AG rejects county’s plea

California Attorney General Xavier Becerra has rejected a personal appeal from Santa Clara County officials to keep two hospitals open, after they had attempted to head off a Jan. 30 court showdown.

The county had proposed a memorandum of understanding that would commit the county to the highest levels of medical care at the two hospitals it seeks to buy from Verity Health System, according to Santa Clara County Executive Jeff Smith.

Smith and several staff drove to Sacramento in a driving rainstorm the afternoon of Jan. 16 to hand-deliver the proposal and meet with Becerra, who earlier this month stunned the county by asking the U.S. Bankruptcy Court to block the sale of O’Connor and St. Louise hospitals to Santa Clara County.

If the attorney general is successful in convincing the judge to “stay” or block the sale of the two hospitals until a U.S. District court rules on Becerra’s appeal of the judge’s Dec. 27 sale order, the $235 million hospital deal is dead and the two hospitals will close, said Smith.

Smith remained hopeful. “We are pretty confident that our legal case is strong, and that the stay will not be granted,” he said. Lawyers familiar with the case also said it would be unlikely that a judge would stay his own order.

Because of a death in the family, Becerra was not able to attend the Sacramento meeting, at which Smith had hoped to ease Becerra’s stated concern that the county’s failure to commit to quality medical care was the primary reason the deal should be scrapped.

Santa Clara County supervisors last week instigated a social media, telephone and email campaign—including appeals to Gov. Gavin Newsom—in hopes of convincing Becerra he should put the healthcare needs of Santa Clara County first, and that his concerns about the county’s commitment to quality health care were unfounded. Smith had told supervisors the morning before his trip that “time is running out.”

Smith said Becerra’s aides were in no mood to discuss the issue.

“Their response was, ‘We are not interested in a contract with the county; we are intent on enforcing our regulations,’ ” Smith said after the meeting. “It is largely an issue of control and power and has nothing to do with the hospitals.”

The attorney general, he said, made “a political decision, not a legal decision.”

The attorney general’s office continued this week to decline to comment.

A hearing of Becerra’s request to block the sale has been set for Jan. 30 in U.S. Bankruptcy Court in Los Angeles, with a decision expected by Feb. 2. Also on Jan. 30, the same federal bankruptcy judge will hear multiple motions by Verity dealing with the collective bargaining agreements with unions at the O’Connor and St. Louise hospitals.

After returning from Sacramento, Smith remained incredulous at the attitude of the attorney general, whose staff rejected any effort to compromise or modify a set of conditions imposed on Verity in 2015 in connection with its purchase of six troubled hospitals in Northern and Southern California that Becerra said dictates conditions of the current purchase agreement.

Becerra contends in court documents that any sale of hospitals owned by Verity Health must adhere to all of the strict conditions set down in December 2015 by his predecessor Kamala Harris, even if it meant the hospitals will close.

Smith has called the attorney general’s obstinacy “absurd.”
Smith said that he made it clear in his personal appeal to Becerra’s staff that blocking the sale to the county will mean that O’Connor and St. Louise hospitals will close, but that this information didn’t sway the state’s lawyers.

The attorney general has no legal role in overseeing the state’s hospitals, but got involved in 2015 because a private entity was purchasing hospitals from a non-profit. In this case, the sale would involve a purchase of private hospitals by a government entity, an actual arm of state government.

Smith and his legal team contend that the attorney general doesn’t understand California law, and that the issue amounts to a power play.

The county executive said he no longer thinks that healthcare workers’ unions’ concerns about losses of pensions and contracts are the issue.

“It’s all about control and power,” he said.

Blocking the county purchase will mean “the hospitals will close, and nobody is going to buy them,” Smith said earlier this month.

He said the county’s asset purchase agreement expires March 1, and that a deal must be closed by then.

Mike Wasserman, the Santa Clara County supervisor whose district includes St. Louise Regional Hospital, wrote on Facebook, “I am deeply disappointed that the California Department of Justice is trying to block the sale of O’Connor and St. Louise hospitals to Santa Clara County. As county supervisor, I will do everything I can to keep the hospitals open so as to ensure continued healthcare access for all residents.”

He urged his constituents to contact Becerra and published his contact information.

“The attorney general’s actions to block the sale of Verity’s hospitals to the county is a real threat to the health of our community, our residents and the vulnerable populations the hospitals serve,” Smith had said in a Jan.10 statement.

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