Community Memorial Sues County Over Funds

Community Memorial Hospital filed a blistering 48-page lawsuit against the Ventura County Board of Supervisors on Tuesday, setting up a legal battle that may not only decide who gets $260 million in tobacco money but also set a precedent for similar battles across the nation.

The hospital accuses the county of being fiscally inept, quashing the citizens’ right to vote and depriving the public of needed health care dollars to make up for past financial mismanagement.

A Ventura County Superior Court judge will hear the case July 19.

Also on Tuesday, supervisors agreed to use the $260 million paid by tobacco companies to the county solely for health care.

Supervisors Frank Schillo and Judy Mikels will spend the summer seeking public comments on the best ways to spend the money, which averages out to about $10 million a year over the next 25 years, Schillo said.

That’s if the county gets to keep the money.

In March, Community Memorial Executive Director Michael Bakst proposed a ballot initiative that would give the tobacco money to private hospitals, because last year the board voted to spend some of it to pay off federal fines for overbilling on Medicare claims.

The funds come from a national settlement with the major American tobacco companies. The proceeds have been divided among states and are supposed to treat tobacco-related health problems.

Bakst said his hospital deserves the money, because it pays a disproportionate share of the medical bills of indigent and uninsured patients. Backers of the proposed initiative gathered 38,517 signatures on petitions, more than enough to place the issue before voters.

In a surprise move after months of negotiations, supervisors last week refused to put the initiative on the November ballot and sued Bakst and Community Memorial to quash the initiative. That makes the county the first in California to seek court help in keeping tobacco settlement money.

The hospital’s response came Tuesday.

“Rather than allow the tobacco settlement [money] to be used to bail the board out of its mismanagement, the voters want the money to be used for a compelling public purpose, health care,” the Community Memorial suit said. The hospital outlined its plan for the money, focusing on health programs for the young, the working poor and the elderly.

Private hospitals, the suit said, serve 46% of the county’s indigent and uninsured, while the county serves the other 54%.

The difference, the suit said, is that the county gets $42 million a year to compensate it for indigent care, while private hospitals receive almost nothing. Tobacco money would help offset this, the suit said.

In response to the suit, Supervisor John Flynn said Bakst was bent on nothing less than the destruction of the county’s health care system, because it competed with his private hospital. He called the effort to get at the county’s tobacco money “criminal.”

Flynn said a national Latino civil rights organization, which he declined to identify, was planning to join the county’s cause, because Latinos would be hard hit if the county lost the money. He also said the American Civil Liberties Union could join the fray.

An ACLU spokeswoman said the group was monitoring the situation but had not decided whether to join with the county.

Schillo vowed to take the case to the U.S. Supreme Court.

He called Community Memorial’s claims that private county hospitals take in 46% of the indigent “bald-faced lies.”

“We have reports that show the county takes care of 90% of the indigent,” Schillo said. “We’ll fight this to the end. If Bakst wins, that means anyone can make a grab for county money. That’s why it’s unconstitutional.”

Assistant County Counsel William Moritz was confident of winning the suit.

“We think the petition is completely without merit, and we think the court will hold in the county’s favor when the matter comes to a hearing,” he said.

Bakst, who could not be reached for comment, said in a prepared statement that the key issue is the thousands of citizens who signed petitions to put the initiative on the ballot.

“If we can’t trust supervisors to protect our right to vote, how can we trust them to protect health care in Ventura County?” he asked.