The contentious legal battle over West Suburban Medical Center between Resilience Healthcare and landlord Ramco Healthcare Holdings continued in court Thursday morning. But the week has already seen several significant developments.
At a June 30 status hearing, Judge Patrick T. Stanton suggested he might be willing to revisit his ruling on not replacing CEO Manoj Prasad with an appointed receiver to manage West Sub.
Also on Tuesday, Wednesday Journal reviewed a 15-page defense brief filed in May that disclosed that Prasad has set aside $2 million in a fund he personally controls to compensate himself for his “deficient” $90,000 annual salary.
And Tuesday night ABC7 news reported that notices had been sent to about 500 West Sub employees informing them that they would be permanently furloughed.
ABC7 quotes a notice saying, “a mass layoff at West Suburban Medical Center” will begin Aug. 31 and that “this mass layoff is expected to be permanent.”
Under the Illinois Receivership Act, a judge may appoint a receiver if a property’s ability to generate revenue “is being subjected to or is in danger of waste, loss, dissipation, or impairment.”
At a hearing in May, Judge Stanton denied Ramco’s motion to appoint a receiver, ruling that its lawyers had not provided evidence proving that Prasad was responsible for West Sub’s problems.
“Current management has already demonstrated his inability to reopen Weiss Hospital for nine months.” Ramco attorney Scott Kaplan had argued, saying there was no evidence Prasad would be able to turn things around at West Sub.
Kaplan also wanted to include as evidence an allegation, he said that Prasad had made payments of more than $2 million from an account meant to fund the hospital to a consulting firm allegedly owned by his daughter.
But Martin Tasch, the attorney for Resilience, argued it was Kaplan who lacked evidence, saying they had not offered any proof that a receiver would produce different results than Prasad had.
The judge agreed, saying, “There was no evidence offered that Dr. Prasad caused any of these problems or that he failed or refused to address them.”
However, at the conclusion of Tuesday’s brief hearing, Stanton suggested he might reconsider that decision.
On Tuesday Kaplan told the court that Prasad’s personal legal counsel, which represents his interests outside of Resilience Healthcare, had told him that he’d have “red lines,” to share with Kaplan, that is, issues they consider non-negotiable.
“We still don’t have that,” Kaplan said. He said he asked “repeatedly” about what would happen if the hospital did not pay the Com Ed electric bill. Com Ed has said it will disconnect power to the Oak Park campus early this month.
“We’re concerned about the electric and the occupancy order (from the Village of Oak Park) declaring the hospital uninhabitable,” he said.
Stanton then asked Tasch if Prasad and his legal counsel would be present at Thursday’s settlement conference.” Tasch replied “Yes.”
“The court urges the parties to respond to each other’s requests,” Stanton told the attorneys.
“We are in communication with both Commonwealth Edison and the village,” Tasch said. “I’m not really sure what more we can do.”
At that point the judge suggested his previous ruling might be subject to reconsideration.
“If there’s a change in circumstances, that may result in the court re-visiting its ruling,” Stanton said without elaborating.
The judge reiterated his call for the attorneys to work together, saying “The court urges parties to exchange their respective positions so the discussion will be productive.”
All sides were in Stanton’s chambers Thursday morning for what was hoped would be a final settlement conference.
In fighting Ramco’s effort to get a receiver appointed, Tasch on May 8 disclosed the $2 million in sequestered funds for Prasad in a 15-page brief.
As part of their argument to the court, Ramco’s attorney had referred to $2 million in allegedly misappropriated funds sequestered in an account controlled by Prasad.
Not so, Tasch wrote in his brief. “The money was intended to address Prasad’s shortfall in compensation, which has apparently now become an issue.” Tasch said it is money Prasad was justified in taking.
“Prasad testified he only received $90,000 per year, but the parties never explored or took discovery on what he was entitled to,” Tasch wrote.
“The AUM Global Healthcare Management LL Amended and Restating Operating Agreement,” Tasch argued, “provided in Section 6.2 that Prasad ‘shall be paid compensation, including a comprehensive set of benefits, that is similar to compensation paid to CEOs of other similar sized hospitals.’”
Neither the $2 million fund for Prasad nor the mass firings sit well with State Rep. La Shawn Ford, whose 8th State House district includes much of the Austin neighborhood once served by West Sub.
Ford said Wednesday morning that Prasad’s actions “reflect a troubling disregard for the health and safety of our residents.”
“As a State Representative, I am deeply outraged by the revelations surrounding the mismanagement of our local hospital. It is unacceptable for an executive to believe they deserve significant compensation while profiting off the backs of the most vulnerable members of our community—those reliant on Medicaid and Medicare.”
Ford suggested the West Sub situation is as much a political and social justice issue as a legal issue, saying, “We need a healthcare system that prioritizes the well-being of our community over personal enrichment. I call on the court to ensure accountability and transparency, so we can restore trust in the services we depend on.”