The current operator of West Suburban Medical Center will remain in place for now, after a Cook County judge rejected a request Monday to place the hospital in receivership.
West Suburban’s owners, however, are working on a plan to reopen the hospital along with sister facility Weiss Memorial Hospital, and “I believe there’s a framework in place that will lead to the reopening of the hospitals, but it’s not final right now,” said Cook County Circuit Court Judge Patrick Stanton on Monday.
The parties met with the judge behind closed doors Friday afternoon to discuss a plan, Stanton said. He did not offer any specifics about the plan Monday morning, but said, “I’m pleased that we made great progress.”
A representative for Resilience Healthcare, the company that operates the hospitals, declined to comment on the plan Monday morning. A representative for Ramco, which owns the hospital properties, did not immediately answer questions Monday morning about the details of the plan.
The judge’s decision Monday came in response to lawsuits filed by the hospital’s owners against each other, after West Suburban was abruptly closed in March. At the time of its closure, Dr. Manoj Prasad, who is the majority owner of operating company Resilience, said problems with the hospital’s billing system had led to severe financial problems.
Following the hospital’s closure, Ramco, owned by Prasad’s landlord and business partner Reddy Rathnaker Patlola, filed a lawsuit alleging that Prasad had mismanaged the hospital and misappropriated funds, leading to its demise. Patlola filed an emergency motion to appoint a receiver. Patlola also owns 40% of the hospital operating company.
The judge, however, said Monday that Ramco failed to offer evidence that Prasad misappropriated hospital funds. He also said it remains unclear which lease the parties were operating under. Patlola and Prasad had offered differing views of which lease was effective in court, and what the lease required.
Stanton said there were clearly many problems that plagued the hospital.
“The evidence seems to point to one thing: a lack of money,” Stanton said. “… There was no evidence offered that Dr. Prasad caused any of these problems or that he failed or refused to address them. (There was no) evidence offered how a receiver would remedy financial problems.”
The decision Monday followed hours of closing arguments from attorneys representing Prasad and Patlola’s companies on Friday, and a daylong hearing on the issue several weeks earlier.
During closing arguments Friday, attorney Scott Kaplan, representing Ramco, argued that appointing a receiver was the only viable path forward for both West Suburban, and Weiss Memorial Hospital in Uptown, which closed in August.
“The appointment of a receiver is not merely warranted, it is necessary to reopen these hospitals,” Kaplan told the judge. “Current management has already demonstrated his inability to reopen Weiss Hospital for nine months.” Kaplan said there was no evidence West Suburban would experience a different outcome under Prasad.
State law allows a judge to appoint a receiver if a property or its ability to produce revenue “is being subjected to or is in danger of waste, loss, dissipation, or impairment.”
But Martin Tasch, an attorney for Resilience, argued that Patlola’s company had shown no proof that a receiver or new operator would do any better than Prasad has done.
“We’ve never denied the financial challenges at the hospitals, but they’re trying to get a receiver appointed under the theory that’s going to make some kind of huge difference, and, on that, they haven’t produced anything,” Tasch argued.
Kaplan had asked the judge Friday to include as evidence a declaration from the head of Insight Chicago as to why it would be an appropriate operator for the hospitals if they were placed under receivership. Kaplan also wanted to include as evidence an allegation, he said, that Prasad had made payments of more than $2 million from a hospital account to a consulting firm owned by his daughter.
But Stanton said including those points as evidence would require continuing the hearing to a later date and doing discovery.
After conferring with Patlola, Kaplan told the judge that if the judge wasn’t inclined to allow the additional points as evidence Friday, they wanted to move forward with closing arguments rather than continuing the hearing until later.
Ramco had also previously alleged that Resilience had misappropriated $35 million in funds, but Kaplan acknowledged Friday, that after spending the last couple weeks working with a special master to look into the hospital’s finances, “It appears that a significant amount went back to the hospitals.”
The decision Monday was the latest development in what’s become a yearslong saga over the hospital.
Prasad and Patlola bought West Suburban and Weiss Memorial Hospital in Uptown together in 2022. They purchased the hospitals from Pipeline Health, which filed for bankruptcy amid the sale. Pipeline had bought the hospitals, along with Westlake Hospital in Melrose Park, from Tenet Healthcare in 2019. Pipeline angered the community when it announced just weeks after the sale that it would close Westlake.
Prasad’s then newly created, for-profit company Resilience, was to operate West Suburban and Weiss, while Patlola’s company Ramco was to own the hospital properties.
The hospitals, however, have continued to struggle. Multiple vendors say they’re owed money and doctors say they saw an exodus of experienced medical professionals under Prasad’s leadership.
In August, the owners’ other hospital, Weiss, closed, after it was barred from receiving Medicare dollars. The federal government terminated Weiss from the Medicare program after its air conditioning failed earlier that summer, leading to temperatures in the upper 80s in parts of the hospital.
