Union Alleges Improprieties in 1998 Sutter Health Purchase of Davies Medical Center
The Department of Justice will begin an inquiry into Sutter Health's 1998 purchase of Davies Medical Center in response to alleged improprieties by the Service Employees International Union Local 250, the San Francisco Chronicle reports. Sacramento-based Sutter in 1998 bought the 341-bed Davies -- which is now part of California Pacific Medical Center -- for $31.8 million. In a letter to Attorney General Bill Lockyer (D) sent on Friday, SEIU Local 250 President Sal Rosselli raised questions about the following agreement terms:
- Sutter paid less than the $41 million value of the hospital listed on Davies' 1998 tax return and the $59.3 million value listed by the San Francisco assessor's office.
- The sale included a "cash gifts" provision under which Davies paid Sutter almost $17.5 million, according to the Chronicle.
- Former Davies CEO Gregory Monardo remains on the board of directors of two charitable trusts affiliated with Davies, and his former salary of $47,000 remains in place, despite a reduction in hours worked per week from 40 to four.
- One of the charitable trusts paid Monardo $3.5 million in 1998, which Roselli indicates "may have been intended to smooth Sutter's purchase," the Chronicle reports.
Sutter spokesperson Bill Gleeson said, "The union suggests that somehow this transaction flew beneath federal and state regulatory radar. Nothing could be farther from the truth," adding that the Department of Justice and the Federal Trade Commission were notified of the purchase agreement and did not act against it. Gleeson said allegations related to Monardo's current compensation are unrelated to the purchase, as neither charitable trust is related to Sutter. Patricia Wynne, special assistant attorney general in the department's legal affairs program, said the state will begin an inquiry into the allegations but added that an investigation has not yet been launched (Wallace, San Francisco Chronicle, 10/11). This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.