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Marin General Sues Sutter Health for $120 Million

John Commins, for HealthLeaders Media, August 30, 2010

"Sutter Health complied in all respects with the legal agreements governing the transfer of Marin General Hospital and expended considerable resources above and beyond what we were required to do so as to ensure a smooth transition of the hospital.  We have responded to the District's concerns throughout the transition and have explained our financial policies to the satisfaction of the regulatory agencies that govern non-profit healthcare entities.  While we had hoped to put the contentious relationship of the past behind us, Sutter Health will now vigorously defend itself and will likewise vigorously pursue all claims against the Marin Healthcare District."

The alleged behavior detailed in the lawsuit, filed Thursday in Superior Court in Marin County, began when Sutter Health Corp. sought to end its 20-year management contract with Marin General five years early. After agreeing to a 2010 termination, Sutter began the massive cash transfers and sought to undermine Marin General as a future competitor, the suit alleges.

 "Sutter asked Marin General for a 'divorce' and then decided they'd just clean out the bank account before the divorce became final," Brosnahan says. "The Board has worked for months to get Sutter to return the $120 million that doesn't belong to them, and time and again they have refused. Now they will have to explain to a judge and jury this massive wealth transfer and conflict of interest."

Sutter's improper and intentional actions depleted the reserves required to invest in the long-term future and continued modernization of the community's major hospital and its only trauma center, Marin General alleges.

"This action is not about money, but what that money represents: The ability for us to provide for the future health and welfare of Marin General Hospital and the people of Marin County," says Tim Sowerby, MD, of the Marin General Hospital Board. "The board has a fiduciary responsibility to recover the money Sutter took to fund fully our reserves—the down payment on the Hospital's future. That will enable Marin General to continue offering the community the highest level of healthcare and the most modern facility today and into the future."

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