West Suburban owners face off in court over hospital’s future

The owners of the now-shuttered West Suburban Medical Center faced off in court Friday over the hospital’s future, amid accusations of mismanagement and questionable fund transfers.

The hearing was over dueling lawsuits filed by the hospitals’ landlord and the company that operates the hospital, against one another, in Cook County Circuit Court. The lawsuits were filed after West Suburban abruptly closed in late March, with the owner of the hospital operating company citing problems with the billing system that had left the hospital severely short on cash. 

The landlord Ramco is asking the court to appoint a receiver for the hospital, so a different operator can take over. The current operating company, Resilience Healthcare, is seeking to stop Ramco from trying to evict it. Both companies say they hope to reopen the hospital, and despite their lawsuits, the owners of the companies are business partners. 

During the all-day hearing Friday, the owners of both companies took the stand to give their often starkly different views of events. A crowd of doctors, hospital employees and vendors who served West Suburban filled the courtroom.

Reddy Rathnaker Patlola, whose company, Ramco, owns the hospital property, said a receiver is necessary “so we can restart it, reopen operations in a few weeks.” He said there was “no hope” for reopening the hospital under its current management.

Dr. Manoj Prasad, who is the majority owner of Resilience, said he’s resumed offering some outpatient, clinical services and hopes to reopen the hospital in phases this summer.  

During their testimonies, Prasad and Patlola painted very different pictures of the terms of their lease agreement. Patlola testified that Resilience had fallen far short of paying required rent, and that Ramco is allowed to evict it. Patlola is also a minority owner of Resilience.

But when Prasad’s attorney asked Prasad if the lease allowed Ramco to evict Resilience, he replied, “No, they cannot.” He said he believed they were operating under a more recent version of the lease that did not allow Ramco to evict Resilience given the current circumstances. Prasad said his understanding was that Resilience had agreed to pay $1 a year, for a time, to use the property, given the hospital’s financial struggles. 

During his testimony, Patlola said he would never have agreed to that. 

Patlola also testified that Resilience transferred $35 million into an account that he couldn’t access, owned by Westlaw Management Group. An attorney for Resilience, however, pressed Patlola on the fact that he owns 40% of Westlaw, which Patlola said he didn’t realize until recently.  

Prasad said Westlaw is a subsidiary of Resilience, and that whenever there were funds beyond what the hospitals needed to operate, they were transferred into the Westlaw account and then used for the hospitals as needed. Resilience also owned and operated Weiss Memorial Hospital, which closed its doors in August.

Prasad said he never made any attempt to hide the account from Patlola and had given Patlola access to the account.

Former Resilience Chief Financial Officer Irene Dumanis also took the stand, testifying that Prasad told her to transfer $25,000 to $30,000 every two weeks into a Westlaw account, part of which was to “supplement his payroll.”

Prasad said on the stand, later in the day, that he never took additional compensation beyond his annual $90,000 salary, and that he disagreed with Dumanis’ testimony.

Closing arguments in the case are slated to be heard Monday afternoon.

Several of those who attended the hearing Friday — people who worked at West Suburban or were vendors for West Suburban — said they hope the judge appoints a receiver. 

“(The hospital) needs to be in receivership,” said Dr. Vishnu Chundi, a longtime West Suburban infectious disease doctor, after hearing some of the testimony. Chundi expressed concern about money being transferred from Resilience to the Westlaw account, after hearing some of the testimony. “Dr. Prasad has demonstrated he can’t run a hospital.”  

Marc Brown, an owner of National Healthcare Resources, which was a vendor to West Suburban and Weiss Memorial Hospital, said Resilience owes his company about $250,000. He said he believes the hospital should go into receivership, noting, “The state of Illinois has been taken advantage of,” referring to tens of millions of dollars the state advanced West Suburban in recent years. 

Longtime West Suburban secretary Tracy White said she grew up in the community served by West Suburban and believes it needs to go into receivership. 

“I have neighbors and friends who ask me, ‘Do you know if the hospital will be open?’” White said. “They’re feeling the loss. … They want the hospital back open.”