Bidder for California hospital denies $150K check was a 'bribe'

A lawyer representing a company vying to take over bankrupt Madera (Calif.) Community Hospital emphasized Sept. 12 that a $150,000 check and job offer his client gave to the hospital CEO earlier this year was not an attempt to gain edge in the bidding process, The Fresno Bee reported. 

"Obviously, there were better ways of handling that process," Hamid Rafatjoo, a partner with Raines Feldman Littrell and lawyer for Modesto, Calif.-based American Advanced Management, told a judge, according to the newspaper. "But it didn't come from a place of trying to bribe anyone."

He added that the actions occurred prior to his retention.

The remarks follow a Sept. 8 bankruptcy court filing, in which Karen Paolinelli, CEO of Madera Community Hospital, made a declaration that American Advanced Management made an unsolicited, written employment offer to her in May. 

She said she met with American Advanced Management's president, Gurpreet Singh, MD, and chief strategy officer, Matthew Beehler, and was given an envelope with a check made payable to her personally for $150,000. Court filings show the offer was to retain Ms. Paolinelli in "an active leadership capacity" if American Advanced Management were selected as the hospital reopening partner, according to the Bee.

Ms. Paolinelli said she sent a certified letter to American Advanced Management's president, reiterating that she was declining the offer and that no decision had been made related to the sale of assets.

"The entire interaction made me feel very uncomfortable," Ms. Paolinelli said.

Madera Community Hospital filed for Chapter 11 bankruptcy March 10. The hospital officially closed at midnight Dec. 30 after Livonia, Mich.-based Trinity Health's plan to buy the hospital fell through. Trinity already owns and operates Saint Agnes Medical Center in Fresno, Calif. In July, Madera and Roseville, Calif.-based Adventist Health entered a nonbinding letter of intent for Adventist to take over operations.

American Advanced Management has continued to pursue a partnership with Madera amid the agreement with Adventist, according to the Bee. Ms. Paolinelli said Dr. Singh also continued to offer her employment, with late August being the last time.

In a statement shared with Becker's, Mr. Beehler said Ms. Paolinelli "has worked diligently with many local and state agencies to prepare Madera Community Hospital to reopen as quickly as possible. We have and continue to believe that her committed involvement will be a key element of a fast, efficient reopening."

Regarding the May meeting, American Advanced Management at the time believed they were the only potential reopening partner for the hospital and wanted to ensure Ms. Paolinelli was involved with future operations, Mr. Rafatjoo told the federal judge Sept. 12, according to the Bee

According to the newspaper, he also told the judge that American Advanced Management is offering to contribute $30 million of the company's own money into a deal with the hospital, in addition to the $50 million allocated for the hospital from the California Distressed Hospital loan program. 

Ms. Paolinelli said in her declaration earlier this month that the hospital has yet to finally determine the identity of a stalking horse bidder for the purchase of the hospital's assets. If the hospital determines the best interests of the hospital and its creditors are best served by the sale of the assets to a third party — whether that be Adventist, American Advanced Management or another party — Madera will identify the proposed buyer as the stalking horse bidder and provide the bankruptcy court and all parties with notice of the proposed sale and its terms, she said.

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