SEBASTOPOL -- A candidate for Palm Drive Healthcare District's board of directors is seeking a court order to disclose a "closely held audit report" from the 37-bed hospital and its management company.
Jim Maresca, a candidate for the five-member board, filed a writ of petition in Sonoma County Superior Court with Jared Dreyfus, an attorney and also a candidate for the board, that says "voters will be denied crucial information unless this court acts at the 'earliest possible time'" in requiring the hospital to release an audit by HealthTech Management Services, which recently changed its name from Brim Healthcare Inc.
Mike Lieb, the hospital's interim CEO, said hospital attorneys have not yet viewed the filing and couldn't comment on specifics, but added, "I take very seriously our responsibility to be transparent to keep our community informed about the finances of the hospital and the medical center it operates. I know that HealthTech Management Services feels the same way. However, we will be looking at this as quickly as possible. As soon as I can confer with our counsel, we will be happy to comment more fully."
The audit, according to Mr. Maresca and Mr. Dreyfus, who are running a joint campaign, "is believed to contain information revealing billing improprieties at the Palm Drive Medical Center that could run afoul of Medicare rules and expose the hospital to significant liabilities."
The request for the audit came on Oct. 1 by Mr. Maresca in an email to Mr. Lieb.
Mr. Dreyfus and Mr. Maresca were told that the audit was only preliminary, thus not subject to the California Public Records Act, and it was attorney-client privilege. However, hospital counsel waived attorney-client privilege on a facility fees audit, which was provided to Mr. Maresca.
The two candidates -- running with the support of Board Treasurer Dan Smith -- pointed to the political implications of the petition, the audit, HealthTech's track record and the stance of the other candidates and board members, who have held a more favorable view of Brim's management. [See "As Palm Drive finds some stability, six vying for district board seats"]
"This dispute takes on political dimensions because the competence and credibility of Brim has become an issue in the campaign,” the candidates said.
The hospital entered into a three-year, $250,000 a year contract with Brim in 2009, not long after the health care district ousted former chief executive officer Richard Russell, whose tenure at the helm ended with the hospital in Chapter 9 bankruptcy. In 2007, the hospital posted more than $6 million in operating losses.
Current Board President Nancy Dobbs has argued HealthTech played an important role in stabilizing the hospital's finances.
In March of this year, the hospital emerged from bankruptcy after the management company brokered the sale of $11 million in bonds that repaid creditors and a Sonoma County bridge loan. The hospital currently has about $2.7 million on hand from the bond sale and has annual revenues of about $30 million a year.
Meanwhile, the hospital announced last week that it hired Richard Polheber as its permanent CEO.