Judge Lets Majority of Hospital’s Suit Stand : Courts: He rejects portion of Community Memorial’s action against county facility, but refuses complete dismissal.

A Ventura County judge Tuesday refused to dismiss most of a lawsuit Community Memorial Hospital has filed accusing the nearby county medical center of illegally competing for privately insured patients.

But the bitter legal dispute between the private Ventura hospital and Ventura County Medical Center could still be a long way from trial, lawyers said, because the judge gave Community Memorial nearly three weeks to refile the part of the lawsuit he threw out.

The county hospital had asked Superior Court Judge Frederick A. Jones to dismiss all of Community Memorial’s July complaint, which evolved from a yearlong battle between the two facilities over the treatment of privately insured and indigent patients.

On Tuesday, Jones ruled that the county hospital must defend itself at trial against charges that it accepts privately insured patients who could be served at other hospitals. He also said the county facility must answer to charges that it does not treat enough of the county’s patients who are uninsured or unable to pay.

But the judge dismissed the final part of the lawsuit--the part charging the county with unfair business practices. A primary concern is a new policy allowing county government employees to go to county facilities for hospitalization and basic treatment.

Officials have said that about 1,000 of the 6,000 employees have chosen that lower-cost option, and that Community Memorial has lost patients as a direct result.

Assistant County Counsel Noel Klebaum said Jones did not allow the final portion of the lawsuit to stand because it involved allegations of unfair business practices and unfair competition. Under state law, state entities cannot be sued on such grounds. The medical center is considered a state entity because it is run by the county, which is defined as a subdivision of the state, Klebaum said.

But Jones did not rule out the possibility of Community Memorial pursuing the same claims under a theory other than unfair business practices, lawyers agreed. By giving the private hospital 20 days to amend its lawsuit, the judge left open the possibility that it might find other grounds to make the same complaint.

John E. McDermott, the Los Angeles attorney representing Community Memorial, said the private hospital has already begun researching a new way to do that.

“There is another legal theory under which we can attack those same activities,” he said. That theory, he said, is to allege that the county hospital is interfering with Community Memorial’s business relationship with private patients.

Klebaum said that if Community Memorial indeed amends its lawsuit, it would only further delay the start of any trial because the county hospital would again ask Jones to dismiss that portion of the complaint.

McDermott said Community Memorial is just trying to make sure that it is not faced with unfair competition. He said Jones’ ruling Tuesday clearly favored Community Memorial.

“The county was basically saying, ‘Throw out the (whole) complaint,’ and the court refused to do so,” he said.

Klebaum said he was pleased that the judge dismissed part of the lawsuit, but added that “we had been hoping to get most of the case thrown out.”