The Tulare Local Healthcare District will vote Wednesday on whether to send a complaint against its former attorney, Bruce Greene, to the State Bar of California.
Greene is a Los Angeles-based partner at the firm Baker Hostetler. He and the Baker firm simultaneously represented the district and Healthcare Conglomerate Associates (HCCA); HCCA previously managed the district’s hospital, the Tulare Regional Medical Center. The Baker firm and attorneys under its employ also, for most of the same period, represented the Southern Inyo Healthcare District, which HCCA also managed.
The Baker firm also represented Dr. Benny Benzeevi, HCCA’s CEO, and other companies he headed; the firm termed Benzeevi, HCCA, and his other companies the “Benzeevi Group” collectively.
The complaint accuses Greene of violating the bar’s Rules of Professional Conduct by failing to disclose, to the Tulare district, conflicts that existed between the district and HCCA. Greene began representing the district in a limited capacity in 2014, then he and the Baker firm served as general counsel for the district from May 2015 until late 2017.
“A 2014 conflict waiver prepared by Baker simply advised that, ‘The interests of the Benzeevi Group and the District are presently aligned with respect to the Bond Dispute, and at present there are no disputes between the District and either HCCA or Medflow under the above referenced contracts.’,” the complaint reads. “A 2015 conflict waiver prepared by Baker also failed to identify any potential conflict.”
Sherrie Bell, the board’s former chairman, signed both the 2014 and 2015 conflict waivers.
The district also alleges Greene was involved in “unlawful efforts to obstruct the seating” of Senovia Gutierrez, a Tulare hospital board member voted in as part of a recall election. Greene’s alleged motivation was to assist Benzeevi in selling off hospital assets under a $3m leaseback agreement — with larger transactions in the works — in order to be repaid for past due legal debts.
How to participate
Due to public health concerns, only 10 attendees will be allowed at the district’s board meeting in person at the Evolutions Plaza, 1425 E. Prosperity Avenue, Tulare.
However, the meeting will be available for participation over the phone, by dialing in at +1 (571) 317-3122 with access code 767-486-837, or joining online via GoToMeeting at https://global.gotomeeting.com/join/767486837.
The meeting will be held Wednesday, March 25, at 6:30pm.
Kern County case
Mike Lampe, an attorney representing the district in a separate civil suit against Green and the Baker firm, wrote the bar complaint. The allegations are similar to those the district levied in the civil suit; that case is set to be heard by a Kern County jury on March 8, 2021. For more details, click here.
Greene and the Baker firm, through their attorney, have denied the civil allegations, stating that the allegations are part of a larger political fight.
“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 BakerHostetler, 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.
UPDATE: Neither Greene nor his attorney provided direct comment on this case. However, James A. Murphy, an attorney for Green and the Baker firm, forwarded a letter sent to Lampe and the Tulare Local Healthcare District.
“It is obvious that the District’s action in publishing the proposed State Bar Complaint is a mere litigation tactic designed to pressure the firm and Mr. Greene in the ongoing lawsuit which was filed more than one year ago and is now pending in Kern County. The draft complaint is factually inaccurate and legally unsupportable. Your decision to make public a document that is usually filed privately with the Bar is very telling. Your actions certainly raise issues for the District’s General Counsel under RPC Rule 3.10,” Murphy writes.
“If the District desires to pursue a Bar complaint, normal course of business would be to consider such action in executive session and then privately file it with the Bar. The fact of making the proposed complaint public is evidence of the District’s bad faith and may subject the and its Board members to a damage claim by Mr. Greene and the law firm, which they expressly reserve the right to make,” his letter continues.
“Call it something like Chair announcement”
Gutierrez’ status as a member of the board was thrown into limbo between July 26, 2017 and September 27, 2017, after Greene found the wording and placement of an agenda item announcing her election to be insufficient.
A new email reveals that on July 21, 2017, Greene suggested the placement and wording of the item in an internal Baker firm email. After Benzeevi forwarded the news of Gutierrez’ election to Greene and Lucas Paule, asking them to agendize it for the next district board meeting, Paule asked Greene where the announcement should be placed on the July 26 meeting agenda.
“Bruce, would this be added to the open session,” Paule asks. “I’m not aware of the details of this special election, do you have any more information I can add to the description?”
“This was part of recall. Just have the chair announce that as a result of the recent election dr [sic] Kumar is no longer a board member and he has been replaced by Senovia Gutierrez,” Greene replies. “I don’t see any reason for board action to be taken. It can be fit in right after the call to order. Call it something like Chair announcement.”
The announcement of Gutierrez’ election was, indeed, later placed under a “Chair Announcement” header.
While Gutierrez was due to be seated at the district’s July 26, 2017 meeting, Linda Wilbourn, the district board’s president at the time, told the public there was “…a question as to whether we have to certify this as a regular board agenda item,” or as a “chair announcement.”
Wilbourn has stated Greene was the one who told her the announcement of her election needed to be placed under the regular agenda.
“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 filing in the Kern County case reads.
Northcraft and Mike Jamaica, two other board members allied with Gutierrez, either did not show up to the meeting or did not take their seats at the dais; and, under the standard that Gutierrez was not a board member, no meeting could be held because a quorum of the board was not present.
While Gutierrez would later hold board meetings with Northcraft and Jamaica — including ones in which the three voted to fire Greene and Baker from representing the district — it was Greene and HCCA’s view that Gutierrez was not a legitimate board member until the full board formally recognized her as one.
New documents coming to light
Though the messages between Paule and Greene discussed the seating of a district board member and the content of a district meeting agenda, they weren’t provided to the district by BakerHostetler after the district chose McCormick Barstow as its new law firm.
Instead, they were “inadvertently produced” at the deposition of Gutierrez for the Kern County civil suit on January 22, 2020, according to a letter from Greene’s attorney, Geoffrey T. Macbride.
Because Benzeevi forwarded the message of Gutierrez’ election to Paule and Greene, the emails were actually attorney-client communications between Benzeevi and the two attorneys, according to Macbride.
“Production of the Privileged Communications at the deposition was inadvertent and did not constitute a waiver of either the attorney-client privilege or the protections provided by the work product doctrine. The communications are subject to the attorney-client communication privilege because they are confidential communications between a client and his attorney; in this case Dr. Benzeevi and Mr. Greene or Mr. Paule,” Macbride wrote.
Lampe filed a motion with the Kern County court asking the judge to rule the email should be allowed in the case.
Attorneys for Baker and Greene did not attempt to challenge Lampe’s motion in the Kern County court.
District billed $24k in DA case
As months passed and Gutierrez’ status remained in limbo, even the Tulare County District Attorney’s office became involved, going so far as to file a writ of mandate case in the Tulare County Superior Court in September of 2017. The goal: forcing Richard Torrez, a former district board member, to recognize Gutierrez’ position on the board, ending the confusion over her status.
After the hearing, Marshall Grossman, an attorney representing HCCA, asked the Voice how Gutierrez, Northcraft and Jamaica could afford to rally the firm of McCormick Barstow and the Tulare County District Attorney’s office into bringing the case to court.
“Who is financing the fees and costs of so many private lawyers and the district attorney’s office?” Grossman, an attorney with the Orrick law firm, asked at the time. “It’s highly unlikely that they are being paid by three newly elected members of the board.”
The district likely bore the cost of McCormick Barstow’s representation.
The district was also expected to bear the cost of Baker’s attorneys opposing the McCormick attorneys: an invoice addressed to the district asks for $24,815; charges include limousine transportation from Los Angeles to the Tulare County Superior Court and back, hourly charges for attendance at the proceedings, replying to McCormick filings, and coordinating with Orrick attorneys on HCCA filings.
“Even though Greene and Baker were still acting as legal counsel for HCCA, and even though they were both named as a real parties of interest in the D.A.’s writ proceeding, neither requested a conflict waiver from the District while they actively coordinated with the Orrick firm to work against the District’s interests, and promote the interests of themselves and HCCA in the writ litigation,” the bar complaint reads.
“The District contends that Greene and Baker working hand-in-hand with HCCA lawyers to advocate a position not only detrimental to the District, but in disregard of basic democratic norms, and then having the audacity to bill the District for limo rides to the courthouse, involves moral turpitude, dishonesty or corruption, constituting cause for discipline under Business and Professions Code §6106,” it continues.
Alleged gain by obstructing Gutierrez
Because Wilbourn and other board members had voted in favor of a resolution that allowed HCCA to seek loans without further approval by the board, the district alleges that Greene and Baker purposefully held Gutierrez’ status in limbo in order to ensure they were repaid debts owed by HCCA. Gutierrez, Northcraft and Jamaica opposed the resolution.
“Most egregiously, between July 26 and September 26, 2017, Greene engaged in unlawful efforts to obstruct the seating of a duly elected Board member, intentionally misrepresented himself as District counsel at a time when he knew he and his firm had been terminated, and assisted Benzeevi in unlawfully selling $3 million of District assets,” the bar complaint reads, “of which $500,000 was funneled to the Baker law firm through a Benzeevi-owned limited liability company. The District contends that these deceitful acts involve moral turpitude, dishonesty or corruption, proscribed by Business and Professions Code §6106.”
The Tulare County District Attorney’s office has claimed the transaction was illegal and only for the benefit of HCCA and Benzeevi — not the district.
Wilbourn later resigned from the board on the day of the August 23, 2017 board meeting. She claims that Greene asked her to delay her resignation in order to “complete […] paperwork while she was a member of the board of directors,” and while she stated in testimony that she did not tell him that she wanted to delay her resignation, the district claims she later sent him a text message delaying her resignation until August 24, 2017.
“My resignation will be effective on August 24 at 8:00am. Linda Wilbourn,” a screenshot shows. “I will not be able to attend tonight’s meeting.”
“I just sent Everyone an email,” Greene replied.
The same day, August 23, Greene asked Wilbourn to sign an Opinion Certificate required for the $3m leaseback transaction.
“Linda – I am attaching a draft of an Opinion Certificate which I need to render my opinion for this new equipment lease/finance transaction,” Greene wrote. “I am also attaching a copy of the lease and a draft of my opinion letter, since those are referenced in the Opinion Certificate. Would you kindly sign and email the Opinion Certificate back to me as soon as possible.”
Greene would later swap out key sections of the documents Wilbourn signed, the district claims.
While the draft letter provided to Wilbourn stated that HCCA CEO Benzeevi was “authorized to execute, on behalf of [the district], any and all documents related to the Lease…,” and does not attribute that opinion to any other entity, the final letter given to Celtic Leasing states that the Baker firm’s opinion for that was “based solely upon the Opinion Certificate [the document Greene asked Wilbourn to sign] and the Allan Law Office opinion.”
“This material change was never communicated to Wilbourn, who was clearly relying upon Green and Baker for these legal conclusions.”
Similar allegations levelled by HCCA in Inyo case
Greene and the Baker firm ended their relationship with Benzeevi and HCCA in late 2017.
In a letter dated September 29, 2017, Greene wrote to Benzeevi stating that 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.”
Another attorney with the Baker firm, Ashley McDow, filed an emergency motion with the United States Bankruptcy Court seeking to terminate HCCA’s contract with the Southern Inyo Healthcare District just weeks later on October 17, 2017; McDow and the Baker firm had stayed with Southern Inyo, though, ironically, it had been HCCA that introduced the Baker firm to the Southern Inyo Healthcare District.
McDow’s motion accused HCCA of misusing the Inyo district’s funds and of “pervasive misconduct,” arguing that the United States Bankruptcy Court needed to terminate HCCA’s contract immediately.
HCCA and Benzeevi later argued that McDow’s actions at that time, and since, represented a conflict of interest. By the time they brought their challenge, McDow had since moved on to another firm — but even then, because McDow had worked on matters relating to HCCA at Baker, she and her new firm were disqualified from representing Southern Inyo.
Judge Frederick E. Clement, in the Inyo case, found that Baker’s waivers between HCCA and the Inyo district were “ineffective, lacking full disclosure, and that they were not informed.”
In that case, the waivers had not been updated to reflect any changes in circumstances between the two parties. While the relationship between HCCA and the Inyo district was harmonious at the time the waivers were signed, a conflict arose that “became actual and very concrete and, frankly, somewhat acrimonious,” Clement found.
Clement also found other reasons to disqualify McDow, including a lack of timeliness in submitting the waiver and “insufficient evidence of circumstances surrounding the waiver,” such as a lack of time for reflection.
“The Court’s carefully reasoned decision to disqualify Ms. Ashley McDow (formerly of Baker Hostetler) and Foley Lardner is integral to the protection of HCCA, Vi Healthcare Finance and Dr. Benzeevi, and honors the law and equity’s abhorrence to conflicts of interest and violation of the duty of loyalty to one’s clients,” Hagop T. Bedoyan, an attorney representing HCCA, told the Voice at the time. “As to potential affirmative claims against Ms. McDow, Mr. Bruce Greene, and BakerHostetler, my clients have suffered immense losses and prejudice and are evaluating their rights and available options.”
As part of a settlement agreement between HCCA and the Tulare district, each side agreed to assist the other “in any lawsuit that either Party brings against Baker Hostetler and any and all attorneys who were, or who may or may not currently be, part of or affiliated in any way with Baker Hostetler for actions representing the [Tulare] District, the HCCA Parties, or Southern Inyo Healthcare District.”