Arguments for starting over on Lakewood Hospital

Addressing Lakewood City Council Monday evening, attorney Gerald Phillips lent his support to repealing ordinance 49-15, which closed Lakewood Hospital, and “starting all over.” Mr. Phillips roundly criticized the ordinance, which will go before Lakewood voters in November.

Mr. Phillips’ statement is republished below, with permission:

The following are examples of malfeasance, misfeasance and non-feasance of the City Council and the Mayor of Lakewood:

I. The complete failure to provide for the waiver of facility fees for Lakewood residents who are unable to pay for them;

II. The complete failure to provide for a guarantee amount of charity care for Lakewood residents; in the past as much as $7 million was provided through Lakewood Hospital; none is guaranteed by the Master Agreement;

III. The complete failure to enforce the breach of the lease agreement by the Lakewood Hospital Association and the breach of the Definitive Agreement by the Cleveland Clinic; no consideration at all was received in light of their material breaches as part of their fraudulent plan to close Lakewood Hospital;

IV: The inclusion of a completely illegal and unlawful restrictive covenant prohibiting competition for vital inpatient and hospital services on the land belonging to the City of Lakewood, such restrictive covenant violates the anti-trust laws and the state anti-monopoly laws;

V: The complete failure to comply with the mandatory bidding procedures for the real estate, personal property, and intangible assets of Lakewood Hospital;

VI: The use of the Lakewood Hospital Foundation investments funds of $50 million to bootstrap the construction of the Cleveland Clinic wellness center of approximately $34 million dollars; in essence the Cleveland Clinic is using the Lakewood Hospital Foundation investment funds to finance their construction;

VII: Pursuant to Section 2.1 of the [1996] Definitive Agreement the complete release of the Cleveland Clinic obligation to fund any and all cash flows deficits for the remaining years of the lease, a potential $30-50 million estimate based upon the outrageous projections of the Lakewood Hospital Association and the Cleveland Clinic;

VIII: Pursuant to Section 2.1 of the Definitive Agreement the complete release of the Cleveland Clinic obligation to make capital expenditures of $5 million per year on a 10 year rolling average, and $3 million per year on three year rolling average; the Cleveland Clinic has not made any capital expenditures for the last four to five years; it is estimated that the Cleveland Clinic was let off and released of obligations under this capital expenditure provision of between $30-50 million;

IX: An illegal joint venture and loaning of credit between the City of Lakewood and a private entity in violation of Article VIII, Section 4 of the Ohio Constitution;

X: The transfer of any and all tangible personal property of the City of Lakewood and the Lakewood Hospital Association for nominal consideration, no competitive bidding, transfer not at fair market value; $20-30 million gift;

XI: A meaningless Option to Repurchase the Cleveland Clinic Wellness Center at fair market value, meaning that the Cleveland Clinic get full value for the Cleveland Clinic Wellness Center, and the City of Lakewood gets no benefits;

XII: The Cleveland Clinic hasĀ  made absolutely no guarantee commitment to construct the Wellness Center or to keep it open for any guaranteed period of time; it is an illusory promise and commitment; a guaranteed period should have been negotiated and a firm absolute commitment to construct should have been negotiated;

XIII: The Master Agreement is nothing but a money grab.