BOMBSHELL: 2012 CCF Plan to Rape & Then Close Hospital
Posted: Sat Aug 01, 2015 8:42 pm
Attached is a Court filing made on July 31, 2015 by Attorney Chris DeVito in the Taxpayer lawsuit. Pages 22-34 of the filing include NEW EXPLOSIVE DOCUMENTS that show the Clinic's "MASTER PLAN" from 2012 to move valuable service lines, equipment, bed licenses and personnel to the Clinic's Fairview Hospital and then close Lakewood Hospital. The plan was to invest nearly $200 million in Fairview to force us to go there while Lakewood was given the tiny medical office building.
All this plotting to rape and kill Lakewood Hospital was done while the Clinic was supposed to be working on behalf Lakewood Hospital. Was Mayor Summers aware of and complicit in this plot? If not, was he a rube? He owes us an explanation of his role in this ASAP.
Stay tuned for more, but here is a section of the Court filing that outlines the facts:
As early as 2005 CCF and LHA began to remove medical services, equipment, and employees from Lakewood Hospital, including the transfer of whole medical service lines, equipment, and employees to other hospitals wholly-owned by CCF. For the past ten years, CCF and LHA continued to diminish the viability of Lakewood Hospital and now claim it is no longer sustainable. CCF created this condition by increasing and paying itself extraordinarily high “Administrative Services” expenses and by removing profitable medical services and equipment, without any reasonable compensation or replacement medical services as promised. Even with CCF's intentional acts to diminish Lakewood Hospital, it still has a positive EBIDA operation when reviewing Ernst & Young's audited financial statement.
The evidence in this matter will demonstrate that CCF, without the knowledge or approval of the City, engaged in a secret plan to siphon valuable medical services and equipment so as to cripple the viability of the hospital. According to CCF’s own 2012 Master Plan that was commissioned in 2011, a covert scheme was created to “Decant” Lakewood Hospital. The “Decanting Plan” specified that medical services, equipment, and employees would gradually be transferred from Lakewood Hospital to Fairview Hospital (and other CCF wholly-owned hospitals) in preparation for the closure and razing of Lakewood Hospital as an inpatient, acute care, and medical/surgical hospital. (Ex. 1). What is further troubling about this conduct is that LHF and CCF continued to solicit, campaign, and raise funds from the public for the support of Lakewood Hospital. These donors were never alerted or advised that their intended contributions for the support of Lakewood Hospital would never be a reality as the hospital would soon cease to exist.
CCF's decanting Master Plan violates the DA and Lease's express and implied terms to manage and operate Lakewood Hospital through 2026 and then return all assets and the hospital as a going concern. Moreover, CCF’s decanting plan simultaneously with raising money from the public (who had no knowledge of such a plan) to support Lakewood Hospital, which CCF planned on closing all along, is evidence of fraud as the donors have been deceived.
On June 21, 2012, three years before the plan to close and raze Lakewood Hospital was revealed to the public and beneficiaries of the charitable trust, CCF representatives met to discuss the decanting plan of Lakewood Hospital. (Ex. 2). Under the decanting plan, 30-45 beds from Lakewood Hospital’s nursing unit will be moved to Fairview Hospital; 16 intensive care unit beds at Lakewood Hospital will be moved to Fairview Hospital; Fairview Hospital will absorb 700-800 births per year from Lakewood Hospital; 7,000-8,000 Lakewood Hospital inpatient emergency department visits will be moved to Fairview Hospital; 1,315-1,773 inpatient surgeries per year will be moved from Lakewood Hospital to Fairview Hospital; Lakewood Hospital physicians will be moved to Fairview Hospital and other CCF wholly-owned hospitals; 12 geropsych beds will be moved from Lakewood Hospital to Lutheran Hospital; Lakewood Hospital’s vascular laboratory will be moved to Fairview Hospital; some Lakewood Hospital inpatient beds will be moved to Fairview Hospital; and inpatient surgery and the catheterization laboratory at Lakewood Hospital will be moved to Fairview Hospital. (Ex. 1). All of these services, employees, and equipment that have been moved and will continue to be moved away from Lakewood Hospital are City-owned assets. More importantly, those assets belong to a charitable trust for the charitable purpose of providing high quality health care to the third party beneficiaries of the trust: City taxpayers and residents, Lakewood Hospital employees, and the general public. The need for these medical services, including inpatient surgery, is demonstrated by CCF’s Master Plan for Fairview Hospital showing Lakewood Hospital’s 1,773 surgery cases being transferred (i.e. decanted) to CCF’s wholly-owned Fairview Hospital.
Defendant Subsidium was hired by LHA and CCF in approximately 2014, and paid using Lakewood Hospital funds in excess of $500,000.00. This “Blue Ribbon Consultant” was hired to provide consulting services related to the future of Lakewood Hospital. Subsidium concluded that LHA should release a request for proposal (“RFP”) to seek proposals from hospital systems offering future plans for the management and operation of Lakewood Hospital. Despite an RFP(s) being sent to potential partners for the long-term sustainability of Lakewood Hospital, CCF and LHA have known since at least 2012 that Lakewood Hospital will be closed, razed, and sold to CCF for an outpatient wellness center. CCF has been pursuing its decanting of Lakewood Hospital for years and its documentation indicates the “decanting plan” was 100% completed by September 2012. (Ex. 4). However, the first public announcement of LHA and CCF’s proposal to close Lakewood Hospital was not made until January 2015. That is a breach of contract and further a breach of fiduciary duty, let alone all of Plaintiffs’ other meritorious claims.
With LHA’s acceptance of CCF’s diminished services proposal, Defendants announced publicly in January 2015 that they intended on closing Lakewood Hospital, razing it at LHA and LHF’s expense, selling a portion of the “clean” land to CCF, and CCF building a new outpatient family health center with an emergency room. The Fairview Hospital Master Plan detailing the Lakewood Hospital decanting plan refers to this new Lakewood Family Health Center as a “Medical Office Building” or “MOB.” Defendants have touted the proposed family health center as innovative and meeting the demands of today’s health care market. However, the City already has a family health center operated by CCF on Madison Avenue.
Defendants provided the public with a copy of the Letter of Intent (“LOI”) signed and approved unanimously by CCF, Lakewood Hospital Foundation (“LHF”), and LHA (which includes the Mayor and two City council members sitting ex-officio on LHA’s Board of Trustees, supposedly to represent the City’s best interests). Defendants argue that the LOI is not binding and has expired; therefore, Plaintiffs have no standing. This argument ignores Plaintiffs’ claims in the Complaint of past and continuing misconduct in violation of the Lease, DA, LHA’s and LHF’s Articles of Incorporation, and City laws and ordinances.
Defendants’ argument also ignores the allegations in the Complaint of continuing and proposed future wrongful conduct, which needs to be enjoined regardless of the status of the LOI. Since the announcement of the proposed closure of Lakewood Hospital, LHF has sent notification to all past donors that it is canceling its annual summer fund-raising event “Starry Night.” Starry Night is LHF’s biggest fundraiser historically and directly supports Lakewood Hospital as a going concern. It is important to note that LHF and LHA are deemed to be financially interrelated organizations (see Affiliations section of LHA’s annual audited financial statements). LHF is a not-for-profit organization whose purpose is to seek private gifts and donations to support the work and activities of Lakewood Hospital as a going concern. The City also is still considering the expired LOI as a valid proposal and holding “executive session” meetings without oversight and transparency to the public and City taxpayers and residents, the intended beneficiaries.
Notably, despite Defendants’ argument otherwise, the five Plaintiffs are not merely a small group of rogue citizens in the City community attempting to usurp the power of the rest of the City population and enforce their own personal agendas upon everyone else. Rather, Plaintiffs represent a large and growing group of City residents and Lakewood Hospital employees who are disgruntled by the lack of diligence by the City to enforce its rights against LHA, CCF, and LHF under the Lease and DA. (See Harkness Affidavit). For example, Plaintiff Marguerite Harkness is the chairperson of Save Lakewood Hospital, an organization of more than 3,000 (and growing) City residents trying to save Lakewood Hospital from decay, sale, and destruction. (Id.). The need for Lakewood Hospital’s inpatient medical services is demonstrated by CCF’s 2012 Master Plan that outlines approximately $200 million of improvements to Fairview Hospital over an eleven (11) phase development plan through 2025. (Ex. 5).