Taxpayers Take First Step In Lawsuit To Stop Hospital Deal

[Jim O'Bryan]

Margaruitte Harkness and Attorney Chirs DeVito.

This was sent to City Hall this morning...

Taxpayer Request for Legal Action to Preserve Lakewood Hospital

Dear Law Director Butler:

I represent Mr. Edward M. Graham, Esq., Mr. William J. Grulich, Ms. Deborah "D.L." L. Meckes, Marguerite Harkness, and all residents and taxpayers of the City of Lakewood. This letter constitutes the written request pursuant to Article VII, Section 1 (G), of the 2nd Amended Charter of Lakewood and Ohio Revised Code ("R.C.") 733.59 on behalf of my clients that you, as Law Director of the City of Lakewood, promptly apply to a court of competent jurisdiction for relief to preserve and ensure the continued operation of Lakewood Hospital for the benefit of the Lakewood community.

My clients are forced to take this action because of failed leadership. They are committed to holding the Mayor and City Council, and the leadership of Lakewood Hospital Association, Lakewood Hospital Foundation, and the Cleveland Clinic Foundation responsible and accountable for their actions and omissions in managing Lakewood Hospital and failure in being good stewards of these valuable assets in our community. The only course of action the City should be pursuing is to protect these assets and manage them in the best interests of the health and welfare of the citizens of the City of Lakewood. The City needs to ignore the strategic plan of the Cleveland Clinic and begin to focus on the economic and healthcare interests of its residents. The above named taxpayers request that you seek:

• Relief under Article VII, Section 1 (D), of the 2nd Amended Charter of Lakewood and Ohio R.C. 733.56 for an injunction to enjoin abuses of the corporate power of Lakewood and execution or performance of any contract in contravention of the 2nd Amended Charter of Lakewood and the Ordinances of the City of Lakewood relating to the preservation and continued operation of Lakewood Hospital;

• Relief under Article VII, Section 1 (E), of the 2nd Amended Charter of Lakewood and Ohio R.C. 733.57 for specific performance of the Amended and Restated Lease by and between the City of Lakewood and the Lakewood Hospital Association, dated December 23, 1996, as authorized by Ordinance No. 51-96 and the Definitive Agreement by and between the Cleveland Clinic Foundation and the Lakewood Hospital Association, dated December 1996; and

• Relief under Article VII, Section 1 (F), of the 2nd Amended Charter of Lakewood and R.C. 733.58 for a writ of mandamus to compel City of Lakewood Officials, including the Mayor and Council, the performance of their duty under the 2nd Amended Charter of Lakewood and the Ordinances of the City of Lakewood to ensure the preservation and operation of Lakewood Hospital for the benefit of the Lakewood community.

Under the authority of Article XV of the Charter of the City of Lakewood and through adoption of Sec. 907.03 of the Codified Ordinances of the City of Lakewood, Council has declared "it necessary and conducive to the public health and general welfare to establish and it hereby does establish a municipal hospital of the City to be known as The Lakewood Hospital." As authorized by Ordinance No. 51-96, the City of Lakewood and the Lakewood Hospital Association entered into an amended and restated lease permitting the Hospital Association to enter into a definitive agreement with the Cleveland Clinic Foundation pertaining to the operation of Lakewood Hospital. The lease and agreement provide for operation of the Lakewood Hospital through the end of 2026.

The obligations and duties under the 1996 Amended and Restated Lease and Definitive Agreement as authorized by Ordinance No. 51-96 have been and are currently being evaded and/or violated. Among other things, the hospital facilities are not being maintained and services have been significantly diminished or eliminated. Moreover, the Lakewood Hospital Association together with the sole member of the Lakewood Hospital Association (i.e. the Cleveland Clinic Foundation) has assented to the referral and diversion of patients to other hospital facilities undermining the financial viability of Lakewood Hospital. Further, the Lakewood Hospital Association, and the Cleveland Clinic Foundation has provided notification in writing and by other means to patients, Lakewood Hospital employees and the greater Lakewood community that Lakewood Hospital will be closing. The above named taxpayers assert that City of Lakewood officials, including the Mayor and Council, have failed and continue to fail to fulfill their duties to ensure compliance with the 2nd Amended Charter of the City of Lakewood, the Codified Ordinances of the City of Lakewood and Ordinance No. 51-96 and the 1996 Amended and Restated Lease and Definitive Agreement.

These abuses of the corporate power of Lakewood and failure in the performance of duties are compounded by the fact that the Mayor and the two Council members who serve as Ex Officio Members of the Lakewood Hospital Association voted in favor of the January 14, 2015, Letter of Intent, rather than seeking recusal from the vote. That vote was in direct conflict with the exercise of their duties as public officials. As such, it is an abuse of the corporate powers of Lakewood for these three public officials to continue to participate in the consideration of those matters advanced in the Letter of Intent. It is further an abuse of the corporate powers of Lakewood for the Mayor to participate in consideration of this matter as the items outlined in the Letter of Intent benefit the Lakewood Hospital Foundation, Inc., to which the wife of the Mayor has a fiduciary responsibility as a member of the Board of Trustees. Similarly, it is an abuse of the corporate powers of Lakewood for Councilman Ryan Nowlin to participate in consideration of this matter as the items outlined in the Letter of Intent benefit the Lakewood Hospital Association, to which his law partner has a fiduciary responsibility as a member of the Board of Trustees. (The above named taxpayers would also like confirmation as whether or not the law office of which Councilman Nowlin is a partner is providing legal counsel to the Lakewood Hospital Foundation, Inc.)

My clients request that you, as Law Director for the City of Lakewood, bring an action in the name of the City of Lakewood to defend the Charter and Ordinances of Lakewood and to protect Lakewood Hospital and the economic interest of our community. If you fail to bring such action and include the necessary parties (including but not limited to the City of Lakewood, its officials, the Lakewood Hospital Association, the Cleveland Clinic Foundation and the Lakewood Hospital Foundation, Inc., my clients intend to enforce a right of action on behalf of and for the benefit of the public by pursing a taxpayer claim under Article VII, Section 1 (G) of the 2nd Amended Charter of Lakewood and R.C. 733.59 for the relief outlined above. In the event, that you, as Law Director, fail to bring such an action by the end of business on Friday, May 1, 2015, a taxpayer claim will be commenced by the undersigned on behalf of the above listed clients.

The actions (including misfeasance and nonfeasance) of Lakewood City Officials and of the Lakewood Hospital Association, together with the Cleveland Clinic Foundation, the sole member of the Lakewood Hospital Association, are causing immediate and irreparable harm to the continued viability of Lakewood Hospital. These actions negatively impact the health and welfare of the citizens of Lakewood and require immediate attention.

Thank you for your consideration.

Sincerely,
s/ Christopher M. DeVito
Christopher M. DeVito, Esq.

CC. Via Email ONLY:
Mayor Michael P. Summers
Ward 4 Councilperson Mary Louise Madigan, President of Council
Councilperson at Large Thomas Bullock
Councilperson at Large Ryan Nowlin
Councilperson at Large Cindy Marx
Ward 1 Councilperson David W. Anderson
Ward 2 Councilperson Sam O'Leary
Ward 3 Councilperson Shaun Juris


Margaruitte Harkness, Ed Grahame, Chris DeVito and State Senator Michael Skindell.


Crowd building.




.

[Michael Deneen]

You can see my highly amateurish photos of the press conference in this LO Photo Gallery.
There is a cute dog, so it's worth the click.

http://www.lakewoodobserver.com/photobl ... ence-41415

[marklingm]

You can see my highly amateurish photos of the press conference in this LO Photo Gallery.
There is a cute dog, so it's worth the click.

http://www.lakewoodobserver.com/photobl ... ence-41415 [Emphasis added.]

[Jim O'Bryan]

City Hall and Law Director Kevin Butler responds...

The .pdf - http://media.lakewoodobserver.com/media/docs_1430928870.pdf

LAW DEPARTMENT OFFICE OF PROSECUTION
12650 Detroit Avenue, Lakewood, Ohio 44107
(216) 529-6030 | Fax (216) 228-2514
www.onelakewood.com law@lakewoodoh.net


KEVIN M. BUTLER DIRECTOR OF LAW
PAMELA L. ROESSNER CHIEF PROSECUTOR
JENNIFER L. MLADEK CHIEF ASSISTANT LAW DIRECTOR
MANDY J. GWIRTZ ASSISTANT PROSECUTOR/ ASSISITANT LAW DIRECTOR

May 1, 2015

By e-mail and regular mail

Christopher M. DeVito, Esq.
Morganstern, McAdams & DeVito Co., L.P.A. 623 West St. Clair Ave.
Cleveland, Ohio 44113 chrismdevito@gmail.com

Re: Litigation Demand

Dear Mr. DeVito:

I am writing to respond to your correspondence of April 14, 2015 in which you demand that I initiate litigation on behalf of the city of Lakewood to ensure the continued operation of Lakewood Hospital. I have read this correspondence, and the inflammatory and accusatory language you use suggests you do not appreciate that the city is attempting to identify the best course of action for Lakewood’s residents and to determine what the future holds for Lakewood Hospital. While you are anxious to involve the city of Lakewood in a lawsuit (which could cost hundreds of thousands or even millions of taxpayer dollars), you fail to identify any causes of action or specific factual support for the claims that could potentially support such litigation.
This failure is significant, particularly in light of the current status of the city’s consideration of the proposal before it. At this point in time, the city has done nothing more than enter into non- binding discussions with the Lakewood Hospital Association and Cleveland Clinic to explore options for future health services benefiting Lakewood residents. No one has drawn a line in the sand, and no one has suggested that litigation is imminent or even necessary.

After careful review and analysis of your demand for litigation, I have determined that your correspondence is based on a number of misleading and conclusory allegations. Specifically, you identify a number of alleged conflicts of interest on the part of certain Lakewood public officials, and you fail to identify any causes of action or the alleged facts upon which those claims would


be based. Because of these and other deficiencies, I respectfully decline to bring your proposed lawsuit at this time. I will address some of the concerns you raise below.

No Conflicts of Interest Exist.

Your letter contrives a number of purported conflicts of interest that stem from Mayor Summers’ and Councilmembers Mary Louise Madigan and Thomas Bullock’s service as ex-officio members of the Lakewood Hospital Association’s board of trustees. As you may know, this arrangement is nothing new (it has been in place since 1986, when your client, Mr. Graham, himself served on city council), and these individuals serve on the LHA board to ensure that the city’s interests are represented and considered at LHA board meetings. This long-standing relationship has been examined and sanctioned by the Ohio Ethics Commission.

As historical background, Lakewood Hospital requested guidance from the OEC in 1986 as to whether conflict of interests existed under the Ohio ethics laws that would prevent the mayor and council members from serving as ex-officio members of the LHA board. The OEC provided an advisory opinion to Lakewood Hospital, making it clear that such service was permitted.1 With this understanding, our elected officials have protected our residents’ best interests through their service on the LHA board. Please review the decision; it should resolve any of your concerns about a prohibited conflict of interest arising from our Lakewood officials’ service on the board.

Nor does the service of certain colleagues or family members of the Mayor and Councilman Ryan Nowlin as unpaid, volunteer trustees on the board of the LHA and Lakewood Hospital Foundation create any conflict of interest. As you may know, Wendy Summers’ service on the LHF board predates Mayor Summers’ election as mayor of Lakewood. Moreover, as stated above, she does not derive any compensation or personal gain from her service on the board.
Similarly, the fact that Councilman Nowlin’s colleagues serve on the LHA board and on the board of LHF creates no conflict of interest. Neither individual is paid for service on the boards, and Councilman Nowlin’s firm is not representing either LHA or LHF in connection with the future plan for Lakewood Hospital currently under consideration by Council.

Finally, it bears repeating that City Council is merely reviewing and considering a non-binding proposal (which was not signed onto by the city) in relation to the future of Lakewood Hospital. Because there have been no official actions taken by our elected officers with respect to this proposal, your suggestion of a lawsuit to redress any action is entirely without merit.

We have sought additional guidance from the OEC in these matters, and will await its analysis of these issues. Regardless, it makes little sense to prepare a lawsuit based upon any issues stemming from the mayor’s and councilmembers’ obligatory service on the LHA board, Mrs.
Summers’ unpaid, volunteer service on the LHF board or Councilman Nowlin’s colleagues’ unpaid, volunteer service on both the LHA and LHF boards.




1 I have enclosed a copy of the September 3, 1986 advisory opinion.



There is no Basis to Initiate Legal Action Preventing the City from Considering Options for the Future of Lakewood Hospital.

The city is still trying to determine what the future holds for Lakewood Hospital. Rather than file a lawsuit that has a questionable chance of success (at best), the city has chosen to work with the Cleveland Clinic and the LHA collaboratively to explore all potential options for Lakewood Hospital. The Mayor and City Council are currently conducting due diligence on the option of replacing Lakewood Hospital with a comprehensive family health center administered by the Cleveland Clinic, along with the formation of a community wellness foundation that would be intended to serve the health and wellness of Lakewood’s residents for years to come.

You have intonated that you were made to believe this proposal was already approved by the city, which comes as quite a surprise to me. This letter should disabuse you of that notion. It is not yet clear whether the proposal will be approved (a decision that will be made by the elected public officials of Lakewood through a deliberative legislative process), but we can certainly agree that a lawsuit such as the one you have suggested will radically alter the city’s current negotiating stance with the Cleveland Clinic and LHA and its ability to perform the due diligence it has recently undertaken. I see no reason to intervene in this exercise of the democratic process, and I will not take any action that would prevent our officials from discharging their obligations as the elected stewards of our city.

Conclusion.

I see no good-faith basis for bringing an action seeking to enjoin Lakewood’s public officials from engaging in the legislative process, performing due diligence and participating in discussions of the best options for the providing health care options to the city’s residents.
Should you decide to bring such an action, I would advise you that, pursuant to Ohio Revised Code § 733.61, you would need to actually prevail on your claims in order to even be considered for a discretionary award of attorneys’ fees. Given the frivolous nature of the action contemplated, such an award seems highly unlikely.

I have done my best to try to explain why I must decline your litigation demand. I hope that my comments have persuaded you that the course of action you have proposed is founded on misconceptions and not suited for our current negotiating position. Thank you for your correspondence.

Very truly yours,


Kevin M. Butler





OHIO ETHICS COMMISSION
THE ATLAS BUILDING
8 EAST LONG STREET. SUITE 210 COLUMBUS, OHIO 4'3215
(614') 4'66-7090


i September 3, 1986
I
IC



Fred M. DeGrandis, Esquire
Vice President/General Counsel Lakewood Hospital
14513 Detroit Avenue
Lakewood, Ohio 44107

Deer Mr. DeGrandis:

In your letter dated June 16, 1986, you asked whet her the Ohio Ethics Law and related statutes would prohibit a city council and mayor from approving an ordinance authorizing the lease of a city hospi tal to a non-sectarian, non-profit charitable corporation, if the lease provides that the mayor, two mem bers of city coun cil selected by the council, and other city of ficials would serve on the hospi tal board of trustees. In addition, you asked whet her such city of ficials would be prohibited from serving on the board of trustees following authorization.

You stated, by way of history, that a city owns a hospital and operates it through a board of trustees consisting of the mayor, a city council mem ber who chairs the hospital com mittee, the city health director, and fif teen other mem bers appointed by the mayor. You stated further that a city charter amendment was sought by the city and approved by the voters in 1985, per mitting the conversion of the hospital to a non-profit corporation. You indicated that the current board of trustees has presented to city council a proposed lease with a non-sectarian, non-profit charitable corporation governed by a board of trustees consisting of the mayor, two mem bers of city council selected by council, three representatives of community organizations, the im mediate past president of the hospital medical staf f , and thirteen mem bers of the current board of trustees. You indicated further that the proposed ordinance authorizing the lease specifically acknowledges the participation of the city, through the current board of trustees and city council, in the organization of the corporation. It also provides that the mayor, city council mem bers, and curren t trustees are designated to serve on the board of trustees of the corporation and ere instructed to represent the interests of the city un til the expiration of their terms as city of ficials or employees. Finally, you stated that the board of trustees are precluded from receiving any compensation for their services, and that the lease is for the term of thirty years, renewable at the option of the corporation for an additional thirty years. You asked whether the Ohio Ethics Law and related statutes would prohibit the transaction.

Division (A) of Section 2921.42 of the Revised Code provides the following, in pertinent part:

No public official shall knowingly do any of the following:

Aut horize, or em ploy the authority or influence of his of fice to secure authorization of any public contract in which he, a me m ber of his f amily, or any of his business associates has an interest;



(4) Have an interest in the profits or benefi ts of a public contract entered into by or for the use of the poli tical subdi vision or govern­ men tal agency or instrum entality with which he is connected.

A city mayor or a mem ber of city council is a "public of ficial" as defined in Division (A) of Section 2921.42 of the Revised Code, since he is an elected of ficer of a political subdivision of the state (See: Ohio Ethics Com mission Advisory Opinions No. 85-002 and 85-008). Similarly, a mem ber of the board of trustees of a munici pal hospi tal is a "public of ficial," since he is appointed to an of fice of the city. A lease of a city hospi tal to a non-sectarian, non-profit charitable corporation is a "public con tract," since it is a contract for the purchase or acquisi tion of the managem ent and operation of the hospital by the corpora tion. Thus, a ci ty of ficial is prohi bi ted from vot ing, aut horizi ng, or other wise using the authori ty or influence of his of fice to secure approval of a pu blic contract wi th a non-prof i t corporation in w hich he serves as a board m em ber. In addi tion, a city of ficial is prohi bi ted from serving as a board me m ber of a non-profit corpora t ion under con tract wi th the ci ty (See: Ohio E thics Com m ission A dvisory Opinion No. 81-008).

However, these prov1s1ons do not apply under circu mstances i n w hi ch a govern- ., m ental enti ty par ticipates in or creates a non-prof i t corporation and design ates pu blic .. of ficials to serve on its governing body . In Advisory Opinions No. 83-0 l O and 84-00 l (copies enclosed ), t he Com mission held that a city of ficial or em ployee is not prohibi ted
from serving on the board of a non-profit corporation, provided that he is serving in his of ficial capacity as designated by city council and that no other conflict of interest
exists. Specifically, the Com m ission stated tha t the following criteria m ust be satisfied:
(l ) the govern m ental entity m ust create or be a par ticipan t in the non-profit corporation;
(2) any pu blic of ficial or em ployee connected wi th the jur isdiction, includ ing a coun cil mem ber, may be design ated to serve on the board of the non-profi t corporation, but the elected legislative authori ty or the appointed governing body m ust for mally designate the of fice or posi tion to represent the govern mental entity; (3) the pu blic of ficial or em ployee m ust be for mally instructed to represent the govern m ental ent ity and i ts interests; and (4) t here m ust be no other conflict of interest on the part of the designated
represen tative. For exam ple, he m ust not use his of ficial posi tion to benefi t hi mself r
personally (See: Division (D) of Section l 02.03 of the Revised Code). '

U nder the facts presen ted, the voters have approved a city charter amend men t per m itting the con version of the city hospital to a non-sectarian, non-profit charitable corporation, and the curren t board of trustees, city council, and mayor have parti cipated in the creation of the corporation. Also, the ordinance designates the city · of ficials to serve on the board of trustees of the corporation and for mally instructs the m to serve the interests of the city. Finally, the organiza tion prohibits compensation for board mem bers, which helps to avoid a major, potential conflict of interest. Thus, the city is adhering to the criteria established in Advisory Opinions No. 83-010 and 84-001, and the city council and mayor would not be prohibi ted f rom authorizi ng the ord inance and organization as proposed . In addition, the city of ficials would not be prohibi ted from serving on the board of trustees of the hospi tal in their of ficial capacities.

This opinion represents the views of the Com mission at its meeti ng on September 3, 1986. It is based on the facts presented and is li m ited to questions arising under Chapter 102. and Section 2921.42 of the Revised Code. If you have any questions, or wish to request a formal advisory opinion from the Com mission, please contact me.

Sincerely,


James M. Long
Assistant Executive Director



J ML:sm

Enclosures

[Scott Meeson]

[Peter Grossetti]

LAW DEPARTMENT OFFICE OF PROSECUTION
12650 Detroit Avenue, Lakewood, Ohio 44107
(216) 529-6030 | Fax (216) 228-2514
http://www.onelakewood.com law@lakewoodoh.net


KEVIN M. BUTLER DIRECTOR OF LAW
PAMELA L. ROESSNER CHIEF PROSECUTOR
JENNIFER L. MLADEK CHIEF ASSISTANT LAW DIRECTOR
MANDY J. GWIRTZ ASSISTANT PROSECUTOR/ ASSISITANT LAW DIRECTOR

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I hate seeing typos on government letterhead!