Officials with Healthcare Conglomerate Associates (HCCA) have made it clear that they’re not pleased with Tulare Local Healthcare District board members Kevin Northcraft, Mike Jamaica and Senovia Gutierrez’ string of special meetings. They’ve brought in the big guns to bring the point home.
The company has retained the services of Orrick, Herrington & Sutcliffe, a law firm headquartered in San Francisco; the firm sent the three a cease and desist letter Wednesday.
The letter tackles the issue of the two special meetings, one held July 27, and the most recent on August 9. Those may be meetings, but they’re not board meetings, says Dr. Benny Benzeevi, CEO of HCCA.
https://www.documentcloud.org/documents/3923200-Orrick-HCCA-Letter.html#document/p8/a367962
“[… T]here was no board meeting [Wednesday],” Benzeevi said. “The meeting that was held had no legal authority whatsoever. It’s not a matter of opinion, but rather, is clearly delineated by the law and practice.”
It also states that the three have “defamed and maligned [Dr. Benny Benzeevi and HCCA] without just cause, and with great damage to their reputations and commercial activities.”
“We write to discourage you from further such conduct, demand that you ‘cease and desist,’ and put you on notice of your responsibilities given the potential for litigation to which you may be a party,” Marshall B. Grossman, an attorney for Orrick, wrote.
Grossman has previously represented Mariah Carey, Apple Computer, Estée Lauder, and many other high profile clients. The Orrick firm was previously hired by the hospital district in May of 2016 as the hospital’s bond counsel.
The letter lays bare the position of HCCA, the company which oversees day-to-day operations of Tulare Regional Medical Center (TRMC), giving the three a crash-course history lesson, a reminder of the staggering breakup fee in the company’s contract with the district, and an overview of the hospital’s financial performance.
https://www.documentcloud.org/documents/3923200-Orrick-HCCA-Letter.html#document/p5/a367970
Put simply, the letter states that the company is the chief driver of the hospital’s success — and that the trio’s actions are undermining the Management Services Agreement, the contract governing the relationship between HCCA and the district.
“The threat of newly elected members of the Board to dishonor the current HCCA contract undermines the ability of HCCA to perform its management function under the terms of the MSA and poisons the environment within which the Hospital must function,” the letter reads, “all to the detriment of the community. A unilateral termination of the MSA is a threat that the District will breach the MSA by disavowing it.”
Northcraft is taking the letter in stride.
“This is the sixth bogus claim in attempting to confuse and delay the properly seated Hospital board. Like the previous attempts, it is in opposition to the democratic process and the American system of government, and was unsuccessful,” he said.
Accountability Group Responds
The letter takes the three — and the Citizens for Hospital Accountability group, which has supported their election bids — to task for alleged defamatory statements, citing specific statements by each.
The letter claims that the Hospital Accountability group published Benzeevi’s personal cell phone number on their page, leading him to receive threatening phone calls “from unknown third parties.”
“The listing of our client’s private cell phone numbers in your postings, if such exists, and the like must be ceased now,” the letter reads.
The group fired back on August 13.
“Let’s face it Benny — the law is not your friend,” the statement reads.
“Don’t you remember when you sent out a campaign flyer during Measure I that printed what you claimed was your personal number and told everyone to call you with their questions,” the statement continues, including a scan of one such flyer. “Was this offer only good when you wanted our money?”
Board Members Respond
Among other actions, the letter states that Northcraft “stated at a public board meeting that HCCA was a ‘horrible failure at completing the tower,’” “[sent an] election mailer urging the District to ‘renegotiate or throw out the current HCCA contract,’” and republished a post from the accountability group stating the contract had “brought our hospital to its current financial ruin.”
“I particularly enjoyed the claim that I ‘defamed’ anyone by saying HCCA’s attempt to finish and open the tower was a horrible failure. Isn’t the truth a suitable defense?,” Northcraft said in response.
It states that Gutierrez “has not once approached HCCA or the hospital to obtain any information” and has posted on Facebook “referring to [the] need to ‘get rid of HCCA.’”
“It is incredible unbelievable how they dare of sending a letter accusing us of ‘defamation and harassment’ when they are precisely those who defamed and slandered without any cause and causing much damage to my reputation,” Gutierrez said. “They used a very dirty campaign at the point that they put my face in the body of a dog being embraced by one of the doctors with whom they (HCCA and Kumar) have had problems in the past.”
“Furthermore, they opened a web page www.draintulareswamp.com, this page was open with the only purpose of confusing to the community saying only lies manufactured by themselves,” she continued.
The letter also claims that Jamaica “refused to hear any information from the Hospital regarding the litigation with the previous medical staff leadership (admittedly aligned with him),” and that he “personally served a lawsuit filed against the District while purporting to act as a board member of the District.”
Jamaica did not respond to a request for comment in time for publication; this article will be updated when a response is received.
Outside Reaction
Since the Voice published the letter, there has been significant reaction in the newspaper’s comments on Facebook and online.
But one Tulare doctor stepped further.
Dr. Frank Macaluso, previously a founding member of the hospital’s new Medical Executive Committee, resigned his positions in protest of the letter.
Macaluso told the Voice his position could be best summed up as “don’t mess with my democracy.”
“Effective immediately I have resigned from the Medical Executive Committee at TRMC,” a letter from Macaluso to his fellow members of the MEC reads.
“My resignation is in protest of a new lawsuit filed by HCCA against the Hospital Board of Tulare Local Health Care District. I’m happy to continue participating in my other hospital committees,” it continues. “GO DEMOCRACY!”
Macaluso is still a member of the medical staff.
He said the same at an August 9 meeting of hospital board members.
“Myself and other members of the medical staff fully welcome Ms. Gutierrez as a member of the board,” Macaluso said. “Anyone who doesn’t recognize her as a board member, just has got to get real.”
“She’s been sworn in, she’s here at the board meeting, you have the quorum,” Macaluso said.
Financing The Divorce
In the letter, Grossman asks: what district assets do the three plan to sell to meet the contract’s required termination fee?
https://www.documentcloud.org/documents/3923200-Orrick-HCCA-Letter.html#document/p6/a367960
That fee starts at $70,000 per month, increased by the Consumer Price Index, then multiplied by the number of months remaining in the contract (limited up to 120), then “discounted to its present value using the discount rate of the Federal Reserve Bank of San Francisco at the time of termination plus one percent.”
Put simply: it’s an upward of $8.4m divorce settlement.
Any separation would leave an independent, or alternatively-allied, TRMC without any staff: the contract mandates the hospital not solicit its existing staff members for employment for a period of two years after any separation. The terms of the contract transferred all employees of the hospital to HCCA.
http://www.documentcloud.org/documents/3013869-Management-Services-Agreement-between-Healthcare.html#document/p13/a314064
Gearing Up for Action
The letter finally puts the three members on notice: they need to start preserving documents, emails, and files, both digital and physical — with their staples and paperclips attached, too.
“Given the likelihood of litigation, we call your attention to the following obligations which we insist be strictly enforced by you and by the district,” Grossman states. “There are consequences which your lawyer, whoever he or she may be, will be familiar.”
https://www.documentcloud.org/documents/3923200-Orrick-HCCA-Letter.html#document/p8/a367969
“The actions taken by the individuals involved are illegal, are harmful to the business of the District, and each of them individually may have exposed themselves to substantial civil liabilities as well as potential criminal liability for falsely portraying themselves as a governmental entity,” Benzeevi told the Voice. “Rest assured that all avenues available under the law will be pursued aggressively by the appropriate authorities.”
The full letter is available below.
