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The San Benito County Board of Supervisors has confirmed that it’s pursuing a legal challenge to the Nov. 5 ballot measure on the lease-purchase of Hazel Hawkins Memorial Hospital. The supervisors first directed staff to explore its options Aug. 6.
The Aug. 13 announcement came from county counsel David Prentice as he reported about actions taken during the closed session phase of the meeting. He said the decision was unanimous.
“The board has authorized and directed the county counsel’s office to file a writ regarding Hazel Hawkins Hospital potential sale and the measure that is placed on the ballot to challenge the language of that measure,” Prentice said.
San Benito Health Care District, which governs the hospital, is proposing a sale and lease transaction with Michigan-based Insight Health System, an agreement that requires voter approval because the district is a public agency. The details of the agreement have not been finalized.
On Aug. 8, health care district CEO Mary Casillas told BenitoLink there is no timeline for making the final agreement available, but that the goal was to have it done before the general election. Asked if the agreement is legally required to be completed by that time, she directed the question to Heidi Quinn, district counsel, who said there was no legal requirement and that the law was very general in this regard. She referenced Health and Safety Code section 32121(p), which states in part, [a public entity conducting such a transaction] “shall, by resolution, submit to the voters of the district a measure proposing the transfer.”
Marcus Young, the health care district’s contracted public information officer, told BenitoLink that if the if deal is approved, the hospital would be sold at the most recent assessed fair market value, which according to a study of the hospital’s assets by HealthCare Appraisers, a healthcare valuation and advisory firm, is between $59.3 million and $65.6 million. Residents who oppose the proposed transaction questioned the validity of the appraisal, saying the hospital is worth more.
The health care district voted June 5 to pursue negotiations for the hospital with Insight, thereby rejecting San Benito County’s proposal to form a joint powers authority to govern the hospital in an alliance consisting of the health care district, the county and possibly other interested public entities.
The ballot question has been a point of contention since the district first approved it. The language has been changed twice since then. While the district said it was to make the language clear to voters, residents have said it’s misleading.
The ballot question currently reads, “Without increasing taxes and to continue providing local access to emergency medical care, surgery, radiology, long-term care, mother/baby care, clinic and physician services at Hazel Hawkins Memorial Hospital, shall San Benito Health Care District’s measure be adopted, leasing (with lessee option to purchase) certain District real property assets, and selling substantially all other District assets, to nonprofit Insight Health Foundation of California, Inc. (or another qualified buyer) for fair market value, determined by independent appraisal, providing local oversight and continued hospital services in San Benito County?”
The district’s move to find a partner to take over the hospital began with the declaration of a fiscal emergency in November 2022. In May 2023, the board filed for bankruptcy. The California Nurses Association and National Union of Healthcare Workers opposed the bankruptcy application and, after a four-day hearing in December 2023, a San Jose judge denied the application. The board filed an appeal and a motion for stay in March to the bankruptcy judge but was denied.
The appeal and motion to stay are now being considered by the appellate court, Young told BenitoLink.
“We are still under [bankruptcy] protection,” Young said. “The ruling on these matters can take some time. I do not know when they will make a ruling.”
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