Attorney General Lockyer Announces Settlement with Tenet in Freeman Marina Hospital Closure Case

Agreement Ensures Facility's Future Will Be Decided Per Purchase Conditions

Tuesday, April 1, 2003
Contact: (415) 703-5837, agpressoffice@doj.ca.gov

(LOS ANGELES) – Attorney General Bill Lockyer today announced the settlement of a lawsuit that blocked Tenet Healthcare Corporation from closing the Daniel Freeman Marina Hospital in violation of public-interest conditions imposed on Tenet's purchase of the nonprofit facility.

"We are pleased we have reached an agreement with Tenet that serves the community's interests and provides much-needed funding for local health care services," said Lockyer. "Now, the hospital's future will be decided as it should be -- after careful consultation between Tenet, and public health officials, medical staffs, community health care providers and the hospital's governing board. Whatever the hospital's ultimate fate, safeguarding local health care must be the primary objective."

The settlement acknowledges Tenet has now complied with the purchase conditions by consulting with local health and elected officials, the public, and the hospital's governing board and medical staff, about the facility's future. In turn, the agreement contemplates dissolution of an August 2002 court injunction that blocked the closure. The settlement was filed today with the Los Angeles County Superior Court, which must approve the agreement.

The settlement requires Tenet to pay $400,000 to fund health care services for low-income residents of the Marina area. The money will go to the California Community Foundation, which will make grants to tax-exempt organizations.

In December 2001, Tenet purchased both the Freeman Marina Hospital and Freeman Memorial Hospital from Daniel Freeman Hospitals, Inc. In May 2002, Tenet announced it planned to close the Freeman Marina Hospital and its emergency room. Tenet also announced it would immediately stop admitting new non-emergency patients.

The Attorney General filed suit to block the closure in July 2002, and secured a court injunction the following month. The injunction barred Tenet from closing the hospital and its emergency room, and from refusing to admit new non-emergency patients, until Tenet complied with two conditions imposed on its purchase of the facility.

One condition required Tenet to conduct a "comprehensive assessment and planning process" for the Freeman Marina Hospital. The condition required Tenet, in conducting this process, to solicit public input and consult with community-based health care organizations, Los Angeles County's Emergency Medical Services Agency and other health officials, the hospitals' governing boards, medical staffs and employees, community leaders and local elected officials. The second condition required Tenet to consult with the Freeman Marina Hospital governing board before making a decision to close the facility, or to eliminate or transfer any significant service.

The California Community Foundation, following notice to the Attorney General's Office, will administer the process by which local charitable groups apply for and receive health care grants from the $400,000 paid by Tenet. The Foundation will collect and review grant applications, select grantees and disburse funds. In addition, the Foundation will monitor and evaluate grantees' use of funds, and submit a report to the Attorney General's Office.

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