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Despite Bankruptcy, New York's St. Vincent’s Hospital Faces Suit From Staff

The now-bankrupt St. Vincent’s Hospital is facing accusations of mismanagement, even as it approached bankruptcy. A group of former staff members have gone so far as to file a lawsuit, according to the Associated Press.

Among the allegations that are presented in the suit are that executives went on an expensive golf outing at a time when the hospital was in financial trouble, and that financial mismanagement led to more than $100 million in unspecified spending over a one year period. The golf outing allegedly cost about $278,000.

The suit also claims that the major executives at the 160-year-old institution in Greenwich Village were making $1 million apiece, and that they spent $17 million on management consultants.

A group of former hospital staff members and members of the community have raised the suit in Manhattan state Supreme Court in New York.

The hospital decided on filing bankruptcy before its April 2010 closing. At the time of the filing it claimed debts around $1 billion. The hospital has also been decreasing capacity, cutting the number of beds from to 400, which is half of what it maintained 10 years prior.

The former staff members and community members are bringing into question the spending behavior of hospital executives at a time when the hospital was trying to save itself from bankruptcy and closure.

“The closure of St. Vincent’s raises many questions,” said lawyer Yerra Kurland. “This is not the way a hospital trying to save itself would be acting.”

Kurlad filed the suit on behalf of around 1,000 former hospital staff, former patients, and residents of the neighborhood that was home to the hospital. Altogether, the group is known as The Coalition for a New Village Hospital. The group has named the New York state Department of Health in the court papers, claiming that the department failed to release documents that related to the St. Vincent’s administration, and to the hospital’s closure.

The Department of Health handles hospital licenses.

One reason for scrutiny is that St. Vincent’s received hundreds of millions of dollars in taxpayer money over the last few years, said Kurlad. This includes an emergency loan secured by New York governor David Paterson totaling $6 million, so that the hospital could make payroll payments.

Mt. Sinai Medical Center had considered taking over St. Vincent’s, but after they evaluated the situation, Mt. Sinai decided that, according to the Associated Press, there were “too many financial obstacles to overcome.”

According to Coalition members, St. Vincent’s has ignored requests for documents that would prove or disprove their claims about the spending of hospital executives when bankruptcy was near.

St. Vincent’s, for its part, stated via representatives that they hadn’t seen the lawsuit yet.

“However, based upon news reports and press conferences,” said these representatives via a statement, “there appears to be a blatant distortion of the facts.” The statement went on to say that St. Vincent’s has attempted for the last months to transfer health services to other facilities while they close the hospital.

The state, according to St. Vincent’s, has already approved the closure plan, as dictated by federal bankruptcy court.

The next court hearing will take place on September 8.