Marin General alleges that Sutter removed the more than $120 million by creating a conflicted hospital governing board that included Sutter employees, who were paid by Sutter and depended for their livelihood and career advancement on Sutter management, and others who would follow Sutter's direction.
The Sutter board allegedly had detailed knowledge of the huge sums of cash taken by Sutter—including exact amounts—and the effect the removal of this money had on Marin General's finances. Because of the clear conflict of interest, however, the board never discussed or questioned the appropriateness of Sutter seizing this money, despite the damage being done to Marin General, Marin General alleges in its suit.
While Sutter was allegedly removing millions from Marin General, it also was investing millions in active healthcare operations in Marin County, in direct competition with Marin General and in violation of its agreements. Sutter sought to lease most of the available medical office space in close proximity to Marin General, refused to recruit physicians for Marin General, purchased a plot of land for new Sutter healthcare facilities, and even forced Marin General to pay for Sutter's pension obligations, Marin General alleges.