Following 11 weeks of deliberation the arbitrator in the dispute between Marin General Hospital and Sutter Health has awarded the hospital $21.5 million.
Marin General Hospital Chief Executive Officer, Lee Domanico, reacted to the ruling saying "JAMS Arbitrator Judge Rebecca Westerfield found that Sutter willfully and purposely failed to meet their contractual duties. Sutter also was found to have breached its duty of good faith and fair dealing by charging MGH for 'cost of capital' despite providing no capital to MGH and forced Marin General Hospital to make contributions to the Sutter Health Retirement Plan greatly in excess of Marin General Hospital's fair share for its employees. Judge Westerfield also found that Sutter failed to make reasonable efforts to cooperate with the IT transition at the Hospital and failed to pay its agreed share of IT training costs."
Domanico added "This ruling validates our longstanding contention that in the years leading up to the transition, Sutter did not operate Marin General in a manner consistent with the best interests of our community. Instead they diverted funds for the benefit of Sutter and the detriment of the people of Marin."
According to an article in the North Bay Business Journal, "at the center of the dispute was whether Marin General is entitled to a claim of nearly $300 million relating to what are known as “equity transfers” and other issues that Marin General, which is overseen by the Marin Healthcare District, said caused financial harm as the hospital ended a protracted divorce from Sutter in 2006.
"Sacramento-based Sutter has long maintained the transfers were perfectly legal, arguing that the money is considered 'excess working capital' that it pools with its other hospitals throughout Northern California."
“Our focus remains the same as it has been since the time of transfer, to modernize our facility, improve the level of care, and maintain Marin General Hospital as a center of medical excellence for the citizens of Marin,” said hospital spokesperson Jamie Maites.
“We are gratified that the arbitrator agreed with us and has ordered Sutter Health to restore funds to Marin General Hospital. The arbitrator’s decision supports what we’ve said for several years – Sutter’s appropriation of funds was improper.”
Maites said the hospital would be establishing specific plans for the use of these funds over the next several weeks to support modernization efforts. “We thank the community for its continued support during this process.”