Northern California hospital sues Sutter Health, claims it illegally skimmed $120M

Calif. hospital claims Sutter Health took $120M

SAN FRANCISCO — A Marin County medical center on Thursday accused Sutter Health of illegally seizing $120 million of the hospital’s money when it was a member of the Northern California nonprofit chain.

In a lawsuit filed in county superior court, Marin General Hospital Corp. in Greenbrae said Sutter Health took an average of $30 million a year from the medical center between 2006 and 2010 for unclear reasons.

“The central issue is the total failure of the old board of directors of this hospital to protect the assets and provide for the future of the hospital,” said San Francisco lawyer Jim Brosnahan, who is representing the hospital. “The new board is determined that they’re going to make this into one of the best hospitals anywhere and they need the money back.”

The lawsuit is the latest blow struck between the Marin Healthcare District, whose board is elected by county voters, and Sutter Health, a not-for-profit network of 3,500 doctors, dozens of clinics and 24 hospitals with revenue of $8.8 billion.

The district, which owns the hospital, and Sutter Health, which leased it for 14 years, previously fought in court in part over which side was responsible for certain building upgrades.

The district and Sutter Health settled the lawsuit by planning to terminate their relationship. Sutter Health returned control over the hospital to the district in June.

Thursday’s legal complaint focuses on the period between the 2006 settlement and the hand-over to the district this summer.

Marin General says its hospital officials, working on behalf of Sutter Health, accelerated money transfers to the Sacramento-based network as the relationship was ending. While transfers of less than $3 million were the rule in past years, Sutter Health took more than $30 million a year after 2006, the complaint argued.

Sutter Health said it could not comment on the specifics of the lawsuit because it has not reviewed it.

But spokeswoman Kathie Graham said Sutter Health was responsive to concerns from Marin General and spent “above and beyond” what was needed to facilitate the hand-over.

“It is indeed regrettable that the Marin Healthcare District has elected to pursue legal action as there is no basis whatsoever for any such action,” Graham said in a statement. “While we had hoped to put the contentious relationship of the past behind us, Sutter Health will now vigorously defend itself and will likewise vigorously pursue all claims against the Marin Healthcare District.”