California hospital sues Alecto for $30M

Antelope Valley Hospital, a 420-bed hospital in Lancaster, Calif., has filed a lawsuit against Irvine, Calif.-based Alecto Healthcare Services, alleging Alecto engaged in "egregious malfeasance and/or outright fraud" in its management of Antelope Valley Hospital, according to the Antelope Valley Press.

Alecto managed Antelope Valley Hospital from November 2015 until December 2016, when the hospital board of directors voted to terminate the management agreement with Alecto.  The hospital alleges that soon after the management agreement was signed, Alecto made changes that caused financial troubles for the hospital.

Antelope Valley Hospital claims Alecto slashed the hospital's nursing staff, mismanaged the hospital's IT processes and botched the management of essential hospital equipment, all in the name of cutting costs. While making these moves, Alecto was "funneling hundreds of thousands of dollars from the hospital to a closely associated adviser for a line of credit the hospital did not actually need," the complaint states, according to the report.

Antelope Valley Hospital claims Alecto's actions caused the hospital to lose more than $30 million, according to the report.

The lawsuit, which alleges negligence, fraud, breach of contract and breach of fiduciary duty, seeks at least $30 million in damages.

Alecto Healthcare did not immediately respond to Becker's request for comment.

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