Judge Issues Restraining Order, Prevents Triad Healthcare Moves

A Los Angeles Superior Court judge issued a temporary restraining order Tuesday against Triad Healthcare Inc.--owner of two financially ailing San Fernando Valley hospitals--to prevent the company from firing its management team and using hospital operating money for other purposes.

The order was requested by officials of the state’s Cal-Mortgage program, which insured the loan that enabled Triad to buy the hospitals in 1991.

Triad defaulted on the $162-million loan last summer, potentially leaving taxpayers on the hook for the debt.

Since then, the cooperative relationship between Cal-Mortgage and Triad’s board has deteriorated, according to court documents. Both sides assert that they have the better plan to get the hospitals in a position to resume loan payments, and both contend that the other has reneged on agreements.

The two hospitals owned by Triad are Sherman Oaks Hospital and Health Center in Sherman Oaks and West Valley Hospital and Health Center in Canoga Park. Although they are located in the area most devastated by the magnitude 6.6 earthquake last week, both hospitals came through relatively unscathed and treated hundreds of earthquake victims in their emergency rooms.

Although he agreed to issue a temporary restraining order, Superior Court Judge Robert H. O’Brien refused the state’s request to immediately place the hospitals into receivership. That action would have effectively cut Triad’s board out of all management decisions, placing the hospitals under the supervision of the court.

The judge postponed the question of receivership until a hearing Feb. 16. But in granting the temporary restraining order, he blocked a plan by Triad board Chairman Sanford Weiss to fire Alpha Partners, a management company hired by Triad at the state’s request in November to replace Triad President Stuart J. Marylander.

Weiss questioned Alpha Partners’ loyalty to the Triad board, saying Alpha was hired and Marylander was fired at the state’s insistence.

“It appears that Alpha Partners views their sole allegiance to the creditor that insisted upon their appointment,” Weiss said in court papers.

In an interview, Douglas Drumwright, president of Alpha Partners, said he will “continue to communicate, as we always have, to the board to keep them informed.”

Marylander has been drawing $25,000 a month in severance pay from Triad and may continue to do so until November, 1996, under terms of an employment contract he negotiated with the Triad board.

“Mr. Marylander wrote the severance provisions for his own benefit,” Cal-Mortgage Director Dennis Fenwick said in a written declaration. “The severance provisions, however, are flagrantly inappropriate and detrimental to plaintiff and to defendant.”

Marylander could not be reached immediately for comment.

State officials contend that their loan guarantee agreement with Triad provides for only a month’s severance pay for Triad’s former president.

Lawyers for the state also argued in court Tuesday that Triad was planning to divert more than $1 million in money earmarked for hospital operations to its lawyers to finance a legal battle with the state over control of the hospitals.