The majority owner of West Suburban Medical Center can continue to run the hospital, a Cook County judge ruled Monday.
The hospital’s minority owner and landlord, Rathnakar Reddy Patlola, sued Resilience Healthcare CEO Manoj Prasad last month after Prasad abruptly closed the struggling hospital. Patlola’s suit asked a Cook County judge to appoint a receiver to help wrestle management of the hospital away from Prasad.
Judge Patrick Stanton ruled against Patlola’s emergency request Monday, saying his lawyers did not meet the burden of proof for a receivership.
“There was no evidence offered that Dr. Prasad caused any of these problems or that he failed or refused to address them,” Stanton said.
The ruling comes amid a bitter legal fight between the two business partners who together own the safety-net hospital on the eastern edge of Oak Park. The court battle has left residents on the West Side and in the near west suburbs with one fewer hospital to rely on.
Evidence points to a lack of money
Patlola is the minority owner of Resilience Healthcare, which owns and operates West Suburban Medical Center and Weiss Memorial Hospital in Chicago’s Uptown neighborhood. Prasad is Resilience’s majority owner and is in charge of the day-to-day hospital operations. The two men teamed up in 2022 to buy Weiss Memorial, West Suburban Medical Center and West Suburban’s River Forest medical campus from Pipeline Health, which had declared bankruptcy that year.
But Patlola’s company Ramco is the sole owner of all of the land the hospitals sit on, which includes the main Oak Park campus, the River Forest campus, Weiss and all associated medical office buildings.
Prasad closed West Suburban in late March and furloughed the vast majority of employees. He blamed the hospital’s electronic medical record system that “never functioned correctly” for the payroll issues. He also shuttered Weiss last summer after the hospital lost Medicare and Medicaid funding.
After Prasad closed West Suburban, Patlola attempted to oust Prasad and evict Resilience from both hospitals and the associated medical office buildings. Prasad then filed his own suit against Patlola to stop the eviction.
In response, Patlola sued and asked a judge to appoint a receiver to take control of West Suburban’s operations, allowing it to reopen. He also alleges Prasad mishandled millions in hospital funds, which lead to the hospital’s closure.
But Stanton said Monday Patlola’s attorneys failed to prove that Prasad had mismanaged any money. He also said the dispute over the lease agreement for the hospitals remains unresolved.
What is clear, Stanton said, is many issues have plagued the hospital and the owners need to come together to make a plan to reopen it.
“The evidence seems to point to one thing: a lack of money,” Stanton said.
Stanton added that attorneys for Patlola also offered no evidence for how a receiver would fix the hospital’s money troubles.
Lawyers for Patlola and Prasad declined to comment on Stanton’s ruling.
‘How can you not pay your physicians?’
Sylvia Williams, a longtime nurse at West Suburban Medical Center who has attended every hearing involving the hospital, was in tears after Monday’s decision.
She says neither Patlola or Prasad are fit to own or operate the hospital. But she was hoping the judge would appoint an independent receiver who could reopen the hospital and stabilize its finances.
Prasad “doesn’t care about the community. If he did, he would have fixed something,” Williams said. “How can you not pay your physicians? How can you let the residency program close? How can you let patients eat on styrofoam? How can you let people be cold in the wintertime in their patient rooms? How can you let them have no air in the summer?”
The legal teams for Prasad and Patlola have been arguing in court before Stanton about the financials for Resilience Healthcare.
In the lawsuit, Patlola accuses Prasad of “financial mismanagement and malfeasance.” The complaint also seeks financial damages for back rent Prasad allegedly owes Patlola.
Patlola also alleges Prasad misused $35 million intended for hospital operations, including a $10 million loan from the state of Illinois. The suit claims Prasad moved the funds to a separate bank account and “misappropriated” the funds for his “direct or indirect benefit.”
Prasad maintains that the disputed millions went toward hospital payroll and operating expenses, and that the funds were transferred to a bank account tied to Westlaw Management Group. Prasad says both men can access the account, but Patlola claims he can’t get into it.
He also claims the hospitals’ leases prohibit Patlola from terminating the lease or removing the hospital operator. He also says the two agreed to set rent for the hospital at just $1 a year until a profit was turned, which he says hasn’t happened since they purchased West Suburban and Weiss.
Patlola acknowledged in court that the two had signed an amended lease, but he had not read the terms of the lease.
The two sides agreed to have recently-retired Judge Patrick Sherlock review years of bank records for several accounts tied to Resilience Healthcare and the hospitals. Stanton says that review found that Patlola’s allegations of financial misconduct aren’t true.
Patlola had been in talks with Insight Hospital & Medical Center to see if the company could take over West Suburban. Insight’s CEO said the company was interested in helping get West Suburban back open.
Prasad previously said he hopes to fully reopen the hospital by late June or early July. He has resumed some clinical services at the Oak Park campus.