ATTORNEY AT LAW
1209 PINE STREET
SANTA MONICA, CA 90405
TEL: (310) 450-1859
FAX: (310) 450-9818
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July 12, 2002
Attorney General Bill Lockyer
Re: Tenet/Marina Hospital
Dear Attorney General Lockyer:
This is a request on behalf of my client, SAVE OUR MARINA HOSPTAL, for immediate action by the Attorney General to prevent the dissipation, usurpation, and diversion of the assets of a non-profit corporation which are conditionally held in trust by Tenet Healthcare.
Tenet announced on July 11, 2002 that it will close the Daniel Freeman Marina Hospital on July 22, 2002, notwithstanding the Attorney General’s letter of July 3, 2002 instructing Tenet not to do so. (See Exhibit A).
It is clear from a review of all materials submitted by Tenet to date that it is not in compliance with Condition IX of the Attorney General’s approval granted on December 7, 2001. The assets of Daniel Freeman are still subject to the charitable trust imposed upon them by law until such time as the conditions are fulfilled. Tenet is purposely dissipating the assets, dispersing the manpower and hence the operating capability of the entity, and diverting equipment for Tenet’s profit-making enterprises. Unless the Attorney General takes immediate action to preserve the status quo, the hospital staff, including doctors, nurses, technicians, and all other employees critical to ongoing viability, will be forced to seek employment elsewhere. Once that occurs, it will be difficult if not impossible to reconstruct the hospital and emergency room as a going concern. Letter to Attorney General Bill Lockyer July 12, 2002 Page 2
It is imperative that the Attorney General act immediately to impose a conservatorship, seize the assets and preserve the status quo as an operational entity, installing a provisional administrator and authorizing said administrator to compensate the employees and meet overhead expenses from public funds if necessary on an interim basis. Said funds can be recovered pursuant to judicial recourse against Tenet for breach of contract, breach of fiduciary duties, and unfair business practices under Business and Professions Code §17200 et seq. Tenet cannot be permitted to flout the law and waste a community asset that is impressed with the public trust doctrine and remains in custodia legis until such time as the conditions of transfer are fulfilled. We remain convinced that when the comprehensive planning process required by Condition IX takes place, the conclusion reached will be that Marina will continue to operate as a medical facility with an emergency room. Tenet is avoiding this process because it seeks to sell the real estate to commercial interests at a vast profit, having acquired it at an undervalued level as a public-trust asset. One option that the public will explore during the Condition IX process may be a decision by local government officials to take over the hospital by eminent domain at the value place upon it by Tenet when acquired, rather than the grossly inflated price Tenet plans to sell it for commercial uses. Another option under discussion is the acquisition by physicians in partnership with public-spirited developers in the Marina area who realize it is in their interest to preserve a medical facility for the benefit of area residents as well as the general public. There are many options of benefit to the public interest that have not been explored or subjected to public scrutiny due to Tenet’s unilateral rush toward closure.
The rules governing the use of the assets of a nonprofit charitable organization are well established; “[All] the assets of a corporation organized solely for charitable purposes must be deemed to be impressed with a charitable trust by virtue of the express declaration of the corporation’s purposes, and notwithstanding the absence of any express declaration by those who contribute such assets as to the purpose for which the contributions are made .... It follows that ... [a nonprofit corporation cannot] legally divert its assets to any purpose other than charitable purposes, and said property [is] therefore ‘irrevocably dedicated’ to exempt purposes within the meaning of
Letter to Attorney General Bill Lockyer July 12, 2002 Page 3
the welfare exemption.” (Pacific Home v. County of Los Angeles, 41 Cal.2d 844, 852 [264 P.2d 539].) Tenet cannot merely claim that the assets can be sold because they are no longer “owned” by a non-profit entity; the sale of assets was expressly conditioned by the terms set forth in the Attorney General’s approval of December 7, 2001. Until those conditions subsequent are fully satisfied, the assets remain subject to the public charitable trust and the authority of the Attorney General.
“Since there is usually no one willing to assume the burdens of a legal action, or who could properly represent the interests of the trust or the public, the Attorney General has been empowered to oversee charities as the representative of the public, ….” (Holt v. College of Osteopathic Physicians & Surgeons, 61 Cal.2d 750, 754 [40 Cal.Rptr. 244, 394 P.2d 932].) See also, Queen of Angels Hospital v. Evelle J. Younger (1977) 66 Cal.App.3d 359, 136 Cal.Rptr. 36.
We now see that Tenet will use every means in its power to thwart the fulfillment of Condition IX, as evidenced by its Memorandum of July 11, 2002. Tenet is obviously treating the EMS hearing scheduled for July 17th as an irrelevant event, mere window-dressing to its announced closure. This bespeaks a lack of good faith and contempt for due process. Health & Safety Code §1300 clearly states that before “closure of emergency services” by a licensee, there must be a presentation of the impact evaluation to the state, “including, but not limited to an impact evaluation of the downgrade or closure upon the community, including community access to emergency care, and how that downgrade or closure will affect emergency services provided by other entities.” None of the requirements of this law can possibly be accomplished by July 22d, yet Tenet is steadfast in its intent to accomplish “closure” of the facility.
Unless the Attorney General exercises the power inherent in his office, the closure of Marina Hospital will become an accomplished fact, and the loss of vital emergency services will result in irreparable harm to those who will not survive the transportation time to more distant facilities.
Letter to Attorney General Bill Lockyer July 12, 2002 Page 4
Tenet cannot rely upon secretive oral discussions with various unidentified “physicians” to fulfill the obligations of condition IX, as it seems to do in its letter of June 27th to your office. The reply letter of July 3d from Mark Urban clearly rejects the material presented by Tenet. The attached letter from Tenet is an act in contempt of the Attorney General’s conditions of approval, and cannot be allowed to create the fear and uncertainty among employees that it was obviously designed to do. Swift and decisive action is required in order to provide the physicians and employees with the assurance that they will not be locked out of the premises on July 23d.
Mark Urban informed me that while he is out of the country, correspondence should be directed to your personal attention, hence I seek your assistance.
Very truly yours,
John B. Murdock
JBM:ly
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