West Suburban Medical Center will not be getting a new owner at this time.
The judge presiding over a bid for a court-ordered receivership said there was not enough evidence to support new management being brought in to attempt to reopen the hospital after West Suburban closed March 27 due to a year-long failure in the hospital’s electronic medical record billing system.
After closing arguments on Friday from representation for Rathnaker Reddy Patlola, the landlord for West Suburban, and Resilience Healthcare CEO Manoj Prasad, who manages the hospital, Cook County Judge Patrick Stanton said he would deliberate over the weekend on whether to appoint a new receiver for the safety-net hospital. On Monday, Stanton told the court room that Friday afternoon he met with Patlola and Prasad’s lawyers late into the evening to develop a plan to reopen West Suburban.
He did not share details of that plan before delivering his ruling Monday morning, denying Patlola’s bid for a receivership.
“There was an implied claim that the hospitals declined because Dr. Prasad was CEO,” Stanton said. “There was no evidence offered that Prasad caused these problems,” or that granting a receivership would fix those problems.
“I believe there’s a framework in place that leads to the reopening of the hospital,” Stanton said during his decision. He added that the court shares the belief that the hospital needs to reopen.
Prasad and Patlola bought West Suburban and Weiss Memorial in Chicago’s Uptown neighborhood in 2022 from Pipeline Health for $92 million. Before selling the hospitals, Pipeline filed for bankruptcy, reporting nearly $70 million of net losses between West Sub and Weiss from Aug. 2021 to 2022 alone.
The case is the result of dueling lawsuits between Patlola and Prasad, with the former business partners disagreeing about what the official hospital lease was and Patlola accusing Prasad of “misappropriating” $35 million, including a $10 million loan from the state of Illinois.
But Patlola’s lawyers couldn’t prove that hospital money had been misappropriated, Stanton said.
After a May 8 hearing — where Patlola’s lawyers brought three witnesses to the stand, including a former hospital executive who testified that Prasad moved money around into different accounts in part to keep income from showing up in his divorce proceedings — Stanton said Monday that neither of the witnesses revealed evidence of mismanagement of funds. Patlola’s team didn’t call to the stand its suggested receiver Michael Flanagan or a representative of Insight Chicago, which Patlola had proposed should take over management of the hospital, to testify to how they would manage West Suburban better than Prasad has.
Following a third-party review of contested financial records, Stanton said Friday that there was no evidence to support the alleged largescale misappropriations by Prasad.
West Suburban employees of all levels, West Side activists and faith leaders had consistently attended the half-dozen hearings on the matter over the last month. Many left court disappointed on Monday.
“Both of them are bad actors,” said Sylvia Williams, furloughed director of nursing at West Suburban, of Prasad and Patlola after Monday’s decision. “Neither one of them know what they’re doing.”
Through tears, Williams lamented the hearing process.
“Moneys were moved around, not necessarily stolen, but we know it was not given to the hospital,” Williams said. “But that’s not what the court was about. … There was not enough evidence that receivership was warranted.”
Williams added that she’ll keep fighting for West Suburban, though she’s wary that any of the furloughed employees will want to return to work at the hospital.
“He still hasn’t fixed anything. The hospital closed in March, and the HVAC system is still broken. …What about the community? What about the patients?” Williams added, “Our politicians, they haven’t really been behind us. They want this to go away. They don’t care that they gave him millions of our taxpayers’ dollars.”
But legal disputes between Patlola and Prasad aren’t yet finished, as Stanton said he’s still unclear about which lease is in place. Representation will meet again at the Daley Center June 22, when Stanton said the parties will dive further into the dispute between Patlola and Prasad over West Suburban and Weiss’ leases.
In his closing argument on Friday, Patlola’s lawyer Scott Kaplan grounded the request for receivership in the claim that Prasad had defaulted on the leases for West Suburban Medical Center in Oak Park, its River Forest campus and Weiss Memorial by not paying rent or property taxes. But Prasad’s counsel maintained that the lease agreement governing the properties only required Resilience to pay Patlola $1 a year in rent, a claim Patlola’s camp has repeatedly denied.
On Monday, Stanton said that Patlola signed Prasad’s version of the lease, but Patlola said he didn’t remember agreeing to $1 a year.
“Ramco never enforced the lease as written,” Stanton said of Patlola’s holding company that oversees the West Suburban and Weiss properties.