By Jason Sweeney
Oakland Tribune
March 11, 2010

AN LEANDRO — The Eden Township Healthcare District has filed a countersuit in Superior Court in a bid to invalidate Sutter Health's attempt to close San Leandro Hospital's emergency room.

The countersuit, submitted Wednesday morning, states that a 2008 memorandum of understanding that allows Sutter to sell San Leandro Hospital is invalid because three directors on the board at the time had conflicts of interest because of incomes derived from Eden Medical Center. The directors were identified as Dr. Rajendra Ratnesar, Dr. Francisco Rico and George Bicshalaney.

Sutter leased from the district San Leandro Hospital and Eden Hospital in 2004 with an agreement to rebuild Eden. The 2008 memorandum, approved by the board in 2007, gave Sutter the option to purchase the hospital. Sutter claims that San Leandro Hospital is a money loser and wants to exercise its option to purchase it, then sell it to Alameda County Medical Center. Then the medical center would shut its emergency room and acute care center and turn the hospital into a rehabilitation center.

The district voted last August not to approve the sale in an attempt to keep San Leandro's only emergency room open. Sutter sued for breach of contract.

The lawsuit was put on hold for arbitration, which was decided in favor of Sutter on Friday. However, the results of the arbitration may be invalidated if the 2008 memorandum is found invalid in the district's countersuit.

Ratnesar is the only member of the 2007 board who remains on the panel. He cast the lone vote against pursuing a countersuit.

"I don't think I had a conflict of interest," Ratnesar said. "My interest was only for the district. I wanted the best for the district and I wanted Sutter to keep its agreement to build a new hospital. I was working at Eden Hospital as a medical director for quality. I did not get one penny because of the contract we agreed to."

Director Carole Rogers, who has been a strong opponent of Sutter, said: "We're an advocate for keeping San Leandro Hospital open and for the rebuilding of Eden Medical Center. I hope that Sutter will consider keeping the hospital open and running it at a profit, and if they don't, they should let the district find someone else to run it."