerate Associates (HCCA), the power to borrow up to $22m on behalf of the district under any terms the company found satisfactory.
The district claims Greene and the Baker firm — simultaneously representing HCCA and the district — breached their duties by drafting the resolution with the knowledge that those funds would, in part, be used to repay $500,000 owed to the firm for services provided by Greene or other Baker attorneys.
The Baker firm, Greene, Kumar, and Torrez have all denied the allegations in court filings. In a recent filing by attorneys for Greene and the Baker firm, the claims are alleged to be part of a purely political dispute.
“At its core, the case is really a political dispute between current and former board members of TLHD. TLHD’s former board, led by Dr. Parmod Kumar, wanted to modernize the aging TLHD hospital with new facilities, including completion of a hospital tower to attract better medical talent, and additionally wanted to outsource talent, and additionally wanted to outsource day-to-day management and operations of the hospital to a management group called Healthcare Conglomerate Associates, LLC (“HCCA”),” Harlan Watkins, an attorney for Greene and Baker Hostetler, wrote.
“TLHD’s current board, led by professional politician Kevin Northcraft, repeatedly clashed with the former board over virtually every decision made by the former board and eventually replaced Kumar after a recall election with their own hand-picked candidate, Senovia Gutierrez,” Watkins continues.
The Latest Warrant
Investigators with the Tulare County District Attorney’s office requested copies of documents relating to both Greene and the Baker firm in a warrant dated January 23, 2020. The warrant was approved by Tulare County Judge Nathan G. Leedy.
District attorney’s office investigators have been investigating actions taken at the Tulare hospital as far back as October 2017, when one of the DA’s first publicly-known warrants was served on the Southern Inyo Hospital, another facility previously managed by HCCA.
The warrant states that the “items to be searched for” included “evidence as it relates to this investigation and the allegations of embezzlement and misappropriation of funds and/or property” and other offences, including, amongst others:
- misappropriation of public funds, a felony,
- procur[ing] an unlawful loan, a felony,
- fraudulently altering accounts, a felony,
- unlawful willful refusal to transfer public funds, a felony,
- unlawful willful refusal to pay or transfer public funds to an officer, a felony,
- conspiracy to defraud, a felony,
- knowingly influenc[ing] a government decision for financial gain, a misdemeanor
The warrant references the same internal case number used in other warrants related to the Tulare Local Healthcare District, including warrants served against HCCA CEO Dr. Benny Benzeevi. Investigators have also served other warrants on the district, on the Southern Inyo Hospital, and on former HCCA CFO Alan Germany.
Investigators requested records of a closed session meeting in which Benzeevi was permitted to hire a general counsel for the board; records of any documents presented to the Tulare board regarding loans made by the Tulare district to the Southern Inyo Hospital; “any and all documentation, notes, or communications relating to the April, 2017, closed session presentation of the 2016 audit to the Board.”
Among other documents, investigators also sought any communications from the Baker firm regarding a $3m loan made against the district’s assets, of which Benzeevi ultimately, personally, received $2.4m. The Baker firm received funds from that loan as well.
The Tulare County District Attorney’s office has also acted against Benzeevi in a Tulare County court case, seizing $937,000 in cash from his bank account; a Tulare County judge ruled the district attorney’s office could keep the funds while he is under investigation.
Benzeevi has appealed that case; in an appellate court filing, the district attorney’s office states that a “filing decision will be made this year, prior to August 24th, 2020.”
No impartial jurors?
Greene and BakerHostetler filed for the case to be moved out of the county for two reasons: they don’t believe an impartial jury can be found in Tulare County, and state law allows for a defendant to request a transfer of venue when sued by a local agency in the agency’s home county.
The district was mired in some level of controversy for years, for reasons including alleged hospital mismanagement, the board’s relations with medical leadership, and the district’s tower construction project — dubbed the “Tower of Shame” by the Tulare County Grand Jury — which is integral to the hospital’s future due to state seismic requirements.
Those controversies have played out in the regional press, including the Valley Voice, Visalia Times-Delta, The (Fresno) Business Journal and ABC30.
In a declaration by Greene, he cites the Voice, Times-Delta and Business Journal coverage as reasons why surrounding counties couldn’t be guaranteed to have impartial jury pools.
“Given the incredibly hostile environment Dr. Benzeevi and HCCA was met with through the media, social media and in meetings by community members, it is a certainty B&H and I will be met with similar hostility in Tulare County,” Greene wrote.
Greene and his firm petitioned for the case to be moved outside of the Central Valley completely — to Southern California.
“A neutral venue convenient to the B&H Defendants would be Ventura County, Santa Barbara County and Orange County. Counties adjacent to Tulare County would not be neutral counties given the close proximity to Tulare County and the shared local press,” a filing read.
All others involved — attorneys for Wilbourn, Torrez, Kumar, and the district — asked that the proceedings be held in an adjacent county to avoid burdening them, and potential witnesses, with long drives.
In a declaration, Kumar told the court that he believed Kern County would be the best venue for the proceeding.
“There is a close proximity and overlap regarding the medical providers and users of medical services within Tulare County, Kings County and Fresno County,” Kumar wrote. “I have also heard and witnessed much in the way of publication and discourse in these three communities regarding the issues presented by plaintiff’s complaint, and I believe that as a result, there is a significant risk of predisposition to bias and prejudice and a tainted jury pool likely to impact the defendants in obtaining a fair trial in this case.”
After voters recalled Kumar from the district board and elected Senovia Gutierrez in his place, the suit claims Greene and the firm worked to delay her from being seated on the board.
The alleged motivation: Gutierrez would have voted with other board members opposed to the resolution to grant HCCA’s authority to seek loans before they had a chance to finalize one, preventing the company from being paid.
Greene told the board at the time that though Gutierrez had received the highest number of votes in the recall election and was sworn in on July 25, 2017, she would not be a member of the board until the board formally recognized her as one, a reading of the California Elections Code that the Tulare County District Attorney disagreed with — and later filed suit over.
That level of recognition from the existing board would not come until September 27, 2017. HCCA had, by that point, executed a $3m loan against the district asset’s in August 2017, and received the funds from that loan on August 31, 2017. On September 10, 2017, the Baker firm received $499,727.93 from the funds, and received another $10,000 on September 14.
Greene exchanged emails with HCCA CFO Germany in September 2017 regarding a potential bridge loan and sale/leaseback of the Evolutions Gym in Tulare with MedEquities Realty Trust, a real estate investment company.
According to documents previously filed in the United States Bankruptcy Court, that arrangement would have provided the district with $20m: $8m in a temporary bridge loan, and $12m in the sale/leaseback arrangement.
Germany asks Greene to attend a meeting in Tulare between HCCA officials and MedEquities’ President; Green chafes, given the expense of coming from Los Angeles to Tulare.
“Who is going to pay for this,” Greene asks in the email. “And please advise as to the funding of either Celtic or Leasing Innovations. I have a meeting with management this morning and although I have asked several times, I am not getting straight answers.”
“TRMC will pay,” Germany replies. “If all goes according to plan, significant funding will be in place soon. Celtic has funded, but Leasing Innovations has not yet.”
“If Celtic has funded I need to be paid today. I am not waiting for [Leasing Innovations] to fund. This is CRITICAL and IU have been promised,” Green responds.
Elected, But Not A Board Member?
While a notice of Gutierrez’ election was agendized for the district’s July 26, 2017 board meeting as a “Chair Announcement,” that may not have been the proper place or wording for it on the agenda, Wilbourn, then the hospital board chair, told the public at the time.
“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 July 26, 2017 meeting.
In an answer to the lawsuit, Wilbourn claims that analysis came to her from Greene.
“Mr. Greene indicated that because the certified vote was not on the July 26, 2017 agenda, it should be placed on the August 2017 meeting agenda for ratification by the Board, and that Ms. Gutierrez could not be seated until then,” a legal filing by Wilbourn’s attorney reads. “[…] Defendant, relying on the advice of Mr. Greene, made an announcement to the effect that the ratification of the election results would be placed on the August 2017 meeting agenda and that Ms. Gutierrez could be expected to be seated as a Board member at that meeting.”
In the time between July 26, 2017 and September 27, 2017, Gutierrez and two other board members, Mike Jamaica and Kevin Northcraft, held a series of parallel board meetings that Greene and HCCA dismissed as shams: neither Wilbourn nor Torrez attended the meetings, though they were invited to do so by the trio. During those meetings, the trio voted to revoke HCCA’s authority to seek loans under the district’s name and credit.
“You can obviously meet as often as you want and with whomever you want, but none of these meetings are lawful meetings of the Board of TRMC, and no actions taken at these meetings will have any legal force or effect unless a quorum is present (which does not mean you two and Ms. Guttierez [sic]),” an August 8, 2017 email from Greene to Northcraft, Jamaica, Gutierrez, Wilbourn and Torrez reads.
Wilbourn resigned from the board on August 23, 2017, the same day as a scheduled board meeting. Her resignation was effective as of noon of that day, she wrote in a letter addressed to Greene. Greene notified the board of her resignation via email and the letter would later be posted on the doors of the Evolutions Fitness & Wellness Center, where the meeting was to have been held.
The meeting that day was cancelled for lack of a quorum, according to a notice posted alongside the letter: Torrez was unable to attend, and Northcraft and Jamaica did not constitute a quorum of the board.
The district alleges that Greene realized that, under the rationale Gutierrez was not a board member, Jamaica and Northcraft would actually constitute a quorum of the board.
He later sent an email to the board stating Wilbourn delayed her resignation to August 24, something Wilbourn says she didn’t do and the district claims was false.
In an October 2019 filing, Wilbourn revealed that she “does recall that during a telephone conversation on August 23, 2017, Greene told [Wilbourn] that he had begun preparation of paperwork while she was a member of the board of directors, that he needed to complete the paperwork while she was a member of the board of directors and that he asked [Wilbourn] to delay her resignation from the board of directors.”
“[Wilbourn] further recalls that Greene asked her to send him a note delaying her resignation for one day,” the filing reads.
Wilbourn had previously told the Tulare County District Attorney’s office that she “had not requested to move the time of her resignation forward to the 24th and she had no reason to do so,” according to a 2018 filing from the DA’s office in a separate case regarding the $3m in funds.
According to the 2018 filing, a private investigator for HCCA CEO Dr. Benny Benzeevi came up to her after a court date and showed her a text message she allegedly sent on August 23 delaying her resignation. She states in the 2018 filing and in her October 2019 filing that she does not recall sending such a message to Greene.
Greene did not return a request for comment by publication time. If one is received, this article will be updated online.
The Tulare County District Attorney’s office declined to comment on the warrant or investigation for this story.